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Bahamas Petroleum Company - Drill Rig Nomination and Perseverance #1 Spud Date

BPC, the Caribbean and Atlantic margin focused oil and gas company, with exploration, production, appraisal and development assets across the region , is pleased to announce that it has received formal notification from Stena Drilling, consistent with the existing contract, nominating the Stena IceMAX as the intended drill rig for the upcoming Perseverance #1 drilling campaign. The notification has also indicated the start of the contracted window (which commences 15 December 2020) as the approximate time for the arrival of the drill ship in the field, with an associated anticipated well spud date some 3 - 4 days later, once the rig is on station.

Highlights

· Stena IceMAX nominated as the drilling facility for the drilling and completion of the Perseverance #1 well


· Date for anticipated spud of Perseverance #1 prior to Christmas 2020


· Perseverance #1 well targeting recoverable P50 oil resources 0.77 billion barrels, with an upside of 1.44 billion barrels


· The Stena IceMAX is one of the most advanced drillships in the world, dynamically positioned and dual mast drillship designed specifically for safe and efficient operations in a wide variety of drilling conditions


· The drillship facilities include a managed pressure drilling (MPD) system integrated into the ship, to  maximise the safety integrity of operations and optimise the pace of drilling through anticipated reservoir formations


· Given confirmation of the anticipated arrival time for the IceMAX in the field, project implementation, previously defined and ongoing in March 2020 prior to the Covid-19 related postponement of work, will now be reactivated to align with a spud in approximately 3 months


· Logistics plans reactivated; previously delivered critical path/long-lead items inspected pending  mobilisation from warehouses; Covid-19 impact mitigation plans being implemented and final revisions to cost estimates made

Simon Potter, Chief Executive Officer of BPC, said:


"In March 2020, the Company was within weeks of commencing the drilling of the Perseverance #1 well when compelled to defer operations due to the anticipated impacts of the Covid-19 pandemic. As might be expected when such an advanced well plan is halted so close to final implementation, major elements were already in train or sufficiently well established such that reactivation is a relatively straightforward matter. With the clarity of the anticipated delivery date of the Stena IceMAX into the field this work can now be reactivated against a detailed timetable and progressed. I very much look forward to updating shareholders in the coming months as we get closer to drilling."

Background


BPC has an obligation to drill an initial exploration well prior to the conclusion of the current exploration period of its four commercially conjoined licences in the southern territorial waters of The Commonwealth of The Bahamas. That period was due to expire on 31 December 2020, but is extendable based upon declaration of force majeure occasioned by the Bahamian and global response to the Covid-19 virus pandemic. An interim force majeure extension of 3.5 months has already been agreed with The Government of The Bahamas, thereby extending the term of the current exploration period to at least mid April 2021 (albeit, given the force majeure event is currently ongoing, BPC expects that the ultimate force majeure extension will be extended so as to be commensurate with the period of the continuing state of emergency in The Bahamas).


At the same time, the Company's long-stated policy has been to avoid undertaking drilling activities during the peak of the Bahamian hurricane season, which traditionally ends in November of each year.


Accordingly, during the period of Covid-19 related shut-downs, BPC sought to reschedule its drilling plans, including all critical supply and service contracts, along with finance arrangements, towards a revised operational objective of drilling Perseverance #1 in the period December 2020 to April 2021.

Rig Nomination


Consistent with this operational objective, BPC, on 24 May 2020, entered into an agreement with Stena DrillMax Ice Limited ("Stena"), a wholly-owned subsidiary of Stena Drilling Limited, one of the world's foremost independent drilling contractors, for the provision of a sixth-generation drilling rig (the "Rig Contract"). The Rig Contract was unconditional, and provided the certainty of a firm time slot for the delivery of a drilling rig on location in the window of 15 December 2020 to 1 February 2021.

Stena has today provided a commencement notice to BPC, specifying as follows:

(i)           Drilling rig: Stena IceMAX


(ii)       Expected date on location: toward the beginning of the drilling window specified in the rig contract,   which commences on 15 December 2020.


The specific mobilisation location and exact arrival date of the rig will be confirmed by Stena no later than 30 days prior to the arrival date. Anticipated well spud date will be some 3-4 days after the rig arrives on location in the field. This means that if the rig arrival is on or shortly after the 15 December 2020 (as per Stena's current indication), Perseverance #1 would be expected to spud prior to Christmas 2020.


BPC is required to make a fixed price mobilisation payment to Stena, which will be processed in due course, as set out in the Company's announcement of 26 May 2020.

About the Stena IceMAX

Stena IceMAX is one of the most advanced drillships available anywhere in the world, having first entered into service in 2012. It is the world's first dynamically positioned, dual mast ice-class drillship. The Stena IceMAX is a Harsh Environment DP Class 3 drillship capable of drilling in water depths up to 10, 000ft. The IceMAX has on-board 2 x BOP's, each 18¾" x 15,000psi Cameron "TL" BOP c/w ST Locks, and uses Cameron Load King riser. A Managed Pressure Drilling system is fully integrated into the IceMAX.

Consequent Work

The nomination from Stena of the exact rig and provision of guidance as to the date on which the rig will be on location, and thus greater certainty around when the Perseverance #1 well can spud, is a significant milestone for BPC, and will now enable a number of critical work items to be progressed within clearly defined timetable. This includes:

(i)  Final logistics planning;


(ii) Ongoing maturation of Covid-19 mitigation and operations planning, as the global situation continues to unfold;


(iii)       Submission of IceMax specific operating and safety related documentation to regulators in The Bahamas in accordance with regulations;


(iv)  Completing the process of emplacing appropriate well insurance policies;


(v)  Finalising and executing all relevant Master Service Agreements with contractors; and


(vi)  Final review of well costings and budget.

BPC will provide further details on the operational readiness of Perseverance #1 well as the project plan advances.

Covid-19


BPC has consulted with global medical experts in the formulation of a Covid-19 safe operating plan, and is working closely with Stena Drilling on planning its detailed implementation. Stena Drilling is currently operating successfully in a number of other locations with Covid-19 mitigation strategies in place that include initial health status screening questionnaires, regular temperature checking and repeated PCR antigen detection tests. Stena Drilling has advised that, notwithstanding continuous operations, zero infections have been documented to date.

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