Bahamas Petroleum shares rally after well cost estimate halved
told investors on Wednesday that it is on course to drill its exploration well in the Bahamas in first half of 2020, with a much lower estimated cost.
The oil and gas exploration company focused on licences in the Bahamas, revised its estimate of its initial exploration well to between $25 - $30 million, which was half previous estimates of $60 - $80 million.
The company said that its agreement with Seadrill as well as its contract with Halliburton and BakerHughes GE allowed it to obtain “greater certainty” in estimating a total drilling cost.
Seadrill is to provide a sixth generation drilling rig, while Halliburton and BakerHughes are to provide well-rated equipment.
Shares in Bahamas Petroleum shot up 35% trading at 2.175p following the announcement
Chief Executive Simon Potter said: "Following our licences being extended to the end of 2020 by the government of the Bahamas earlier this year, rapid progress has been made across our business. Today we are pleased to update shareholders on a series of coordinated steps that the company has taken toward drilling of an initial exploration well during 2020, consistent with our licence obligations.”
He added: "This includes a framework agreement for a rig, appointments for essential well services with leading global oil services companies, as well as considerable progress on financial arrangements to fund the drilling, whether that be via a farm-in on acceptable terms, or by other means, whichever is in the best interests of the company. I look forward to updating all stakeholders as we make further progress."
The company also said it secured a 3 year, 12% per annum, convertible loan covering half the cost of a well of £10.3 million with Bizzell Capital Partners, who were granted 25 million share options at a 2p exercise price.
Bahamas said it is in talks for a farm-out deal but has received proposals "for other financing alternatives".
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