BPC, the Caribbean and Atlantic margin focused oil and gas company, with production, appraisal, development and onshore and offshore exploration assets across the region, provides the following update on a range of strategic and corporate matters.
· The drilling of Perseverance #1 fulfilled its core technical objectives and a post-well review is underway. In parallel, BPC is considering the most appropriate way forward for monetisation of its assets in The Bahamas, in particular, the renewal of an active farm-out process
· Near term operational activity is now focussing on the Company's 2021 work programme in Trinidad and Tobago and Suriname, targeting exit production of c.2,500 bopd, and prospect maturation in Uruguay
o Saffron appraisal well due to begin in Q1 2021 which, subject to results, would see BPC seek approvals for field development with up to seven production wells to follow through 2021
o Suriname appraisal well and Extended Well Test in the Weg Naar Zee Block due to also begin in Q1 2021
· The Company's funding strategy is to focus on consolidating and strengthening the balance sheet, in support of directing maximum effort toward planned value-adding drilling activities in Trinidad and Tobago and Suriname during 2021
· Consistent with this funding strategy, the conditional convertible note facility has been restructured and extended along with a further £2 million drawn, a final reconciliation of the initial £7.5m tranche of the December 2020 Funding Agreement has occurred requiring no net cash payment by the Company, and the Company has issued 135 million new ordinary shares in lieu of cash settlement of a number of current financial obligations
Simon Potter, CEO of BPC said:
"The Stena ICEMAX has just left the drilling location and is off hire. However, the pace of operations has not ceased - the post-well review has begun, as the Company charts its way forward in The Bahamas with a renewal of the farm-out process. Notwithstanding it is only a week since the completion of the Perseverance #1 well, BPC has already moved to consolidate and strengthen its balance sheet, so as to ensure all value-add options to grow productions and cash generation in Trinidad and Tobago and Suriname are maintained. Over the coming weeks the Company will fully close out the Perseverance #1 operation and set the final timetable for operations elsewhere across the portfolio."
The Perseverance #1 well result has confirmed the presence of a working hydrocarbon system, validating the Company's structural play concept. In addition to obtaining an invaluable new sub-surface dataset which, in BPC's view, reduces the exploration play risk for any future exploration activities in this frontier province, the well verified the structural model the presence of competent seals, high porosity reservoir and hydrocarbon charge. The combination of these play elements points to significant hydrocarbon potential remaining in a number of independent, untested play systems and structures seismically identified from 2D and 3D within BPC's extensive acreage extending over its four (4) southern exploration licences covering approximately 12,000km2 (4,700 square miles - 3 million acres).
Post drilling sub-surface evaluation work has immediately commenced on a comprehensive post-well review, which includes cuttings analysis and geologic age dating, petrophysical analysis, gas chromatography and recalibration of the exploration play concepts. These learnings will be utilised to revise the stratigraphic and structural models as well as the extent of vertical closures and a revised play-type analysis. This extensive assessment will allow the Company to fully integrate the new Perseverance well data into an updated interpretation of the previously mapped prospect and lead inventory accessible within the licences, and more accurately inform and direct the focus of the Company's forward strategy within its Bahamian exploration acreage portfolio.
As previously advised, the Company has continued to assess options for a farm-out or similar transaction as part of its overall risk mitigation and funding strategy, and maintained an active dialogue with a number of interested parties, including a number of oil and gas majors and supermajors, right up to the point of spudding the Perseverance #1 well. Since announcing the well results, the Company has received a number of unsolicited approaches from industry counterparties. Gneiss Energy has been formally engaged to assist in managing a formal process to solicit broader industry interest in a farm-in alongside this early, positive interest.
The plugging and abandonment of the Perseverance #1 well has been carried out both safely and responsibly and the rig has moved off location and hire. The Company's remaining tasks to wrap-up well activities are to complete final well reports, statutory documentation and other formal records.
Trinidad and Tobago and Suriname
With Perseverance #1 completed, key near-term operational planning is on upcoming drilling and operational activities in Trinidad and Tobago and Suriname, with a view to building reserves and resources, and rapidly increasing production and cashflow across the portfolio. The Company is seeking to exit 2021 with net production of 2,500 bopd.
T&T 2021 programme:
· Drilling of the Saffron #2 appraisal well, targeted to commence in Q1 2021, which, subject to results, would rapidly see BPC seek approvals for a Saffron field development, and with up to seven production wells to follow through 2021. Work is currently underway in terms of site preparation, final permitting, and finalising rig procurement.
· Completion of reprocessing of the entire 3D seismic grid over the highly prospective South West Peninsula ("SWP"), the objective being to high-grade Saffron lookalike prospects for drilling and with a view to identifying up to two initial exploration well targets for drilling by the end of 2021.
· Depending on Covid-19 operational constraints, technical outcomes, speed of permitting approvals, and rig and funding availability, an even more accelerated 2021 work program could then include further Saffron production wells, and a further exploration well in the SWP.
Suriname 2021 programme:
· Drilling of an appraisal well and conduct of Extended Well Test (EWT) in the Weg Naar Zee Block in Suriname in Q1 2021, and subject to results, rapidly moving into a wider field development, with up to six production wells to follow through 2021.
· Depending on Covid-19 operational constraints technical outcomes, speed of permitting approvals, and rig and funding availability, an accelerated 2021 work program could include up to a further three Weg Naar Zee production wells in Suriname.
Following the conclusion of the Perseverance #1 drilling programme, the Company is seeking to consolidate and further strengthen its balance sheet, so as to direct maximum effort towards planned value-adding drilling activities in Trinidad and Tobago and Suriname throughout the course of 2021.
As part of this process, and further to the Company's announcement on 8 February 2021:
· BPC has reached agreement with the provider of its conditional fixed conversion price convertible note facility (the "Facility") to establish revised terms for the Facility and extend this Facility to ensure it remains available through the course of 2021 drilling operations in Trinidad and Tobago and Suriname, as follows:
o the conversion price of all notes issued under the Facility ("Notes") has been amended from 2.5p to 0.8p;
o the maturity date for all Notes will be a single maturity date of 31 December 2023, regardless of the date of issue of the relevant Notes;
o the coupon on the Notes remains 12 per cent., to accrue from the date of receipt of any subscription funds by the Company;
o coupon will be payable periodically throughout the term of the Notes, on each of 30 June 2021, 31 December 2021, 30 June 2022, 31 December 2022, 30 June 2023, and 31 December 2023 (each an "Interest Payment Date");
o on any Interest Payment Date, BPC can elect (at its sole discretion) to capitalise up to 50 per cent. of the coupon accrued on the Notes at the relevant Interest Payment Date, with any amount not capitalised to be paid in cash. Alternatively, BPC can elect to pay 100 per cent. of the coupon accrued on the Notes at the relevant Interest Payment Date in the form of BPC ordinary shares, to be issued at a price equivalent to 90 per cent of the volume weighted average price of BPC's shares in the 10 trading days prior to the relevant Interest Payment Date. This variation reflects BPC management's expectation that the Company, which is targeting material growth in production and cashflow through the course of 2021 and beyond, will have the ability to cash settle coupon (all or in part) throughout the term of the Notes, which will then allow the Company to use available surplus cashflow from production for this purpose, thereby reducing the overall potential dilutive impact of the Notes;
o the provider has agreed to make an immediate additional £2 million subscription for Notes on an unconditional basis, thus increasing to £5 million the total amount of Notes subscribed for to-date, with settlement for the additional subscription (and coupon accrual commencement) on 28 February 2021;
o the last date for subscription for further amounts of Notes, up to the total undrawn Facility availability of £10 million, is extended to 16 April 2021, and this date will be extended further to 30 June 2021 if a minimum of £8.5 million of Notes in aggregate have been subscribed for by 16 April 2021. The ability to draw-down on these remaining funds remains subject to satisfaction of certain conditions precedent, which the Company and the provider are engaging on collaboratively;
o BPC retains the right, at is sole election, to scale back the remaining availability of the Notes by up to £7.5 million and BPC will now also have the additional ability at any time during the term of the Notes, at its sole discretion, to issue a notice to redeem the Notes early, by way of cash payment of the subscription price, all accrued coupon to the time of redemption, an early redemption premium of 5 per cent, and the issue of options to acquire the equivalent of 30% of the number of shares the redeemed Notes would otherwise have converted into, with such options to have an exercise price of 0.8p per share and an expiry date of 31 December 2023. If the Company does elect to redeem the Notes in this way, the provider will first have a 10-day period in which it may elect to convert the Notes the subject of an early redemption notice; and
o the fee payable to the provider on subscriptions for Notes is 6 per cent.
All other terms and conditions of the Facility remain unchanged, as previously advised.
· In relation to the package of funding arrangements put in place between the Company and 1798 Volantis Fund Ltd ("the Investor") on 13 December 2020 ("the Funding Agreements"), the Company confirms that:
o a full and final reconciliation payment of approximately £370,000 in respect of the initial £7.5 million tranche has been made by BPC to the Investor, representing approximately 5 per cent. of the funds received by the Company under this initial tranche. This payment has been entirely offset by an agreed rebate of advisory and fundraising fees paid by the Company, such that the net cash cost to the Company in respect of the full and final reconciliation for this tranche of funding has been nil;
o the £3.75 million Call Option under the Funding Agreement has now fully lapsed; and
o the £3.75 million Put Option under the Funding Agreement, which was exercised by the Company on 12 January 2021, remains subject to a similar final reconciliation process on 16 April 2021, with the reconciliation amount (if any) able to be satisfied in cash or shares (or any combination thereof) at both parties' discretion, after which any obligations under the Put Option will be fully satisfied and the Funding Agreements will terminate.
· Lastly, the Company has settled a number of corporate creditors through the issuance of, in aggregate, 135 million new BPC shares ("New BPC Shares"). Application has been made for the New BPC Shares to be admitted to trading on the AIM market of the London Stock Exchange and it is expected that admission will take place, and trading in New BPC Shares will commence, at 8:00am on 22 February 2021 ("Admission").
The Company currently has approximately $15 million of available cash (inclusive of the funds to be made available on 28 February 2021 under the Facility).
The immediate anticipated cost of planned activities in Trinidad and Tobago and Suriname in the balance of H1 2021 (in particular, the drilling of Saffron 2 and the WNZ appraisal well) is approximately $4 million. The timing of future operations in both Trinidad and Tobago and Suriname remains dependent on the speed of permitting approvals, and Covid-19 access constraints. The Company will update the market with regards to the detailed work programme and timing of operations in due course.
Close-out of remaining costs associated with the drilling of Perseverance #1 (a number of which will not be finalised and become payable for 30-60 days post-well completion) is also ongoing.
In addition to securing further draw-downs under the conditional convertible note facility, the Company has access to a range of other potential funding sources, including utilising cash flow generated from production in Trinidad and Tobago and Suriname, reserve-based lending facilities in respect of the Company's petroleum reserves in Trinidad and Tobago (which are expected to grow during 2021), and generating prospective payments and back cost reimbursements through a farm-in to the licences in The Bahamas.