Company Update

RNS Number : 6598L

Bahamas Petroleum Company PLC

13 January 2016

 

13 January 2016

Bahamas Petroleum Company plc

("Bahamas Petroleum" or "BPC" or the "Company")

Company Update

Bahamas Petroleum Company, the oil and gas exploration company with significant prospective resources in licences in The Commonwealth of The Bahamas, is pleased to provide the following update.

2015 Review

·    The Bahamian House of Assembly passed a new Petroleum Bill and associated Regulations and a Sovereign Wealth Bill in December 2015. BPC considers that when this legislative package becomes law (and thus applicable to all exploration licence holders in The Bahamas), it will represent a significantly more modern and up-dated regime regulating exploration industry activities in The Bahamas. The Company believes that this upgraded framework, in being more consistent with current industry standards and expectations of communities provides considerable assurance to industry stakeholders, as well as the Bahamian people, of safe and responsible operations.

·    The Government of the Bahamas renewed the Company's four core southern licences into a second exploration term as of June 2015. As part of this renewal, the Company's work programme commitments, and associated timelines for the second exploration period, were established. BPC's contracted licence obligation to the Government of The Bahamas is to commence a first exploration well on the southern licence areas by April 2017.

·    The proposed exploration well was redesigned and the optimum location re-examined, which coupled with significant reductions to rig, contractor and services rates has allowed the Company to target an obligation well cost of $50 million to $60 million, a significant reduction on previous estimates. Technical risks continue to be mitigated and potential value enhanced, based primarily on partner discussion feedback. Key areas of work focus in 2015 were geochemistry - reinforcing source and charge - and seismic stratigraphy - seal, reservoir and additional, deeper play definition.

·    In support of ensuring environmentally responsible operations, in 2015 the Company undertook considerable work to produce Environment Sensitivity Maps denoting coastal and marine usage in various areas of The Bahamas. This work reinforced the Company's existing Environmental Impact Assessment (EIA) study (which was accepted by the Government of The Bahamas in 2012) and already anticipated upgraded, revised regulations. The Company believes this is the first time that such information has been gathered and produced in The Bahamas, and the Company has made all of this work available to all Government Ministries and agencies.

·    Continual focus on cost management from 2012 has seen the Company's total annual overheads reduced by 54%, and continued cost reduction efforts were significant in 2015. The Company completed the last year (2015) with approximately US$5.5 million of cash, consistent with previous guidance. BPC considers that this is sufficient to continue funding overhead requirements through the farm-out and well planning phase.

2016 Outlook

·    The Company remains singularly focussed on commencing drilling activities, in accordance with licence obligations, by April 2017. This will require the Company to undertake certain preliminary work during 2016, including necessary permitting, well design, technical and environmental work.

·    In support of this objective, the Company is seeking to introduce an industry partner to the project to share in technical execution and funding. The Company is engaged in ongoing partnering discussions with a variety of parties, including majors and large independent oil companies. Notwithstanding near-term reductions to crude product prices, the world-class scale and robust economics of BPC's defined geological structures continue to attract the interest of industry participants, and the Company hopes to conclude a successful partnership arrangement during 2016.

Longer Term Outlook

·    In the period 2007 - 2015, BPC has spent in excess of US$100 million advancing the technical de-risking of its licences. The Company anticipates that in the period to end 2017, the total cost of an initial exploration well and associated activities will see expenditure by the Company (and any partners) of potentially a further US$100 million, a meaningful proportion of which will be spent directly in The Bahamas. In the event of a successful discovery, full evaluation and commercialisation of the Company's licence area could see incremental investment by the Company (and any partners) of many billions of dollars in the period 2018 - 2025. All of the costs of this activity considerably exceeds licence requirements and in accordance with licence terms would be borne entirely by BPC shareholders and partners (at no cost to the Government), with the benefits of any exploration success realised not only by shareholders but also by the Government and thus the people of The Bahamas alike.

·    BPC is committed to The Bahamas for the long-term. To-date the Company has made a significant investment in The Bahamas, including establishing a local office, training and international development of Bahamian staff, ensuring Bahamian representation on its Board, and building up a substantially enhanced technical and environmental understanding of the maritime areas of The Bahamas. The Company's long-term intent, as its projects advance and mature, has always been to deepen further the already considerable investment in The Bahamas. In particular BPC intends to continue its pursuit of a dual listing on the Bahamas International Stock Exchange (BISX) to allow Bahamian citizens to more easily participate directly in the value creation that exploration success may bring.  This process, which was first announced by the Company in 2012, has been hitherto constrained pending the recently advanced regulatory legislation process.

Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, said:

"With our southern licences extended into their second exploration term and the lengthy process of passing the new regulatory regime now behind us, BPC starts 2016 in a strong position to advance what we believe is potentially a multi-billion barrel petroleum resource that is world class in terms of its scale, economic potential, location and operating environment.

The Company's primary focus for 2016 is to secure a partner for the initial exploration well, and to undertake activity in support of a drilling campaign during 2017. There has been a considerable level of farm out interest to date, notwithstanding global oil market conditions, and discussions are ongoing with a number of companies, including majors and large independents.

Our shareholders have been pleased to see the decisive actions of The Government of The Bahamas during 2015, first in renewing our licences, and then in passing of the new Petroleum Bill and associated regulations. We believe this recognises the nation-building potential of our nascent industry, in terms of skills development, job creation, direct investment, production royalties, and long-term wealth creation.

Having undertaken substantial efforts to increase our footprint in The Bahamas, a local listing represents a further step in demonstrating our commitment to the Bahamas, with strong Bahamian participation in the entire project remaining a core tenet of our strategy. I look forward to updating shareholders further on these efforts in the near future.

I and everyone at BPC look forward to the year ahead, as we embark on the exciting task of unlocking the potential of the petroleum resource of The Bahamas, for the benefit of all stakeholders, and the broader Bahamian society".

- Ends -

For further information, please contact:

Bahamas Petroleum Company plc Simon Potter, Chief Executive Officer	Tel: [phone]
Strand Hanson Limited - Nomad Rory Murphy / James Spinney	Tel: [phone]
CAMARCO Billy Clegg / Gordon Poole	Tel: [phone]

Notes to editors:

Bahamas Petroleum Company is an oil and gas exploration company with 100% owned offshore licences exclusively focused on the Commonwealth of The Bahamas. The Company has significant prospective resources, which have been de-risked through both extensive 2D and 3D seismic. The current (second) exploration period of the Company's key four southern licences run until 2Q 2018, at which time these licences may be renewed a further two times. The key obligation associated with the four southern licences during the current exploration period is to commence an initial exploration well by April 2017. The Company is intent on delivering safe and environmentally responsible exploration.

www.bpcplc.com

 

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