Bahamas Petroleum eyes up potential farm-out in The Bahamas
(BPC ) has provided an update on its high-impact exploration assets in The Bahamas and Uruguay and highlighted its commitment to seek new ventures.
The Caribbean and Atlantic margin focused oil and gas company said that since the completion of the drilling of Perseverance #1, it has had discussions with industry counterparties in relation to a potential farm-out of its licences in The Bahamas.
Specifically, the Company highlighted to investors that it intends to renew the four southern licences in The Bahamas into a third, three year "drill or drop" exploration period.
BPC said it is now working to formalise and launch an entirely new farm-out process via UK-based financial advisory firmGneiss Energy. The farm-out will seek to introduce a funding and operating partner for the next stage of exploration activity in The Bahamas.
It is in the final stages of integrating the well information with its historical dataset and expects to commence the farmout process upon completing this work in the coming days.
BPC intends to exercise its right to renew the four southern licences into a third exploration period at the end of the current second exploration period, which is at the end of June 2021.
The third exploration period will last for three years and will require a further exploration well to be drilled before the period expires, failing which the licences would be forfeited.
While BPC acknowledged that the drilling of its Perseverance #1 well had not resulted in a commercial discovery, it said it is encouraged that the results indicated the presence of hydrocarbons. It said this newly acquired technical data from Perseverance #1 will facilitate valuable updates and refinements to basin modelling, biostratigraphy and geochemistry.
BPC stated that technical results from the drilling campaign support the view that other closures, structures and both shallower stratigraphic and deeper structural plays in the Company's licence areas “continue to provide significant prospectivity with multiple viable drillable prospects of scale which merit additional study and exploration activity.”
‘In particular, the significance of the new geothermal gradient data placing the oil maturation window deeper stratigraphically has critical implications for the deeper Jurassic play that produces oil in the Eastern Gulf of Mexico from an analogous play type (and which is the current focus for several companies actively exploring in the region),’ it noted.
BPC added in its statement that the Perseverance #1 drilling cost is expected to be approx. $45m compared to the pre-drill estimate of approx. $35m. It said this includes additional costs of approx. $10m incurred as a result of heightened Covid-19 procedures (approx. $3m) as well as side-tracking operations related to mechanical debris in the well (approx. $7m).
As at 1 March 2021, BPC had cash on hand of approx. $13m while it anticipates an additional capital requirement in 2021/22 across the business of around $25 - $40m. BPC said it expects ‘to more than cover the difference’ from various potential funding sources.
In separate news, BPC noted the extension of the OFF-1 contract in regard to an exploration area offshore Uruguay. The Company said it now expects the formal contract execution within Q2 2021 and will thereafter commence initial desk-top and technical work.
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 17 May 2021, as the first part of BPC’s 2021 Trinidad drilling program.
Should the 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 Follow 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 Columbus, 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.”
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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