BPC ramps up Perseverance #1 funds
said it has successfully increased the size of its Conditional Convertible Note facility by £4.75 million to £15 million in order to offset any increased costs at the group’s Perseverance #1 drilling installation in the Bahamas.
Over recent months, BPC said it has undertaken ‘an extensive body of work’ alongside Stena Drilling and a number of BPC's key contractors, to develop a Covid-19 mitigation plan.
The company outlined that it had designed a plan to minimise the chance of importing the virus onto the Stena IceMAX drillship in order to ensure ‘continuous operations whilst providing a series of plans for outbreak containment and business continuity.’
Stena IceMAX, one of the most technically capable drill ships in the world, recently completed all necessary vessel and equipment inspections, and was scheduled to leave dock in The Canary Islands before the end of the month in preparation to drill Perseverance #1.
New measures include heightened isolation and testing for all crew and personnel, extended mandatory quarantine in secure hotel facilities, and private charter flights.
As a result of Covid-19 measures and associated operational impacts, BPC said the cost estimate for Perseverance #1 is revised upward by around 15% (c. $3m), to between $24m to $28m (from $21m to $25m); contingency element expanded to $7m (from $5m).
To provide appropriate financial headroom, the Conditional Convertible Note facility has now been increased by £4.75m (c. $6.3m) to £15m (c. $20m) in total, with an initial subscription notice issued for £3 million (c. $4, with funds anticipated before year end).
Meanwhile, the balance of the group’s facility is to be provided in a timeframe consistent with the demands of operations (subject to satisfaction of certain conditions precedent).
"The sobering reality is that preventing the Covid-19 virus spreading onto the Perseverance #1 drilling installation in the first place is dramatically more cost effective than having to deal with it once it has arrived offshore,” commented Simon Potter, CEO of BPC.
“We are pleased that the providers of this facility have demonstrated their commitment to the project by agreeing to provide a portion of this facility unconditionally once the well is spud, and the balance expected to be available as required. In aggregate, these arrangements provide enhanced financial capacity, notwithstanding a worsening Covid-19 environment.”
“Safe, responsible, and uninterrupted operation is our key objective in the ever changing global Covid-19 environment, and these additional costs and increased funding arrangements reflect a prudent approach to achieving this objective,” added Potter.
BPC expects the proposed drilling program to be between 45-60 days with well activities complete considerably prior to even the previous mid-April 2021 date, it said last week.
Shares in Bahamas Petroleum Company have increased by over 70% since the beginning of September 2020 to open 3.33% higher this morning at 3.10p following the announcement.
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.
The company is currently on-track for drilling an initial exploration well in The Bahamas, Perseverance #1, in late 2020 / early 2021, with the well targeting recoverable P50 prospective oil resources of 0.77 billion barrels, with an upside of 1.44 billion barrels.
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.”
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