Bahamas Petroleum Company on track to spud Saffron-2 well this month
(BPC ) said mobilisation of the drilling rig at the Saffron-2 wellsite in Trinidad and Tobago has now been completed with all elements of the rig currently being assembled at the site as the spud of the well remains on track for 23 May 2021.
The Caribbean and Atlantic margin focused oil and gas firm told investors last week that rig mobilisation at the Saffron-2 well site was expected to commence over the weekend. The anticipated duration of the Saffron-2 drilling program is 25 - 30 days, the company noted.
BPC said the design of the Saffron-2 well includes a production completion, which allows for immediate oil production and sales on a successful well, with anticipated rates of 200 - 300 bopd, which it is estimated would provide more than $1.8m per annum of cash flow to BPC.
Based on these pre-drill estimates, at such a rate the Saffron-2 well would have a payback of 12-18 months as well as a return on investment (ROI) of in excess of 200%, the firm noted.
The spud of Saffron-2 is expected to occur on or around 23 May 2021, the group told investors and, should this be successful, a further five to nine production wells are currently planned to be drilled in H2 2021 as part of an overall field development of up to 30 wells.
These further five to nine wells are projected to deliver average daily production of up to 1,000 - 1,500 barrels of oil per day (bopd), which it is estimated would provide US$8m - $12m annual cash flows going forward (based on a US$60 / bbl oil price), BPC reported.
Thereafter, field development drilling would continue through 2022 and 2023. The current estimated overall field development would comprise up to 30 wells in total, with a peak production projection of around 4,000 bopd. The current full Saffron field development scenario would generate annual incremental cash flows for BPC in excess of US$25m.
BPC also told investors that Mr. Robert Riley, the former Chairman and CEO of BP in Trinidad and Tobago, has agreed to join the BPC’s Board as a Non-Executive Director, effective subject to customary new director due diligence, consistent with BPC’s forward business strategy of seeking to grow production and cash flow primarily from assets in Trinidad.
"As previously advised, we are focussed on resetting the Company and positioning it for future value growth, consistent with a simple strategy: increasing production and generating cash flow,” said Bill Schrader, Chairman of Bahamas Petroleum Company.
He said, “We expect that Robert, together with Stephen Bizzell who as previously advised will also be joining the Board subject to completion of normal onboarding processes, will be able to make immediate and extremely valuable contributions to the effectiveness of our operations going forward.”
He added, “On that front, the state of operational readiness of the Saffron-2 well continues to advance at pace, with all the rig components arriving on site and currently being assembled."
In a separate statement released this morning, BPC detailed that its Chairman, CEO designate, current CEO, all continuing and retiring members of the Board and key members of the Company's executive management have all confirmed intended participation in the current Open Offer, representing an aggregate participation for around 85 million shares.
The Company recently unveiled to investors an Open Offer to all shareholders on 23 April 2021 on a 1:2.46 basis, of up to £6.9 million in aggregate, at a price of 0.35 pence per share.
"I am pleased to confirm that in addition to my own contribution, all continuing and retiring directors, as well as key members of BPC’s executive management team, have indicated a meaningful contribution to the current fundraising,” said Eytan Uliel, CEO Designate.
He added, “I am grateful for this vote of support in me as I assume the role as CEO, as well as the strong confirmation it represents of the collective team's commitment to the task at hand, and our firmly held belief that the assets will deliver in the way we intend."
View from Vox
While shares in Bahamas Petroleum Company have taken a recent hit after drilling at the Group’s Perseverance #1 Well did not identify commercial volumes, BPC has noted “multiple value drivers” via appraisal, infill and well testing campaigns across its portfolio in 2021.
BPC is now awaiting the drilling of the Saffron #2 well, which the group anticipates will start on or around 23 May 2021, as the first part of BPC’s 2021 Trinidad drilling program.
Should drilling be successful, the Saffron #2 well is expected to deliver immediate oil production rates of 200 - 300 barrels of oil per day (bopd) to the group, while upon its completion, a further five to nine production wells are currently planned to be drilled in 2H21.
Reasons to BPC
BPC is becoming a multi-asset ‘full cycle’ 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.
Successful Acquisitive Growth
As a result of its merger with olumbus, BPC has been granted access to high-impact exploration wells in The Bahamas, five producing fields, two appraisal / development projects Trinidad, and an expansive frontier exploration acreage offshore Uruguay and Suriname.
BPC believes the merger will allow both groups to provide something different from within that business cycle to the combined entity and that together the asset base is ‘more robust, has broader interests and is, as a consequence, more financeable and thus more valuable.’
“With the completion of the merger of BPC and Columbus, we today become a single company, in pursuit of a single-minded vision: the creation of a revenue generating, full-cycle, Atlantic margin exploration and production business,” said Potter in August.
He added, “Going forward, BPC is an exploration and production business, intent on generating reliable, growing production cash flows capable of supporting exploration activities, and which together will create significant value for all stakeholders.”
2021 Operations
Following the conclusion of the Perseverance #1 drilling programme, BPC 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 Suriname during the course of 2021.
BPC’s 2021 work programme in Trinidad and Suriname is focused on near term operational activity, targeting exit production of c.2,500 bopd as well as prospect maturation in Uruguay.
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