Bahamas Petroleum Company, the oil and gas exploration company with significant prospective resources in licences in The Commonwealth of The Bahamas, is pleased to provide the following update on its planned H1 2020 drilling campaign.
· Drilling of exploration well expected to commence in April 2020 with results expected to follow later in Q2 2020
o Licences and exploration well 100 per cent. owned and operated by BPC
· Well location finalised for northern segment of the B structure
o the well has been named Perseverance #1
o targeting P50 recoverable prospective resources of 0.77 billion barrels of oil, with an upside of 1.44 billion barrels, solely for this northern structural closure portion of the B structure
o In total the B structure extends for 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
· Temporary field office set up and staffed to deliver well
o well design and planning substantively complete
o major contractors integrated into the well execution team
o procured further long-lead items including drill bits and casing
o completed tendering for helicopter, supply boats, and various other required support services
· Deadline for satisfaction or waiver of all conditions precedent in relation to the £10.25m conditional convertible loan note extended to 9 March 2020
· Further announcements on contracting, financing and approvals expected in lead up to mobilisation and drilling
Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, said:
"BPC is in the final stages of readiness for the commencement of drilling our initial exploration well, Perseverance #1, in The Bahamas, with results from the well expected in Q2 2020. The well location will be on the northern segment of the B structure, targeting a P50 recoverable resource of 0.77 billion barrels, but with an upside close to 1.5 billion barrels of recoverable oil. Perseverance #1 has the potential to open a world class, new frontier basin offshore Bahamas, less than 200 miles from the world's largest hydrocarbon market/infrastructure. In our view this makes Perseverance one of the premier prospects that could be drilled globally this year with the potential to not only fundamentally alter the status of BPC in the market, but to also transform the revenue generating capacity of the Bahamian economy."
Perseverance #1 Well
The Company is on-track to drill Perseverance #1, the Company's initial exploration well in The Bahamas, and deliver the well results during Q2 2020.
Perseverance #1, which is 100 per cent. owned and operated by BPC, is to be located in the northern segment of the B megastructure. The target P50 prospective recoverable oil resource at this location is 0.767 billion barrels, with an upside of 1.444 billion barrels (assuming the same recovery factor), and downside volumes approximating to the minimum economic field size at currently prevailing oil prices. This location has been chosen, based upon high resolution 3D seismic data, as the best balance of lowest technical risk, geological conditions and recoverable volumes, with a significantly better developed top seal and reservoir characteristics at this crestal point on the northern segment of the very large B structure. It is anticipated that any discovery at this location has the potential to extend into a larger portion of the overall B structure extending to the south-east. In aggregate, the entire B structure extends for between 70 and 80 kilometres along strike and accommodates over 400 square kilometres of mapped closure with the entire structure having a combined most likely potential resource of in excess of 2.0 billion barrels.
Perseverance #1 will be located in water approximately 518 metres deep, with a target depth of 4,822 metres, but with a capability to be able to reach 5,600 metres, thereby affording the ability to evaluate multiple reservoir horizons throughout the entire stratigraphic column below the Tertiary cover. The ultimate decision on well depth will depend on real-time drilling results and geological information.
The Company has established a temporary field office (in Houston, Texas USA), supplementing the Company's existing permanent offices in Nassau (The Bahamas) and the Isle of Man. The field office has been staffed to manage and support drilling and well operations, and includes personnel with a breadth of global expertise and experience in well design and engineering, offshore drilling (including the use of Managed Pressure Drilling systems), logistics and planning. Major well services contractor Halliburton has integrated staff into the Company's drilling execution team.
Safety and environmental management systems have been finalised and documented along with bridging documents into the rig operator's systems and Safety Case. BPC's incident response systems and procedure will be tested/verified prior to commencement of the well by OSRL, the Company's contracted response specialists, through the organisation of an extensive desktop exercise simulating an incident requiring an emergency response. This exercise will include BPC management and operating staff, the rig operations team, domestic Bahamian authorities and multiple invited governmental agencies from across the region.
Over the past months, the Company has been working to finalise the process of rig selection and contracting with Seadrill, and to advance contracting for other services (including the master services agreement with Halliburton for integrated downhole services) and various other equipment required for the drilling campaign.
Physical inspection of the proposed rig is scheduled to occur shortly, whilst it is in port for class certification. Subsequently, the Company expects to be in a position to finalise and enter into the definitive contract for the rig in the coming weeks.
In parallel, the Company has placed long-lead orders for casing and drill bits and will shortly be finalising contracts for the provision of supply vessels, and helicopter services to the rig following an extensive tendering process. The Company expects to complete its contracting for a further range of other necessary services and equipment supplies over the coming weeks.
The Company has appointed AON as its insurance broker, is in receipt of a number of quotes and is currently working through these with AON ahead of finalising an appropriate package of insurance policies for the intended drilling campaign.
Consistent with its overarching approach to financing for the Perseverance #1 well, the Company continues to be in discussions with a number of potential farm-in partners - further announcements will be made in this regard if and when appropriate.
Institutional marketing of the Bahamian Mutual Fund to qualifying institutional investors in The Bahamas has been well received. Indications of demand are expected towards the end of the subscription period.
In October 2019, the Company entered into a subscription agreement in relation to a conditional convertible loan note investment of £10.25 million. The rationale, key terms, and conditions of that agreement were detailed in various announcements made by the Company at that time (refer specifically to the Company's announcements made on 21 August 2019 and 10 October 2019, and also to pages 20 and 21 of the Company's Open Offer Circular, which is posted on the Company's website and was despatched to all shareholders on 18 October 2019).
Recognising the extent of the well programme and the consequent time taken to finalise a number of key contracts, the Company and the parties to the conditional convertible loan note subscription agreement have agreed to extend the date for satisfaction or waiver of all conditions precedent to 9 March 2020, with all other terms and conditions unchanged. The Company is working to achieve timely satisfaction (or waiver) of the conditions precedent, and will advise shareholders accordingly in relation to these, as appropriate.
Over the past several months, the Company has also progressed discussions with the Government of The Bahamas and submitted required documents consistent with its application for Environmental Authorisation in accordance with the timetable agreed with the Government and its advisers. BPC remains confident of receiving appropriate approval in a timeframe consistent with the Company's intended drilling campaign.