Bahamas Petroleum Company plc, the oil and gas exploration company with significant prospective resources in licences in The Commonwealth of The Bahamas, is pleased to announce its Final Results for the year ended 31 December 2019.
Significant progress achieved during the year toward drilling the Perseverance #1 well in 2020, which is targeting P50 recoverable prospective resources of 0.77 billion barrels of oil, with an upside of 1.44 billion barrels, solely from the northern structural closure portion of the B structure. In total the B structure extends between 70 and 80 kms, has a mapped areal closure over 400 km2 and has an aggregate most likely recoverable resource potential in excess of 2.0 billion barrels.
This progress included:
· February 2019: Secured unambiguous clarity on the tenure of the Company's key southern licences and work program obligations from the Government of The Bahamas, confirming that the second exploration period of the Company's licenses has been extended to the end of 2020, thereby allowing the Company adequate time to commence preparation for drilling of an initial exploration well, consistent with the obligations of its licences
· July 2019 onward: Worked with the Government of The Bahamas to review and upgrade the Environmental Authorisation application initially lodged by the Company in April 2018, with a focus on a drilling campaign that that is consistent with international best practice performance standards
· August 2019: Signed a framework agreement for the provision of a sixth-generation drilling rig in 1H 2020, appointed Halliburton for the provision of integrated well services, and BakerHughes GE for the provision of various well-related equipment
· September 2019: AGM approval for the temporary authority to issue new shares to underpin financing of drilling of initial exploration well in The Bahamas, if required
· September 2019 onwards: Initiated a coordinated funding strategy toward securing the funding required for Perseverance #1 in a measured fashion. Initial phase of funding strategy successfully executed - an Open Offer to existing shareholders and Placing which raised gross proceeds of US$11.4 million, and entering into an agreement for a Conditional Convertible Note Subscription Agreement which, if available and fully drawn, would raise gross proceeds of £10.25 million
· October 2019: Opened temporary Houston office to accommodate drilling personnel consistent with the planned exploration well activities
· December 2019: Process initiated seeking to provide Bahamians with an opportunity to invest in the Company's nationally significant project, via creation of a Bahamian-domiciled mutual fund to exclusively hold BPC shares
· December 2019: the Group closed the year with $11.2 million in cash reserves
Post period highlights:
Prior to Covid-19 shutdown, continued rapid progress towards drilling. This included:
· February 2020: Successful first closing of the Bahamian mutual fund initiative, raising gross proceeds equivalent to US$0.9 million
· February 2020: Grant of Environmental Authorisation from the Government of The Bahamas following extensive review by independent, internationally recognised consultants
· February 2020: Further expansion of conditional financial capacity to US$45 million through entry into an initial £8 million facility (extended to £16 million in March 2020) pursuant to a zero-coupon convertible bond with a Bahamian private family office investor
Post period Covid-19 impact & response
· March 2020: As a result of the massive, unprecedented and adverse impact of the spread of the Covid-19 pandemic, drilling operations were postponed until a time when safe and responsible drilling operations could be assured
· March 2020: Successfully rescheduled key elements of the Company's finance package to end of 2020
· April 2020: Notification to the Government of The Bahamas of the delay arising from the force majeure event occasioned by the Covid-19 pandemic, which will result in a corresponding extension to the current term of the Company's licences into 2021
· April 2020 onwards: Notwithstanding the Covid-19 impacts, the Company's assessment of farm-in possibilities has continued and BPC has begun evaluating other opportunistic strategic options arising as a result of the continuing global crisis
· May 2020: Entry into a fully termed, binding and unconditional rig contract with Stena Drilling for delivery of a sixth-generation drilling rig to location within a firm time slot between 15 December 2020 to 1 February 2021. The rig contract provides for significantly improved terms (notably, an all-in rig cost, including managed pressure drilling system, that reduced the estimated total cost of Perseverance #1 by approximately 15%)
· May 2020: There being no further convertible notes remaining on issue, the Company has no debts owing under any facility
· May 2020 onwards: The Company and all personnel remain resolute in pursuing the primary objective - commencement of exploration drilling on Perseverance #1, now anticipated to spud in late 2020 / early 2021
Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, said:
"Our exploration well, 'Perseverance #1', is aptly named. During the period of these accounts we achieved so much, including unambiguous licence tenure, a rig framework agreement, contracting with globally renowned service companies for our drilling campaign, successfully initiating a funding strategy with you - the shareholders - coming first, creating a structure to allow Bahamians the opportunity to invest in their nationally significant project and obtaining Environmental Authorisation from the Government of The Bahamas. We were within weeks of commencing the drilling of our long awaited exploration well that you - the shareholders - and all of us who work in the Company have waited a long time for. And along the way we had already met, responded to, and overcome a range of adverse situations.
But even in the face of a dramatic and deeply impactful global pandemic we have remained resolute in our single-minded focus - to deliver the well. To this end we have rescheduled our program, revisited our funding strategy, and most recently unconditionally contracted a drilling rig with a window for commencement of drilling beginning before the end of 2020, affording the Company the greatest assurance of 60 days of continuous operations necessary to complete the well. This chosen window demonstrates our clear intent to proceed to drilling without unnecessary delay, being the earliest opportunity post the 2020 hurricane season in The Bahamas, and by which time we expect the worst of the Covid-19 impacts to be behind us.
Shareholders should be equally encouraged by the relatively strong financial position we are in as we look forward to drilling operations at the end of 2020. In response to Covid-19 we acted quickly to implement appropriate cost control measures to preserve cash while we wait for the dust to settle, and to quickly reach revised agreements with our service and equipment suppliers and providers of our various finance arrangements. As a result, we currently have retained significant cash reserves, and preserved all relationships with backers intent on flexibly supporting the Company once operations are able to resume.
Moreover, the Company's prospect has not changed: the same rocks will still be there at such time as safe and responsible operations can resume, and shareholders can rest assured that the entire team at the Company will continue working towards drilling with the same commitment and belief that has got us to this stage.
On behalf of the Board and staff of BPC, I would like to thank all our shareholders for their continued support of the Company. I believe that toward the end of 2020 we will be back on track toward our unwavering objective of drilling an initial exploration well in The Bahamas, and seeking to realise the enormous shareholder value a successful discovery could unlock."