BPC says Bahamas could see $5 billion if it strikes oil

The Bahamas stands to accrue revenues of $5 billion or more should Bahamas Petroleum Company (BPC) strike oil at its Perseverance #1 drill site, the company said.

“In a successful development scenario of approximately 0.7 billion barrels (i.e. of the P50 resource level at Perseverance #1 only), and assuming a real US$40 oil price, the project remains robustly economic with an NPV10 exceeding US$2.5 billion,” BPC said in a statement.

“In such a scenario, even at these relatively modest oil prices, an aggregate revenue stream of over US$5 billion would flow to the government of The Bahamas in royalty income and other payments over the life of the project.”

BPC is confident that its first site, Perseverance #1, could hold between 0.7 billion and 1.4 billion barrels of oil.

The company also revealed in its statement that it acquired well control and associated insurance policies for its drill site; expanded its dedicated drilling team and facilities in Houston, Texas; and progressed logistics planning and contracts with Halliburton for well drilling services. 

Last week, the company revealed that it would begin drilling its exploratory well before Christmas, and revealed that the Stena IceMAX will be the drillship to carry out the project.

BPC Chief Executive Officer Simon Potter said that its drilling team has recommenced its activity, though working remotely due to COVID-19.

The company said recent studies have refined the “potential full-field development options, their potential costs in the current environment and the ultimate possible economic parameters of a full-field development in the event of successful exploration and thereafter appraisal drilling campaigns”.

“Over the last eight years of detailed geological and geophysical study, BPC has refined both its view of the resource potential of the B Structure, and in particular the BNorth segment targeted with the drilling of Perseverance #1 (P50 0.77 billion barrels; upside 1.44 billion barrels), along with the possible range of production rates in the event of a successful development,” BPC said.

“These pre-drill estimates, along with expected fluid characteristics, water depth and distance from infrastructure, have been combined to confirm the preferred development concept, being the use of a subsea wells system tied to a Floating Production Storage Offloading (FPSO) vessel. This is a known technology operating safely up and down the entire Atlantic margin on both sides of the ocean.”

BPC also revealed in a statement yesterday that is has raised $12 million in a share placement to institutional investors through the issuance of 475,000,000 new ordinary shares at a price of 2p each.

The statement revealed that Potter and other non-board management were amongst the investors in this recent placement.

“Simon Potter and certain non-board management have agreed to subscribe for, in aggregate, 15,503,875 placing shares, representing a $400,000 investment in the company,” the statement said.

“The investment accounts for approximately 3.3 percent of the gross proceeds of the placing.

“Simon Potter’s participation in the placing, amounting to 7,751,938 placing shares, is deemed a related party transaction pursuant to the AIM rules for companies, by virtue of his status as a director of the company.

“The independent directors (being those directors other than Simon Potter) consider, having consulted with the company’s nominated adviser, Strand Hanson Limited, the terms of Simon’s participation in the placing to be fair and reasonable insofar as shareholders are concerned.”

According to the statement, this funding round was undertaken so as to optimize BPC’s funding strategy and achieve lower cost of capital, less aggregate dilution and greater certainty.

“Based upon the proceeds from this placing in combination with the company’s existing cash balance and the amount available from the existing conditional convertible notes, and assuming no change to the anticipated cost of Perseverance #1, the company now does not expect to have to draw further on the previously announced £16 million zero-coupon, second ranking convertible bond facility,” the statement said.

Potter added: “With the success of the placing, we are also able to materially reduce the need to rely on other previously announced financing instruments, without affecting our overall ability to proceed with Perseverance #1 or other aspects of our recently enlarged business.”

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