BPC to ramp production in 2021
(AIM:BPC ) has outlined to investors its strategy for the upcoming work program for 2021 in Trinidad and Tobago and Suriname which will see the company execute “an aggressive program of new wells” across its existing portfolio.
The Caribbean and Atlantic margin focused oil and gas company said its strategy, which is anticipated to be delivered before the end of 2021, will result in a revenue run-rate of >$35 million per annum as well as an operating cash flow run-rate of >$15 million per annum.
This company said this is based upon ‘achieving, or exceeding, a production target of 2,500 barrels of oil per day (bopd), current oil prices, and an extraction cost of <$20 per barrel.
A comprehensive 2021 work program has now been developed to deliver this strategy, with planned activity across BPC's portfolio of assets in Trinidad and Tobago, and Suriname with the intention of achieving material, profitable growth in production across these assets.
The base program will include 2 appraisal wells, up to 13 production wells, and up to 2 exploration wells (subject to permitting) while production and development could also be accelerated by adding up to an extra 11 production wells and 1 extra exploration well.
In Trinidad and Tobago, the drilling of Saffron #2 appraisal well, which is anticipated to commence in February 2021, subject to results, would rapidly see BPC seek approvals for a Saffron field development, and with up to 7 production wells to follow through 2021, it said.
Meanwhile, the drilling of appraisal well and an Extended Well Test (EWT) in the Weg Naar Zee Block in Suriname will occur in February 2021, and subject to results, will rapidly moving into a wider field development, with up to 6 production wells to follow through 2021.
In addition, the company will also complete its reprocessing of the entire 3D seismic grid over the highly prospective South West Peninsula (SWP) of Trinidad, high-grading Saffron lookalike prospects for drilling, with up to 2 initial exploration wells by the end of 2021.
Depending on ‘technical outcomes, speed of permitting approvals, and rig and funding availability’ of the accelerated 2021 work program, BPC said it could see up to a further 8 Saffron production wells, a further 3 Weg near Zee wells, and a further 1 well in the SWP.
The work program has an anticipated capital expenditure of up to $20m, and up to around $35m in a scenario where all developments and exploration activities are accelerated.
BPC told investors that it has developed a similar funding strategy with its operations in Trinidad and Tobago and Suriname as it has with Perseverance #1 in The Bahamas. It said that it will seek to implement this strategy in the coming months and thereafter through 2021.
“Our 2021 work program is targeting the addition of entirely new productive capacity, rather than having to expend capital to simply produce existing reserves. Thus, this work is directly in pursuit of our stated production goal, to achieve and potentially exceed a production level of 2,500 bopd by the end of 2021,” said Simon Potter, CEO of BPC.
BPC also highlighted that a Competent Person's Report ("CPR") has indicated certified net 2P reserves across BPC's portfolio of production assets in Trinidad and Tobago of 1.29 one million barrels of oil per day (MMbbl) - exceeding BPC's target for end of 2020 by 30%.
The CPR also indicated certified net 2C contingent resources of 7.46 MMbbl across its portfolio of production assets in Trinidad and Tobago and in Suriname, which the company said provides ‘a clear direction as to where to apply work and capital during 2021.’
BPC said it expects to see a material contribution from its activities to grow its 2P reserves and 2C resources, with a CPR update targeted for Q2 2021 to incorporate the outcomes of these workstreams, and to inform ongoing work in pursuit of our production target.
Commenting on these activities, Potter said, “The program as a whole represents a material increase to that previously undertaken prior to BPC assuming control of these assets.”
Shares in Bahamas Petroleum Company have increased by over 20% since the beginning of November 2020 to open 5.19% lower this morning at 2.7p following the announcement.
Reasons to Follow Bahamas Petroleum
Multi-Asset Company
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.
Positive Newsflow
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.
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.”
Follow News & Updates from here:
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.