TIDMBPC
RNS Number : 2382O
Bahamas Petroleum Company PLC
08 February 2021
8 February 2021
Bahamas Petroleum Company plc
("BPC" or the "Company")
Perseverance #1 - Completion of Drilling
BPC, the Caribbean and Atlantic margin focused oil and gas
company, with production, appraisal, development, and exploration
assets across the region, provides the following update on the
drilling of its Perseverance #1 well in The Bahamas.
Highlights
-- The Perseverance #1 well in The Bahamas has encountered
hydrocarbons, successfully validated the structural model and the
petroleum system, and drilled a majority of the potential
reservoirs of interest, thus fulfilling the core technical
objectives of the well
-- Whilst the well encountered oil, indicated from LWD (Logging
while drilling) tools, gas chromatography and
mud logs, commercial volumes of oil have not been proven at this well location
-- T he validation of a competent seal, good reservoir quality,
charge and the presence of oil points to significant hydrocarbon
potential remaining in various independent, untested play systems
and structures within BPC's extensive acreage
-- Drilling has now ceased, the well having reached a depth of
approximately 3,900 meters without incident, and the well will now
be permanently plugged and abandoned
-- Over the coming weeks BPC will undertake a detailed
evaluation of all technical information gathered during drilling.
In this context, BPC will review the appropriate way forward for
future monetisation of its business in The Bahamas, in particular
with a view to renewal of a farm-in process
-- Near term operational activity will now focus 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
Simon Potter, CEO of BPC, said:
"I am proud to say that after many years of diligent effort we
did what we said we would do: BPC drilled the Perseverance #1 well
safely and without incident, testing for the presence of
hydrocarbons in the Southern Seas of The Bahamas. This was the very
specific objective of the well - not a scientific or geologic
experiment, but to seek hydrocarbons in commercial quantities.
In a technical sense, the well successfully validated the
existence of oil, seal and reservoir. Together, these factors
verify the existence of a working Lower Cretaceous petroleum system
and sequences of reservoir quality within the Aptian, pointing to
the overall hydrocarbon potential of other untested prospects
captured by BPC's extensive acreage holding. However, at the
Perseverance #1 location the volumes of oil encountered are not
commercial.
Perseverance #1 is the first exploration well in The Bahamas for
decades, and the data gathered from this well will prove invaluable
in providing a modern analysis as to the regional potential of the
petroleum system, which, in our view, reduces technical risk for
any future/further exploration in this new frontier province. The
Company will proceed to undertake a comprehensive evaluation of the
data derived from the well, as we believe the results provide a
sound technical basis for renewed farm-in discussions.
Personally, I have worked on the Bahamas project for over 15
years and, along with the Board members and a number of the
management team, have spent the majority of the last 10 years
working to bring about the drilling of Perseverance #1. We all take
great professional pride in the fact that BPC has delivered the
well safely, responsibly and without incident, notwithstanding the
challenges presented by Covid-19, low oil prices and a challenging
market environment. Great credit is due to the professionalism of
our operating and commercial teams, to whom I owe a huge
thanks.
Elsewhere in the portfolio, in Trinidad we have producing oil
fields and, in combination with assets in Suriname, we have
upcoming drilling programmes scheduled in 2021, such that the
near-term operational activity focus will now shift toward those
activities.
All of us at BPC are resolute in support of the diversification
strategy embarked on during 2020, and we remain intent on
delivering the potential that is latent across the entire
portfolio."
Drilling Summary
The drilling of the Perseverance #1 exploration well in The
Bahamas commenced on 20 December 2020 and continued through to 7
February 2021. Pre-drill, the well design allowed for a t arget
depth of 4,800 meters across multiple potential reservoir horizons
continuously through the Albian and Aptian aged stratigraphies,
targeting P(50) prospective oil resources of 0.77 billion barrels,
with an upside of 1.44 billion barrels.
As of 6 February 2021, the well had reached a total depth of
just over 3,900 meters. In reaching this depth, the well passed
through multiple targeted reservoir sections in both the Albian and
Upper and Mid Aptian horizons, which cumulatively accounted for
approximately 70% of the total pre-drill prospective volume
estimates.
In terms of the overall drill programme schedule, the Company
was able to complete drilling and provide results within the 45-60
days estimate previously advised. Initially, well progress (rate of
penetration - ROP) was hindered by extensive, very hard anhydrite
seal lithologies, which caused significant vibration to the
sensitive bottom hole assembly (BHA) and measuring/logging tools,
and a mechanical obstruction in the hole at around 2,400 meters
which required side-tracking around. However, these issues were
'engineered out' by the drilling team and in an aggregate sense
these normal drilling issues were somewhat offset by efficiency
gains, and in particular by higher rates of penetration achieved,
in deeper target Aptian reservoir sections.
The information gleaned from the successful drilling of
Perseverance #1 confirms that technical issues encountered during
the drilling of historic offset wells (including extreme losses and
very slow rate of penetration) which required several casing
strings, can be overcome by the application of modern technologies
and engineering design. This is particularly important in
demonstrating that the costs of drilling to deeper target
reservoirs, including the important Jurassic horizons and the Lower
Cretaceous, deeper water reef build-ups seen within the Santaren
Channel , may be commercially viable at currently prevailing oil
prices.
Depth and thickness of reservoir sections encountered were
generally as prognosed pre-drill, and reservoir porosity was
likewise generally in line with pre-drill expectations (in the
range of 10% - 20%).
Hydrocarbons were encountered at various horizons, indicated by
elevated gas chromatography readings detected continually during
drilling, generally increasing with depth and through the deeper
Aptian reservoir column in particular. Oil was identified from high
oil saturation values from logs in a number of reservoir sections
thus verifying the existence of a working Lower Cretaceous
petroleum system and reservoir quality sequences in the Aptian.
Given that the totality of the reservoir sections evaluated to
3,900 metres represented the majority (approximately 70%) of the
total estimated prospective volumes, the lack of hydrocarbons in
demonstrably commercial volumes led to the decision to TD the well
at that point.
Next Steps
Over the coming weeks, BPC will be undertaking a detailed review
of the technical data and results from the drilling of the
Perseverance #1 well. These results will be presented to the
Government of The Bahamas in accordance with the Company's licence
obligations.
A core focus of this review will be an assessment of the
technical and value potential established by the drilling of
Perseverance #1, and the definition of further activities that will
maximise the Company's ability to monetise and thus create value
from its extensive acreage holding in The Bahamas.
The Company considers the results from Perseverance #1 - notably
the confirmation of migrated oil within the Aptian reservoirs -
will significantly reduce technical risk for any future/further
exploration in this new frontier province. In particular, BPC
considers that the results from Perseverance #1 may provide a
strong technical basis for renewed farm-in discussions, with a view
to future drilling at other target locations within BPC's licence
areas.
In parallel the Board, with the assistance of the Company's
advisers and brokers, will review the Company's broader portfolio
of operations and opportunities, to ensure its plans deliver
maximum value for the foreseeable future. This review will focus on
ensuring progress of the planned 2021 work program in both Trinidad
and Suriname, and associated production growth, as well as the
potential to deliver prospect/lead maturation in Uruguay from
reprocessed seismic . The Company's 2021 work programme in Trinidad
and Tobago and Suriname is targeting exit production of c.2,500
bopd.
A shareholder information call will also be scheduled once this
process is complete, and prior to that the Company will provide
further updates as appropriate.
Funding
As at commencement of abandonment of Perseverance #1, the
Company's cash balance is $12.5 million. These funds held will be
applied toward satisfying final payments relating to Perseverance
#1 as the drilling programme is concluded, progressing the
Company's work programs in Trinidad and Tobago and Suriname over
coming months, and general working capital purposes.
Completion of the Perseverance #1 well will trigger potential
funding points under the Company's existing funding facilities,
specifically (i) the ability of the investors under the Company's
conditional fixed-conversion price senior secured convertible loan
notes financing facility to subscribe for up GBP12 million of
additional notes (pre fees and expenses), and (ii) the investor
under the facility announced by the Company on 14 December 2020 (as
amended) to exercise a call option (the "Call") to subscribe for
187.5 million shares at 2p per share, which, if exercised, would
see inflows of a further GBP3.75 million (pre fees and expenses).
The Company will be discussing with both investors in the coming
days and will advise shareholders accordingly of the outcome of
those discussions.
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 listed on the AIM market of the London Stock Exchange. www.bpcplc.com
END
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