TIDMBPC
RNS Number : 8466K
Bahamas Petroleum Company PLC
07 January 2021
7 January 2021
Bahamas Petroleum Company plc
("BPC" or the "Company")
Portfolio Operations and Funding Update
BPC, the Caribbean and Atlantic margin focused oil and gas
company, with production, appraisal, development and exploration
assets across the region, is pleased to provide an update on its
operations across its portfolio, as at the start of 2021.
Highlights
-- Achieved production target of 500 bopd by end of 2020; end 2021 target remains at 2,500 bopd
-- On track to deliver extensive 2021 drilling campaigns;
commencing with Saffron #2 in Trinidad and Tobago, and Weg Naar Zee
extended well test in Suriname
-- Delivered certified 2P reserves and 3C resources targets;
seismic reprocessing and drilling to drive further restatement in
Q2 2021
-- 100% owned Perseverance #1 exploration well, targeting
recoverable P50 prospective oil resources of 0.77 billion barrels
and with an upside of 1.44 billion barrels, commenced on 20
December 2020 in The Bahamas, with drilling ongoing
-- Election to draw on first tranche of funding (GBP3m) under
the Company's convertible note funding facility now made; variation
to the Funding Option Agreement entered into with the Investor in
respect of the potential exercise of both the Put and Call
Simon Potter, CEO of BPC, said:
"BPC's stated strategy has been to complement high-impact
exploration activities with producing, and thus cash generative,
assets. In this context, during 2020 we brought together an
exciting portfolio of assets in multiple locations and laid out a
strategy with clear operational objectives in support of delivering
a significant financial goal by the end of 2021. I am pleased to
report to shareholders that on leaving 2020, the initial key
operational objectives were met and consequently we remain on track
across the portfolio to deliver our goals.
Pleasingly, notwithstanding the obvious constraints of operating
across all of our asset base during a global pandemic, we managed
to increase production in Trinidad and Tobago to our targeted 500
bopd level by the end of 2020. The next challenge will be to
sustain that production and grow it further so as to achieve our
2,500 bopd production target by the end of 2021.
As well as maintaining progress across the base production
assets, delivering our goals will require timely execution of our
2021 drilling program in both Trinidad and Tobago and Suriname, and
we are making great strides to be ready to kick-off those
activities in the coming months.
Equally, in leading such a turnaround of activities in Trinidad
and Tobago, we were not deflected from our primary goal of
delivering on the long-awaited exploration well in The Bahamas.
Perseverance #1 commenced drilling in late December 2020, and we
look forward to being able to advise shareholders of the outcome at
completion of the 45-60 day anticipated drilling and evaluation
period."
Operations Background
In August 2020, BPC completed a merger with Columbus Energy
Resources Plc, pursuant to which BPC added a portfolio of
production, development, appraisal and exploration assets in
Trinidad and Tobago and Suriname to its existing assets in The
Bahamas and Uruguay.
In respect of this broadened portfolio business, during 2020 BPC
developed and outlined a strategy designed to achieve material,
profitable growth in production, as well as rapidly progress
appraisal and exploration activities across the portfolio, in
support of clear financial targets.
Those financial targets are to deliver, by the end of 2021:
(i) a revenue run-rate of >$35 million per annum, and
(ii) an operating cashflow run-rate of >$15 million per annum,
all based upon achieving, or exceeding, a production target of
2,500 bopd by the end of 2021, with an extraction cost of <$20
per barrel (and assuming current oil prices).
During the course of 2020, BPC set out a number of clear
operational objectives, the achievement of which will underpin
delivery of this strategy and our financial goals, and on which the
Company is now pleased to provide an "end of year 2020" report, as
set out further below.
Progress Report Against Goals
1. Goal: Apply focussed technical work and expertise to build to
a baseline of 500 bopd production by year end 2020, as an initial
stepping stone toward ramping up to the production target of 2,500
bopd or more by year end 2021
Delivered : Peak daily production of 500 bopd was achieved
during the month of December 2020, based upon a dedicated work
program that saw a 15% uplift in daily offtake rates across
November and December and production rates consistently >10%
higher than pre-merger production rates earlier in 2020. The
increased production over the last 6-8 weeks of 2020 has been the
result of:
-- Stabilised offtake rates from base production assets
o Specific workovers to remove wellbore damage undertaken on
eight wells
-- Delivery of the planned increased workover frequency rate
(0.57 workovers per day post-merger, up from 0.39 pre-merger)
o A total of 35 workovers were completed in the period bringing
the annual total to 152 completed workovers (a level not achieved
since before 2018)
-- Perforation of new oil producing zones in two existing wells
2. Goal: Achieve certified net 2P reserves of > 1MMbbls by
the end of 2020, as an initial stepping stone toward achieving
certified net 2P reserves of > 10MMbbls by the end of 2021
Delivered : As announced on 1 December 2020, BPC exceeded its
reserves target by 30%, with a certified net 2P reserve of
1.29MMbbls (as well as a certified net 2C resource of 7.46MMbbls
and net 3C resource of 24.70MMbbls). Ongoing activities in Trinidad
and Tobago and Suriname (as detailed further below), once
completed, are expected to result in a material contribution to
growth of 2P reserves and 2C resources, with a CPR update targeted
for Q2 2021. As future capital is deployed it would typically be
expected that the existing 2C resource base would migrate into the
2P reserves category, upon demonstration of commercial
viability.
3. Goal: Rapidly add production in both Trinidad and Tobago and Suriname , through:
(a) Saffron #2 appraisal well in Trinidad and Tobago (targeting
a thicker downdip reservoir section) , 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
Progress update: Detailed technical and operational planning
work is well underway, including:
-- The Saffron #2 well plan, proposal and design has been
completed. This includes estimates of costs for drilling, and
completion of the well for the subsequent extended well test.
-- The rig tendering process, along with major services, has
been completed. BPC is assessing the response and expects to award
the contract(s) in the coming weeks.
-- Site inspections and surveys have been completed. Civil work
contractors have been invited to quote, and construction work is
scheduled to begin in January 2021.
(b) Appraisal well and Extended Well Test (EWT) in the Weg Naar
Zee Block in Suriname, and subject to results, rapidly moving into
a wider field development, with up to six production wells to
follow through 2021
Progress update: Planning and design for the Weg Naar Zee well
was completed prior to the end of 2020, and requisite details have
been submitted to both the state and environmental regulators, as
well as further clarifications submitted following external review.
With the expectation of final approvals being provided in January
2021, planning work is continuing, including the issue and receipt
of rig tender proposals from interested parties. Drilling remains
on target for Q1 2021.
4. Goal : Identify and mature up to three additional exploration
targets in Trinidad and Tobago, so as to add further resources and
thus reserves for future production growth in 2022 and beyond
Progress update: BPC has identified nine other prospects of
roughly equivalent size to Saffron in the South West Peninsula
(SWP). A contract for initial 3D seismic reprocessing of the
dataset that covers the SWP as a whole was awarded in November 2020
and, while the entire 3D seismic reprocessing project is expected
to be completed by April 2021, the initial study area - covering
the Saffron discovery - will be completed within January 2021 ahead
of drilling.
5. Goal : Formal award of the OFF-1 exploration licence in
Uruguay f rom the Ministry of Energy & ANCAP , and commence
initial geotechnical work
Progress update: As previously announced on 9 June 2020, BPC was
awarded the OFF-1 exploration licence in Uruguay. The licence
application has been submitted and agreed between BPC and ANCAP
(the Uruguayan state-owned petroleum company and regulatory body)
and now only awaits ministerial approval and Presidential Decree
prior to signing, expected during Q1 2021. BPC has already
purchased a 2D seismic database and identified additional 2D data
for purchase from ANCAP as part of the Exploration Period 1 work
program requirements. The entire enlarged 2D seismic database will
be reprocessed to enable early-stage geotechnical work to commence
immediately upon formal signing of the OFF-1 licence. This initial
technical work, expected to be completed through the course of
2021, will comprise the review and analysis of the
purchased/reprocessed seismic and other legacy data to remap and
update the portfolio utilising the latest imaging technology to
reconfirm prospects and leads previously identified across the
licence. In addition, integrated geological and geophysical studies
will be undertaken to fully support a more complete play and
petroleum system assessment of the block OFF-1 area.
6. Goal : Drill and evaluate the Perseverance #1 well in The Bahamas
Progress update: Drilling of the Perseverance #1 exploration
well in The Bahamas has been underway since 20 December 2020
(consistent with previous announcements prior to Christmas 2020).
The well is progressing according to plan and budget and remains on
track to take 45 - 60 days to complete . The well has a t arget
depth of 4,800 meters (with capacity to increase depth to 5,600
meters, depending on outcomes while drilling), and is targeting P50
prospective oil resources of 0.77 billion barrels, with an upside
of 1.44 billion barrels.
Funding Update: With drilling of Perseverance #1 having now been
underway for almost 3 weeks, and with clarity as to the ability to
continue drilling without interruption received from the Court in
The Bahamas (refer to BPC's announcement of 6 January 2021), the
Company is now refocussed on bringing to a close the final elements
of its previously advised corporate funding strategy, with 2
principal aims: (i) ensuring the Company has on an ongoing basis
adequate liquid cash resources to meet ongoing costs; and (ii)
ensuring the Company has access to additional funding resources
should they be needed to meet contingencies and other costs arising
as drilling proceeds, but ideally without the Company being
required to draw on those funding sources until and unless
needed.
Consistent with this strategy, the Company has progressed two
elements of its funding package, as follows:
(i) The Company has drawn-down the first GBP3 million of its
conditional fixed-conversion price senior secured convertible loan
notes financing facility ("Notes") , under which up to GBP15
million (approximately US$20 million) is available for draw-down,
subject to satisfaction of conditions precedent. Drawdown of the
first GBP3 million was subject to spud of Perseverance #1 by 28
December 2020, with the drawdown of the balance in accordance with
a timing schedule matched to the Perseverance #1 drilling program,
and subject to satisfaction of certain conditions precedent by the
time of drawdown.
(ii) The Company has secured a variation to the agreements
entered into on 14 December 2020 with an institutional investment
fund managed by Lombard Odier Asset Management (the "Investor"),
which were specifically designed to replace a variable-conversion
price convertible note facility with a Bahamian family office
investor. Under a Funding Agreement, BPC placed a fixed number of
shares to the Investor to secure GBP7.5 million (US$10 million),
and under a Funding Option Agreement, BPC was granted an option,
exercisable within 10 business days after the spud of the
Perseverance #1 well (being 6 January 2021), to place a further
fixed number of shares to the Investor to raise up to an additional
GBP3.75 million (US$5 million) (the "Put"). If BPC exercises the
Put, the Investor has the option to double the amount the subject
of the Put, on the same terms and conditions (the "Call"). BPC and
the Investor have now agreed that: (i) the last date by which BPC
may exercise the Put is extended to 13 January 2021, but if the
Company chooses not to exercise the option the Put will simply
lapse - this extension preserving funding optionality for BPC as
drilling progresses, consistent with the overall funding strategy;
(ii) subject to BPC exercising the Put, the Call must be exercised
before the earlier of (a) the date of BPC's RNS announcement of the
Perseverance #1 well results and (b) 12 February 2021, failing
which, the Call will lapse; and (iii) in respect of any shares
issued pursuant to the exercise of the Put or Call, the date on
which BPC may be required to make a reconciling payment to the
Investor is extended from 60 days after the date of spudding of
Perseverance #1 (which would be 20 February 2021), to 16 April
2021, this extension allowing a considerably longer window for the
determination of the need for a reconciliation payment (if any),
which BPC considers to be to its advantage.
Operational Outlook for 2021
BPC's portfolio-wide work program for 2021, as defined in late
2020 (refer for more details to the Company's announcement of 1
December 2020), remains on track, and can be summarised as
follows:
Trinidad & Tobago
-- Drilling of Saffron #2 appraisal well commencing 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.
-- Completion of reprocessing of the entire 3D seismic grid over
the highly prospective SWP, high-grading Saffron lookalike
prospects for drilling, with up to two initial exploration wells by
the end of 2021.
-- Depending on technical outcomes, speed of permitting
approvals, and rig and funding availability, an accelerated 2021
work program could include u p to a further eight Saffron
production wells, and one further exploration well in the SWP.
Suriname
-- 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 technical outcomes, speed of permitting
approvals, and rig and funding availability, an accelerated 2021
work program could include u p to a further three Weg Naar Zee
production wells in Suriname.
Uruguay
-- Finalisation of licence award in Q1 2021.
-- Finalise technical work to better define, delineate and quantify the lead/prospect inventory.
The Bahamas
-- Completion of the Perseverance #1 well in Q1 2021, and analysis of technical results.
-- Depending on technical outcomes, renewal of licences in The
Bahamas into a third exploration period (end of Q1 2021), followed
by planning for future well activity, and farm-out
considerations.
Regulatory Statements
In accordance with the AIM Note for Mining and Oil & Gas
Companies, BPC discloses that Mr Nathan Rayner, the Company's
Operations Director, is the qualified person who has reviewed the
technical information contained in this announcement. He is a
qualified Petroleum Engineer, a member of the Society of Petroleum
Engineers, and a member of the Institution of Engineers, Australia.
He has over 20 years' experience in the oil and gas industry.
Nathan Rayner consents to the inclusion of the information in the
form and context in which it appears.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
For further information, please contact:
Bahamas Petroleum Company plc Tel: +44 (0) 1624
Simon Potter, Chief Executive Officer 647 882
Strand Hanson Limited - Nomad Tel: +44 (0) 20 7409
Rory Murphy / James Spinney / Jack Botros 3494
Shore Capital Stockbrokers Limited - Tel: +44 (0) 207 408
J oint Broker 4090
Jerry Keen / Toby Gibbs
Investec Bank Plc - J oint Broker Tel: +4 4 (0) 207
Chris Sim / Rahul Sharma 597 5970
CAMARCO Tel: +44 (0) 020 3757
Billy Clegg / James Crothers / Hugo Liddy 4980
Notes to Editors
BPC is a Caribbean and Atlantic margin focused oil and gas
company, with a range of exploration, appraisal, development and
production assets and licences, located offshore in the waters of
The Bahamas and Uruguay, and onshore in Trinidad and Tobago, and
Suriname. BPC is currently drilling an initial exploration well in
The Bahamas, Perseverance #1, with the well targeting recoverable
P(50) prospective oil resources of 0.77 billion barrels, with an
upside of 1.44 billion barrels. In Trinidad and Tobago, BPC has
five producing fields, two appraisal / development projects and a
prospective exploration portfolio in the South West Peninsula.
BPC's exploration licence in Uruguay is highly prospective, with a
management estimate of potential resources of 1 billion barrels of
oil equivalent. In Suriname, BPC has an onshore appraisal /
development project.
BPC is listed on the AIM market of the London Stock Exchange. www.bpcplc.com
END
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