Bahamas Petroleum Co (BPC.L) Convertible Note Funding Update

BPC, the Caribbean and Atlantic margin focused oil and gas company, with exploration, production, appraisal and development assets across the region, provides the following update in relation to its Conditional Convertible Notes funding arrangement.

On 10 October 2019, BPC entered into a Conditional Convertible Note Subscription Agreement (as more particularly described in the Company’s announcement of that date and subsequently in multiple Company communications to shareholders since that date). Under this agreement, and subject to satisfaction of various conditions precedent (as were described in the Company’s announcement of 21 August 2019), BPC expects to raise gross proceeds of £10.25 million through the issue of convertible notes (“Notes”) to a syndicate of Australian-based investors (the “Subscriber”). Any funds secured through the issuance of the Notes will be applied by BPC towards the costs of drilling of Perseverance #1 in The Bahamas.

BPC and the Subscriber have agreed to extend the date for satisfaction of all of the conditions precedent to the issue of the Notes, such that the last date for satisfaction (or waiver by the Subscriber) of those conditions precedent is now 15 December 2020. Further, to the extent that the Subscriber elects to subscribe on an unconditional basis for at least £1.5 million of Notes prior to 15 November 2020, the date for the satisfaction (or waiver by the Subscriber) of the conditions precedent shall be further extended to 15 January 2021. BPC has the right to scale back the Notes by up to 50%, should it elect to do so, at no cost or penalty.

This revised timing is reflective of the current plan and schedule for the drilling of Perseverance #1, and is consistent with BPC’s funding strategy. Specifically, given the recent institutional placement (as announced on 1 October 2020), BPC does not expect the need for funding from the Notes until toward the later part of the 45 – 60 day drilling program. Further, whether funding from the Notes will be required (all or in part or not at all) will largely be dependent on real-time results encountered while drilling, in particular the extent to which contingencies arise.

In terms of potential dilution, assuming the full value of the Notes were to be drawn without any scale back, and assuming further that all interest on the Notes was accrued for the full 3-year term and then all principal and interest were fully converted into ordinary shares, a total of approximately 590 million new ordinary shares would be issued to the Subscriber. This potential issuance was approved by shareholders at the 2019 Annual General Meeting.

BPC notes that even if the conditions precedent to funding from the Notes are not satisfied (or waived by the Subscriber) by the time that funding is required (all or in part), BPC would still have other funding sources available (as detailed in the Company’s announcement of 1 October 2020).

Status of Conditions Precedent

For the information of shareholders, the key conditions precedent to subscription for the Notes, and their current status, are summarised as follows:

· Condition: BPC having raised sufficient funds (to the reasonable satisfaction of the Subscriber) to meet the balance cost of the intended drilling of Perseverance #1 in full, plus the operating costs of BPC for a period of at least 24 months from the date of drawdown.

Status: BPC remains to close out this matter with the Subscriber, but believes this condition to have been satisfied following the recent institutional placement.

· Condition : BPC having entered into binding agreements and contracts necessary and sufficient to enable BPC to conduct the intended drilling at the estimated cost of those operations, including a drilling rig contract and a contract for integrated well services, both with reputable international companies, and placement of an appropriate insurance policy.

Status : Given contracts in place with Stena Drilling, Halliburton, Schlumberger, BakerHughes and Weatherford, as well as the insurance policy placed via AON (as previously announced), BPC believes that this condition has been satisfied.

· Condition: BPC securing all necessary permits and approvals for drilling from the Government of The Bahamas, including all necessary environmental permits and payment of all necessary licence fees.

Status : The Company has obtained Environmental Authorisation for Perseverance #1, which is the applicable permit and approval requirement under relevant Bahamian laws and regulations. In relation to fees, as a result of interruptions to the normal conduct of Government business due to COVID-19, BPC is still working with the Government on a final reconciliation amounts payable for the balance of the current 2nd exploration period. BPC expects this to be completed within the timeline required for satisfaction of this condition.

· Condition: BPC and the Subscriber entering into suitable security documentation for the Notes.

Status : BPC and the Subscriber are working collaboratively on this process. BPC believes that this condition will be able to be satisfied in a timely manner.

· Condition : Employment and executive retention arrangements between nominated key executives and BPC being on terms satisfactory to the Subscriber.

Status: The Subscriber remains to provide formal confirmation on this matter, but BPC believes existing contractual arrangements will satisfy the Subscriber in relation to this condition.

Notes to editors

BPC is a Caribbean and Atlantic margin focused 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. BPC 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. In Trinidad and Tobago, BPC has five producing fields, two appraisal / development projects and a prospective exploration portfolio in the South West Peninsula. BPC’s exploration licence in Uruguay is highly prospective, with a potential resource of 1 billion barrels of oil equivalent. In Suriname, BPC has an onshore appraisal / development project.

BPC is listed on the AIM market of the London Stock Exchange. www.bpcplc.com


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