Bahamas Petroleum immunises itself from the volatile and unpredictable capital markets

Bahamas Petroleum Company plc (BPC), FOLLOW has announced that it has successfully agreed to an expansion of its existing zero-coupon, second ranking, unsecured convertible loan note facility by £8 million to £16 million. 

Highlights include: 

• The Company has entered into an agreement to expand its zero-coupon, second ranking, unsecured convertible bond facility from £8 million to £16 million, of which 90% is available for cash draw down, provided by an institutional family-office investor based in the Bahamas 
• The expansion of the facility will see immediate additional cash inflow of £1.8 million (approximately $2.2 million), with access to the remaining balance of the facility (being £11.4 million in aggregate) available to be drawn at the Company's election, in four committed instalments through April to July 2020 
• The estimated cost of drilling the 100% owned and operated Perseverance #1 well, targeting recoverable prospective resources of 0.7 - 1.4 billion barrels of oil, is the range of $25 million to $30 million (with potential contingencies identified of up to an extra $5 million) - inclusive of the facility expansion, if all funding sources available to the Company (as previously announced) are available, fully drawn, and not been scaled-back or replaced. the Company's overall funding capacity for its strategy is now approximately $45 million (as set out below under "Funding Strategy Context") 

BPC price chart

Since 2019, the Company has been pursuing a coordinated strategy toward securing the funding required for the drilling of an initial exploration well - Perseverance #1 - in The Bahamas, targeting recoverable prospective resources of 0.7 - 1.4 billion barrels of oil. 

The net proceeds raised from the expanded Facility will be additive to the Company's existing funds and the Conditional Convertible Loan Notes, should these become available. These aggregate resources will be directed by the Company to meeting the costs of drilling of the Perseverance #1 well. 

Simon Potter, Chief Executive Officer, commented: "In February, as part of a coordinated funding strategy toward drilling of Perseverance #1, we put in place an £8 million facility for a zero-coupon, second-ranking convertible bond, provided by a substantial Bahamian-based investor. At that time we drew down the first tranche of that facility (£2.43 million), with four further tranches remaining available to us in April - July 2020 if we so choose. This gave us immediate cash to help manage our front-ended cash-flow needs whilst providing us a high degree of financial flexibility in order that we could respond to operational needs as they arise and react to real-time drilling outcomes to ensure a full and comprehensive evaluation of our prospects as we drill. 

“Materially increasing the size of the facility with the same investor on an immediate, unconditional basis is, in and of itself, a tremendous boost for the project. Moreover, for the Company to achieve this in the face of the decline in oil price and the global adverse impact of the Covid-19 virus is an enormous vote of confidence in the Company, our planned drilling activity and the robust nature of our prospects. Notwithstanding current turmoil in the world's financial markets and the disruption associated with the Covid-19 virus, including interruption to our drilling schedule, the project team remains together, focused and intent on delivery. I look forward to updating shareholders further over the coming weeks."