TIDMBPC
RNS Number : 2243P
Bahamas Petroleum Company PLC
16 February 2021
16 February 2021
Bahamas Petroleum Company plc
("BPC" or the "Company")
Corporate and Strategic Update
BPC, the Caribbean and Atlantic margin focused oil and gas
company, with production, appraisal, development and onshore and
offshore exploration assets across the region, provides the
following update on a range of strategic and corporate matters.
Highlights
-- The drilling of Perseverance #1 fulfilled its core technical
objectives and a post-well review is underway. In parallel, BPC is
considering the most appropriate way forward for monetisation of
its assets in The Bahamas, in particular, the renewal of an active
farm-out process
-- Near term operational activity is now focussing on the
Company's 2021 work programme in Trinidad and Tobago and Suriname,
targeting exit production of c.2,500 bopd, and prospect maturation
in Uruguay
o Saffron appraisal well due to begin in Q1 2021 which, subject
to results, would see BPC seek approvals for field development with
up to seven production wells to follow through 2021
o Suriname appraisal well and Extended Well Test in the Weg Naar
Zee Block due to also begin in Q1 2021
-- The Company's funding strategy is to focus on consolidating
and strengthening the balance sheet, in support of directing
maximum effort toward planned value-adding drilling activities in
Trinidad and Tobago and Suriname during 2021
-- Consistent with this funding strategy, the conditional
convertible note facility has been restructured and extended along
with a further GBP2 million drawn, a final reconciliation of the
initial GBP7.5m tranche of the December 2020 Funding Agreement has
occurred requiring no net cash payment by the Company, and the
Company has issued 135 million new ordinary shares in lieu of cash
settlement of a number of current financial obligations
Simon Potter, CEO of BPC said:
"The Stena ICEMAX has just left the drilling location and is off
hire. However, the pace of operations has not ceased - the
post-well review has begun, as the Company charts its way forward
in The Bahamas with a renewal of the farm-out process.
Notwithstanding it is only a week since the completion of the
Perseverance #1 well, BPC has already moved to consolidate and
strengthen its balance sheet, so as to ensure all value-add options
to grow productions and cash generation in Trinidad and Tobago and
Suriname are maintained. Over the coming weeks the Company will
fully close out the Perseverance #1 operation and set the final
timetable for operations elsewhere across the portfolio."
Operating Strategy
The Perseverance #1 well result has confirmed the presence of a
working hydrocarbon system, validating the Company's structural
play concept. In addition to obtaining an invaluable new
sub-surface dataset which, in BPC's view, reduces the exploration
play risk for any future exploration activities in this frontier
province, the well verified the structural model the presence of
competent seals, high porosity reservoir and hydrocarbon charge.
The combination of these play elements points to significant
hydrocarbon potential remaining in a number of independent,
untested play systems and structures seismically identified from 2D
and 3D within BPC's extensive acreage extending over its four (4)
southern exploration licences covering approximately 12,000km(2)
(4,700 square miles - 3 million acres).
Post drilling sub-surface evaluation work has immediately
commenced on a comprehensive post-well review, which includes
cuttings analysis and geologic age dating, petrophysical analysis,
gas chromatography and recalibration of the exploration play
concepts. These learnings will be utilised to revise the
stratigraphic and structural models as well as the extent of
vertical closures and a revised play-type analysis. This extensive
assessment will allow the Company to fully integrate the new
Perseverance well data into an updated interpretation of the
previously mapped prospect and lead inventory accessible within the
licences, and more accurately inform and direct the focus of the
Company's forward strategy within its Bahamian exploration acreage
portfolio.
As previously advised, the Company has continued to assess
options for a farm-out or similar transaction as part of its
overall risk mitigation and funding strategy, and maintained an
active dialogue with a number of interested parties, including a
number of oil and gas majors and supermajors, right up to the point
of spudding the Perseverance #1 well. Since announcing the well
results, the Company has received a number of unsolicited
approaches from industry counterparties. Gneiss Energy has been
formally engaged to assist in managing a formal process to solicit
broader industry interest in a farm-in alongside this early,
positive interest.
The plugging and abandonment of the Perseverance #1 well has
been carried out both safely and responsibly and the rig has moved
off location and hire. The Company's remaining tasks to wrap-up
well activities are to complete final well reports, statutory
documentation and other formal records.
Trinidad and Tobago and Suriname
With Perseverance #1 completed, key near-term operational
planning is on upcoming drilling and operational activities in
Trinidad and Tobago and Suriname, with a view to building reserves
and resources, and rapidly increasing production and cashflow
across the portfolio. The Company is seeking to exit 2021 with net
production of 2,500 bopd.
T&T 2021 programme:
-- Drilling of the Saffron #2 appraisal well, targeted to
commence in Q1 2021, which, subject to results, would rapidly see
BPC seek approvals for a Saffron field development, and with up to
seven production wells to follow through 2021. Work is currently
underway in terms of site preparation, final permitting, and
finalising rig procurement.
-- Completion of reprocessing of the entire 3D seismic grid over
the highly prospective South West Peninsula ("SWP"), the objective
being to high-grade Saffron lookalike prospects for drilling and
with a view to identifying up to two initial exploration well
targets for drilling by the end of 2021.
-- Depending on Covid-19 operational constraints, technical
outcomes, speed of permitting approvals, and rig and funding
availability, an even more accelerated 2021 work program could then
include further Saffron production wells, and a further exploration
well in the SWP.
Suriname 2021 programme:
-- Drilling of an appraisal well and conduct of Extended Well
Test (EWT) in the Weg Naar Zee Block in Suriname in Q1 2021, and
subject to results, rapidly moving into a wider field development,
with up to six production wells to follow through 2021.
-- Depending on Covid-19 operational constraints technical
outcomes, speed of permitting approvals, and rig and funding
availability, an accelerated 2021 work program could include up to
a further three Weg Naar Zee production wells in Suriname.
Capital Strategy
Following the conclusion of the Perseverance #1 drilling
programme, the Company is seeking to consolidate and further
strengthen its balance sheet, so as to direct maximum effort
towards planned value-adding drilling activities in Trinidad and
Tobago and Suriname throughout the course of 2021.
As part of this process, and further to the Company's
announcement on 8 February 2021:
-- BPC has reached agreement with the provider of its
conditional fixed conversion price convertible note facility (the
"Facility") to establish revised terms for the Facility and extend
this Facility to ensure it remains available through the course of
2021 drilling operations in Trinidad and Tobago and Suriname, as
follows:
o the conversion price of all notes issued under the Facility
("Notes") has been amended from 2.5p to 0.8p;
o the maturity date for all Notes will be a single maturity date
of 31 December 2023, regardless of the date of issue of the
relevant Notes;
o the coupon on the Notes remains 12 per cent., to accrue from
the date of receipt of any subscription funds by the Company;
o coupon will be payable periodically throughout the term of the
Notes, on each of 30 June 2021, 31 December 2021, 30 June 2022, 31
December 2022, 30 June 2023, and 31 December 2023 (each an
"Interest Payment Date");
o on any Interest Payment Date, BPC can elect (at its sole
discretion) to capitalise up to 50 per cent. of the coupon accrued
on the Notes at the relevant Interest Payment Date, with any amount
not capitalised to be paid in cash. Alternatively, BPC can elect to
pay 100 per cent. of the coupon accrued on the Notes at the
relevant Interest Payment Date in the form of BPC ordinary shares,
to be issued at a price equivalent to 90 per cent of the volume
weighted average price of BPC's shares in the 10 trading days prior
to the relevant Interest Payment Date. This variation reflects BPC
management's expectation that the Company, which is targeting
material growth in production and cashflow through the course of
2021 and beyond, will have the ability to cash settle coupon (all
or in part) throughout the term of the Notes, which will then allow
the Company to use available surplus cashflow from production for
this purpose, thereby reducing the overall potential dilutive
impact of the Notes;
o the provider has agreed to make an immediate additional GBP2
million subscription for Notes on an unconditional basis, thus
increasing to GBP5 million the total amount of Notes subscribed for
to-date, with settlement for the additional subscription (and
coupon accrual commencement) on 28 February 2021;
o the last date for subscription for further amounts of Notes,
up to the total undrawn Facility availability of GBP10 million, is
extended to 16 April 2021, and this date will be extended further
to 30 June 2021 if a minimum of GBP8.5 million of Notes in
aggregate have been subscribed for by 16 April 2021. The ability to
draw-down on these remaining funds remains subject to satisfaction
of certain conditions precedent, which the Company and the provider
are engaging on collaboratively;
o BPC retains the right, at is sole election, to scale back the
remaining availability of the Notes by up to GBP7.5 million and BPC
will now also have the additional ability at any time during the
term of the Notes, at its sole discretion, to issue a notice to
redeem the Notes early, by way of cash payment of the subscription
price, all accrued coupon to the time of redemption, an early
redemption premium of 5 per cent, and the issue of options to
acquire the equivalent of 30% of the number of shares the redeemed
Notes would otherwise have converted into, with such options to
have an exercise price of 0.8p per share and an expiry date of 31
December 2023 . If the Company does elect to redeem the Notes in
this way, the provider will first have a 10-day period in which it
may elect to convert the Notes the subject of an early redemption
notice; and
o the fee payable to the provider on subscriptions for Notes is
6 per cent.
All other terms and conditions of the Facility remain unchanged,
as previously advised.
-- In relation to the package of funding arrangements put in
place between the Company and 1798 Volantis Fund Ltd ("the
Investor") on 13 December 2020 ("the Funding Agreements"), the
Company confirms that:
o a full and final reconciliation payment of approximately
GBP370,000 in respect of the initial GBP7.5 million tranche has
been made by BPC to the Investor, representing approximately 5 per
cent. of the funds received by the Company under this initial
tranche. This payment has been entirely offset by an agreed rebate
of advisory and fundraising fees paid by the Company, such that the
net cash cost to the Company in respect of the full and final
reconciliation for this tranche of funding has been nil;
o t he GBP3.75 million Call Option under the Funding Agreement
has now fully lapsed; and
o th e GBP3.75 million Put Option under the Funding Agreement,
which was exercised by the Company on 12 January 2021, remains
subject to a similar final reconciliation process on 16 April 2021,
with the reconciliation amount (if any) able to be satisfied in
cash or shares (or any combination thereof) at both parties'
discretion, after which any obligations under the Put Option will
be fully satisfied and the Funding Agreements will terminate.
-- Lastly, the Company has settled a number of corporate
creditors through the issuance of, in aggregate, 135 million new
BPC shares ("New BPC Shares"). Application has been made for the
New BPC Shares to be admitted to trading on the AIM market of the
London Stock Exchange and it is expected that admission will take
place, and trading in New BPC Shares will commence, at 8:00am on 22
February 2021 ("Admission").
The Company currently has approximately $15 million of available
cash (inclusive of the funds to be made available on 28 February
2021 under the Facility).
The immediate anticipated cost of planned activities in Trinidad
and Tobago and Suriname in the balance of H1 2021 (in particular,
the drilling of Saffron 2 and the WNZ appraisal well) is
approximately $4 million. The timing of future operations in both
Trinidad and Tobago and Suriname remains dependent on the speed of
permitting approvals, and Covid-19 access constraints. The Company
will update the market with regards to the detailed work programme
and timing of operations in due course.
Close-out of remaining costs associated with the drilling of
Perseverance #1 (a number of which will not be finalised and become
payable for 30-60 days post-well completion) is also ongoing.
In addition to securing further draw-downs under the conditional
convertible note facility, the Company has access to a range of
other potential funding sources, including utilising cash flow
generated from production in Trinidad and Tobago and Suriname,
reserve-based lending facilities in respect of the Company's
petroleum reserves in Trinidad and Tobago (which are expected to
grow during 2021), and generating prospective payments and back
cost reimbursements through a farm-in to the licences in The
Bahamas.
Total Voting Rights
Following Admission, BPC's issued share capital will consist of
4,838,548,349 ordinary shares, with each ordinary share carrying
the right to one vote. The Company does not hold any ordinary
shares in treasury. This figure of 4,838,548,349 ordinary shares
may therefore be used by shareholders in the Company, as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change in their
interest in, the share capital of the Company under the FCA's
Disclosure Guidance and Transparency Rules.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
For further information, please contact:
Bahamas Petroleum Company plc Tel: +44 (0) 1624
Simon Potter, Chief Executive Officer 647 882
Strand Hanson Limited - Nomad Tel: +44 (0) 20 7409
Rory Murphy / James Spinney / Jack Botros 3494
Shore Capital Stockbrokers Limited - Tel: +44 (0) 207 408
J oint Broker 4090
Jerry Keen / Toby Gibbs
Investec Bank Plc - J oint Broker Tel: +4 4 (0) 207
Chris Sim / Rahul Sharma 597 5970
Gneiss Energy - Financial Adviser Tel: +44 (0) 20 3983
Jon Fitzpatrick / Paul Weidman / Doug 9263
Rycroft
CAMARCO Tel: +44 (0) 020 3757
Billy Clegg / James Crothers / Hugo Liddy 4980
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. In Trinidad and Tobago, BPC has five (5) producing
fields, two (2) appraisal / development projects and a prospective
exploration portfolio in the South West Peninsula. In Suriname, BPC
has on onshore appraisal / development project. BPC's exploration
licence in each of Uruguay and The Bahamas are highly prospective,
and offer high-impact value exposure within the overall portfolio
value.
BPC is listed on the AIM market of the London Stock Exchange. www.bpcplc.com
ENDS
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