Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, 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.
Progress towards Commencement of Exploration Drilling
and Notice of Annual General Meeting
Bahamas Petroleum Company, the oil and gas exploration company with significant prospective resources in licences in The Commonwealth of The Bahamas, is pleased to announce that it has entered into a series of agreements as part of a coordinated approach toward drilling its first exploration well in The Bahamas in 2020.
· On course to see the drilling of an initial exploration well in 1H 2020
· Agreement with Seadrill for the provision of a sixth-generation drilling rig, key commercial parameters agreed including day rate
· Appointed leading international contractor, Halliburton, as integrated well services provider, BakerHughes GE appointed to provide a range of well-related equipment
· Revised estimate of initial exploration well cost down to between US$25 – US$30 million (or <US$50 million for a concurrent two-well campaign if funding permits)
· Conditional agreement for a convertible loan investment of £10.25 million, approximately half the anticipated cost of a single well
· Proposals received for other financing alternatives, farm-out discussions continue
· AGM called for 17 September 2019, to approve, inter alia, the convertible note investment, a proposed expanded share issuance authority, a proposed cancellation of existing options to be replaced with issue of revised new options, and approval of payment of deferred remuneration via the issue of new ordinary shares once the initial well is fully funded
Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, 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. 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.”
Shareholders should note that this announcement comprises a necessarily brief summary of the various matters to which it relates, certain components of which are subject to shareholder approval. A notice convening the Annual General Meeting of Shareholders on 17 September 2019 has been prepared for despatch on 23 August 2019, at which shareholder approval for these matters will be sought. The Notice of Annual General Meeting contains details setting out the rationale for, and the terms and conditions of, various agreements and other matters. Shareholders are encouraged to read this information in full in conjunction with this announcement. A copy is included in an appendix to this announcement and is also available on the Company’s website (www.bpcplc.com). All capitalised terms in this announcement are as defined in the Notice of Annual General Meeting.
BPC has an obligation to drill an initial exploration well in 2020 and, in the view of the BPC Board, drilling as soon as practicable remains the best route to generating shareholder value. Accordingly, the Company is now embarking on a course to the drilling of an initial exploration well during the first half of 2020, in the event that a farm-in is not concluded by then. The Company has sought to put in place a package of critical supply and service contracts, along with finance and certain other arrangements (which will be tabled with shareholders for approval at the Annual General Meeting), representing a coordinated approach to undertaking this activity.
BPC has entered into a framework agreement with Seadrill, one of the world’s largest offshore drill rig companies, for the provision of a sixth-generation drilling rig (the “Framework Agreement”). The Framework Agreement sets out key commercial parameters, fixes a day rate, and specifies a time slot for delivery of the rig in the first half of 2020 (with the ability to extend the drilling campaign to a concurrent two-well program, should funding permit). The provision of the rig remains subject to contract customary in the industry (to include specific terms for an individual drilling rig and encapsulating the key commercial parameters already established in the Framework Agreement), a number of conditions precedent being satisfied, and final Seadrill board approval. The Framework Agreement stipulates that the parties must seek to enter into such definitive contract by 11 October 2019 (or such later date as the parties may agree). Having rigs already identified as per this Framework Agreement allows BPC, with Seadrill’s input and support, to begin necessary time-sensitive preparatory work, and to complete permitting processes ahead of drilling.
Following extensive technical discussions and mutual due diligence, BPC has received proposals (including pricing) for essential well services for the intended drilling campaign and well design and has appointed leading international contractor, Halliburton, as integrated well services provider. BakerHughes GE has also been appointed to provide a range of well-related equipment, including wellheads and tubulars. The Company has issued Notices of Award to each of these service providers, as a precursor to contract as is customary in the industry.
BPC continues to proactively pursue a farm-in as its primary financing strategy, and farm-in discussions are continuing with multiple parties, the license extension to the end of 2020 granted by the Government of The Bahamas earlier this year offering clarity to potential partners. However, the process is taking longer than anticipated and has not yet produced a successful outcome.
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