Challenger Energy Group PLC (formerly Bahamas Petroleum Company) continues to negotiate the final amounts owed to the government for its leases in The Bahamas while also still negotiating to extend those leases for another three years, the company said in its 2020 annual report and accounts released yesterday, adding that it has relinquished the lease for the Miami license in the northern Bahamas.
The annual report also revealed that the company continues to owe money to service providers for the work done on the Perseverance-1 test well the company completed early this year.
While the company did not find commercial quantities of oil at that test site, which cost the company $45 million, the company’s chief executive officer Eytan Uliel said in the report that there remains the distinct possibility of commercial quantities of oil within the remaining four license areas in the southern Bahamas.
If CEG is successful in renegotiating a renewal of the licenses, it said that during the next three-year exploration period, the company would take a “drill or drop” position.
“Looking forward in The Bahamas, it is worth noting that whilst Perseverance-1 may not have resulted in the commercial discovery we hoped for, a substantial amount of data and learning has been obtained from the drill,” Uliel said.
“We are still integrating all of this information but it provides encouraging support for the possibility of a deeper Jurassic oil play.
“As I have observed in other forums, we had hoped for ‘instant gratification’ with Perseverance-1, which was not the case. However, it is important to remember that in our industry, several exploration wells are often required before the potential of a frontier basin is unlocked, and based on what we have learned from Perseverance-1, we continue to believe that our licenses in The Bahamas are prospective.
“We have thus shifted our focus to the future of this project: (i) renewing the licenses into a third, three-year exploration period, and (ii) securing a partner – ideally a large industry player – to provide expertise and capital for the next phase of activity.”
Uliel said that as the company looks to 2022, it is determined to deliver value from The Bahamas leases.
Environmentalists have vowed to fight tooth and nail to prevent oil drilling in Bahamian waters.
The company also has a financial battle to win as it seeks to fund further exploration in The Bahamas after having spent about $72.9 million in “exploration costs in the Bahamian offshore licenses” the annual report explained.
The company said it hopes to find an established oil company as a farm-out partner to continue exploration in The Bahamas.
CEG remains in a positive cash position but still has to raise funds for its operations, which it said in the report it will be able to do, enough to meet its financial obligations for the next 12 months.
“The Group’s ability to meet all of its anticipated obligations over the 12 months from the date of this report is, however, dependent on the ability to secure access to additional funding,” the report read.
“The Group currently estimates that it has a need for approx. $15 million in additional funding in order to continue to meet its obligations as and when they fall due over the 12 months from the date of this report. This includes meeting routine operating costs, undertaking certain planned work program activities, and also includes settlement of final remaining payments to suppliers and finance providers from the drilling campaigns for both the Perseverance-1 well in The Bahamas and the Saffron-2 well in Trinidad.
“In order to meet this funding requirement, the Group has been and continues to evaluate a number of potential funding options. This includes a potential $10 million convertible loan note facility with Arena Investors LP, consideration of Reserve-Based Lending options, the potential disposal of certain assets for cash, potential farming out of an interest in certain of the Group’s exploration and/or production licenses which would result in some cash inflows and funding of work program plans in relation to those assets, possible further issuances of securities and/or debt instruments for cash, agreeing payment plans for the deferral of outstanding obligations to suppliers and finance providers, and/or settlement of all or part of outstanding obligations to suppliers and finance providers in equity shares.”
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source https://thenassauguardian.com/oil-explorer-drops-a-license-and-continues-to-negotiate-overdue-license-fees/
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