Notice of Extraordinary General Meeting

RNS Number : 3718W

Bahamas Petroleum Company PLC

23 April 2021

 

NEITHER THIS ANNOUNCEMENT NOR ANY PART OF IT CONSTITUTES AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE OR ACQUIRE ANY SECURITIES IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, SOUTH AFRICA OR ANY JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

 23 April 2021

Bahamas Petroleum Company plc

("BPC" or the "Company")

Notice of Extraordinary General Meeting and Circular relating to Proposed Open Offer and Placing, Change of Name, Share Consolidation, General Share Issuance Authority and Amendments to Conditional Convertible Note Facility; changes to Board and Management

BPC, the Caribbean and Atlantic margin focused oil and gas company, with production, appraisal, development and onshore and offshore exploration assets across the region, is pleased to advise of a comprehensive program of activities, following the drilling of Perseverance #1, which will lay the foundations for building future shareholder value elsewhere across its expanded portfolio, predominantly by increasing production, and hence cashflow, from operations in Trinidad and Tobago and Suriname.

Highlights

· Near-term activity schedule focussed on significantly increasing production and cashflow, including in particular:

o  Saffron # 2 appraisal / production well to be drilled in May / June 2021, budgeted cost $3m million, e xpected production in the range of 200 - 300 bopd generating cashflows of US$1.8 - US$2.6 million per annum, and paving the way for a full-field development projected to achieve in an initial phase average daily production of 1,000 - 1,500 bopd / generate annualised cashflows of US$8 - US$12 million; and longer-term an overall field development could ultimately comprise up to 30 wells in total, with a peak projected production of approximately 4,000 bopd ;

o  Appraisal well and extended well test at Weg Naar Zee in Suriname planned to be drilled in July 2021, budgeted cost US$0.7 million capital expenditure, and paving the way for an initial field development projected to produce c.100 bopd / generate annualised cashflows of US$1m per annum; and longer-term with a full WNZ field development scenario projected to generate annual cash flows for the Company in excess of US$2.5 million

o  Ongoing production maintenance and enhancement work in Trinidad and Tobago, from five producing fields with current production averaging in the range of 450 - 500 bopd, currently generating annual cashflows to BPC of approximately US$3 million per annum, and with the potential for cashflow growth from enhanced production levels and/or increased oil prices

o  Low-cost continuation of exploration activities, including maturation of exploration targets in Trinidad, a process for farming out the Company's principal licences in The Bahamas (alongside renewal of those licences), and initial technical work in relation to the Company's licence in Uruguay (and consideration of potential farm-out options in relation to that licence)

· Cost cutting initiative commenced across the Company, with a view to reducing the Company's ongoing cost of operations by at least 20% - 30%

· Recapitalisation of the Company through a proposed £6.9 million (c. US$9.6 million)   o pen offer to Qualifying Shareholders ("Open Offer") of approximately 1.967 billion shares at a price of 0.35 pence per share on a 1 new share for every 2.46 shares held basis, to enable all qualifying existing shareholders the first opportunity to participate in the Company's future, with the Company intending for any shares not taken up in the Open Offer to be placed with institutional investors at the same price ("Placing")

· Circular to launch the Open Offer and convene an Extraordinary General Meeting ("EGM") to be held on 17 May 2021 (to be posted by no later than Saturday, 24 April 2021 and posted on the Company's website on the same date) for the purposes of seeking shareholder approval to:

o  Change the name of the Company to Challenger Energy Group Plc

o  Consolidate the shares of the Company on a 1:10 basis ("Share Consolidation"), and expansion of the Company's post-share consolidation authorised share capital

o  Refresh the Company's general share issuance authority

o  Ratify and approve agreed changes to the Company's Conditional Convertible Note facility, including a partial early conversion of notes

· Eytan Uliel, the Company's Commercial Director, to become Chief Executive Officer (subject to completion of required due diligence and onboarding processes for new Company directors), Simon Potter is to transition to a Non-Executive director role effective 20 May 2021; Non-Executive directors Mr Adrian Collins and Mr Ross McDonald to step down  from the Board; Mr Stephen Bizzell to join the Board as a Non-Executive director(subject to completion of required due diligence and onboarding processes for new Company directors)

Bill Schrader, Chairman of BPC, said:

"T he Company is focussed on restoration, renewal and refreshment. In this context, the Company's forward business strategy for the coming 12-18 months has been firmly set, on significantly increasing oil production and thus cashflow from our assets in Trinidad and Tobago and Suriname, which the Board considers to be the most effective manner in which to restore value and create a foundation for future value growth. In support of this strategy, the Company is calling an Extraordinary General Meeting, to put before shareholders a series of actions with a view to 'resetting' the Company and its capital structure, along with a recapitalisation of the Company and a cost reduction initiative.

At the same time, as a part of a natural renewal process and in adherence with best practices for corporate governance, changes are being implemented to the Company's board and management. I would like to welcome both Eytan Uliel and Stephen Bizzell on their prospective appointments to the Board, as respectively CEO and non-executive director. Shareholders will already be familiar with the contribution of Eytan to the organisation over the last seven years, and Stephen is highly credentialled in the industry, having successfully assisted many similar companies with significant capital raisings and transformational corporate transactions, as well as having actively supported the funding of this Company for the past two years. Simon Potter stays with us as a non-executive director, where his skills and experience remain available to the organisation.  I would like to thank both Ross McDonald and Adrian Collins, who will be leaving the Board, for their valued contributions, over respectively the last nine and ten years. Finally, a huge expression of appreciation for the work undertaken by Ben Proffitt over the last twelve years in support of both the Board as Company Secretary and to the Company as Finance Director - we wish him luck as he embarks on the next stage of his career.

Taken together, the steps being announced today represent what the Board considers to be a coordinated approach to charting a viable and value-restorative future course for the Company. We thank shareholders for their ongoing support, and we look forward to providing updates as to our progress over the coming months."

Eytan Uliel, CEO designate, said:

"Our Company has a diverse full-cycle portfolio of production, development and exploration assets. The work program for 2021 and beyond is busy, and contains many value triggers. The re-set proposed today will enable us to get after that value, through building production and cashflow. I am excited by the prospect of leading Challenger Energy Group, and I look forward to engaging with all our stakeholders over the coming months."

Background and Strategic Context

 

From 2008 until May 2020, BPC had a singular focus on high-impact hydrocarbon exploration assets in The Bahamas, and in particular on four exploration licences located in the southern territorial waters of The Bahamas (collectively referred to as the "Southern Licences"). This culminated in the recent drilling of the Perseverance #1 well in late 2020 / early 2021.

During 2020, seeking to take advantage of the period of inactivity and industry change occasioned by the Covid-19 pandemic, the Company undertook a review of prevailing conditions in the oil and gas exploration sector. Based on this review, and while preparing for the drilling of Perseverance #1, the Company initiated a revised business strategy with a view to creating a broader, more diverse asset base. The objective was to create a portfolio business with a range of assets across multiple jurisdictions, a spread of operations across the industry spectrum from production to exploration, and to deliver investors a full-cycle exploration and production company centred on the Caribbean and the Atlantic margin capable of complementing high-impact exploration with growth in oil production and thus cashflow.

In terms of execution of this revised strategy, the Company completed two transactions in 2020: firstly, the successful application for a high-impact exploration licence offshore Uruguay, and secondly, a merger with Columbus Energy Resources PLC ("Columbus"), a company that owned and operated a range of complementary assets in Trinidad and Suriname. A core rationale for the Columbus transaction was the fact that the assets were already in production and generating income, with the Company having identified the potential to be able to grow that production, and hence income, materially in the near-term. However, in taking the first steps in creating the desired portfolio business through 2020, the Company's management structure, capital structure, and market perception almost inevitably remained dominated by the imminent drilling of Perseverance #1 in The Bahamas.

Drilling of the Perseverance #1 well was subsequently completed in February 2021. However, the well did not result in a commercial discovery, albeit the well did encounter hydrocarbons, and was drilled safely and without environmental or safety incident. Technical issues while drilling the well also meant that the ultimate cost of the well will be considerably more than planned. The Company is currently in the process of both completing the post well technical analysis, and in parallel finalising payment terms and schedule for remaining amounts invoiced, as well as resolving various items in dispute, which process it expects to complete in due course, thereby fully "closing out" the drilling program for Perseverance #1.

With the Perseverance #1 well completed and with better visibility of costs still to be paid (as set out in the Funding Requirements section below), the Company is now in a better position to consider the most advantageous plans for the various other components of its asset portfolio, as well as the demand for capital across the business. In particular, whilst the Company believes that maturation of its offshore assets in The Bahamas and Uruguay continue to be of significant longer-term value potential, the Company's nearer-term focus, and immediate value creation potential, will be driven largely by the ability to achieve a step change in production and cashflow growth from its assets in Trinidad and Suriname, realising low-cost exploration success in Trinidad, continuing to expand a portfolio of complementary assets along with sourcing the capital needed to collectively progress these objectives.

It is in this context that the board of the Company ("Board") considers it to be an appropriate time to enact certain fundamental changes to the way that the Company operates going forward, reflective of the fact that the assets in The Bahamas no longer represent the sole or even dominant focus of the business.

To this end, a transition of the Company's Board and management is occurring, alongside a change of name of the Company, a 'reset' of the Company and its capital base, a recapitalisation, and implementation of a cost reduction exercise. In aggregate, the Board considers this overall Forward Strategy to be the approach that will provide the Company with the best capacity and capability to restore and create future shareholder value.

Key Business Value Drivers

As a consequence of activities undertaken during 2020, BPC is now a Caribbean and Atlantic margin focused oil and gas company, with a range of exploration, appraisal, development and production assets and licences, located onshore in Trinidad and Suriname, and offshore in the waters of The Bahamas and Uruguay.

In 2020, BPC commissioned a Competent Persons Report, which certified net 2P reserves across BPC's portfolio of production assets in Trinidad of 1.29 MMbbls, and net 2C contingent reserves of 7.46 MMbbls across BPC's portfolio of assets in Trinidad and Suriname (each at the Company working interest).

Approximately 80 staff are employed globally in the Company's operations (the majority of whom are located in Trinidad and are employed in active operations in that location). The Company owns and operates two workover rigs that are employed in support of production maintenance and enhancement activities in Trinidad.

Production Transformation and Cashflow Growth

The Company's forward business strategy for the coming 12-18 months is firmly focussed on restoring and creating future value through significantly increasing oil production and thus cashflow in its assets in Trinidad and Tobago and Suriname. To achieve this, the Company is focussed on three principal activity sets:

a)  Drilling of the Saffron #2 appraisal / production well in Trinidad and, in the event of success with that well, rapidly moving to develop the Saffron field, thereby significantly increasing Company production and cashflow,

b)  Drilling of the Weg Naar Zee (WNZ) appraisal well and conducting an Extended Well Test (EWT) on that well in Suriname, and, in the event of success, rapidly moving to drill additional production wells across the WNZ field, thereby adding both further production and cashflow, and

c)  Maintaining, enhancing and developing production (and resultant cashflow) at or from existing fields in Trinidad.

The Saffron Development in Trinidad

During 2020, an initial exploration well ("Saffron #1") was drilled within the Bonasse licence in the South West Peninsula ("SWP") of Trinidad. This well discovered oil in both the Lower Cruse and Middle Cruse reservoirs. High-quality light oil (circa 40-degree API) was also recovered to surface from the Lower Cruse reservoir. The well encountered 2,363 ft of gross sands with six reservoir intervals of interest with a 47 per cent. net / gross ratio. On the basis of these results Columbus confirmed an estimated a field resource (as established pre-drill by seismic) of up to 11 MMbbls. Production was established from the Middle Cruse interval but due to mechanical failures in the execution of the Saffron #1 well, no production completion was established over the discovered oil in the Lower Cruse.

The Company is now planning to drill an appraisal / production well at the Saffron field. This well - Saffron #2 - is scheduled to commence drilling in May 2021 and has been designed to establish production from both the Middle and Lower Cruse reservoir horizons (though initially only from the Lower horizons). As such, a number of workstreams have already been completed to enable this to occur, including a detailed well plan (benefitting significantly from the drilling results and learnings from the drilling of Saffron #1), civil works to establish the well pad, purchase of all long-lead / major equipment items and contracts for required well services. The well conductor was installed in March and mobilisation of rig and associated equipment will commence this month and the well is expected to spud on or around 23 May 2021, subject to the successful completion of the Open Offer and Placing ("Fundraising"). The well design for Saffron #2 is for a total drilled depth of approximately 4,500 ft, with drilling expected to take up to 25-30 days to complete. The budget for the Saffron #2 appraisal well, inclusive of the production completion, is approximately US$3 million.

The Saffron #2 appraisal well will be placed onto immediate production given the ready proximity to oil sales infrastructure. Expected production is in the range of 200 - 300 bopd. Based on a US$60 / bbl oil price, this would generate, from this well alone, cashflows to BPC of US$1.8 - US$2.6 million per annum, with a full well payback of 12-18 months and a ROI of in excess of 200 per cent..

Contingent on Saffron #2 well success, an initial program of field development has been planned which could see a further five to nine production wells drilled during H2 2021 (subject to permitting, rig availability and capital availability), with field development drilling continuing thereafter, through 2022 and 2023. The current estimated overall field development would comprise up to 30 wells in total, with a peak production projection of approximately 4,000 bopd. The initial program of activity is projected to achieve an average daily production of 1,000 - 1,500 bopd by the end of 2021 which, based on a US$60/bbl oil price, which alone would generate annualised cashflows to BPC of US$8 - US$12 million. For context, the projected full Saffron field development scenario would generate annual cash flows for the Company in excess of US$25 million per annum.

The Weg Naar Zee Project in Suriname

In October 2019, a Production Sharing Contract ("PSC") was entered into with Staatsolie Maatschappij Suriname N.V, the Suriname state-owned petroleum company ("Staatsolie"), to secure an onshore appraisal / development project contained in the Weg Naar Zee Block ("WNZ"). BPC holds a 100 per cent. working interest in WNZ, however, Staatsolie has the right to participate in the development phase with up to a 50 per cent. working interest, subject to Staatsolie reimbursing BPC for pro-rata share of costs incurred up to that point and funding its own share of costs thereafter.

WNZ is a large block (900 km²) in a proven hydrocarbon province with 70 historic wells and 2D seismic coverage. Up to 24 MMbbls STOIIP (15 degrees API) has been identified in eight pools (of which around half is in a single pool) with the recently completed CPR assessing 2C resources of 1.1 MMbbls and 3C resources of 3.5 MMbbls.

An extended well test ("EWT") has been designed to appraise the producibility of the discovered resource in the WNZ block, and to assess whether the asset is suitable for application of enhanced oil recovery techniques used by BPC in Trinidad. To date, approval from Staatsolie to proceed with the planned drilling program has been received as has approval from NIMOS (the Surinamese environmental regulator). The proposed well site has been scouted, various in-country contractors and well equipment has been sourced, and rig tenders have been received from a number of suppliers.

The Company is thus ready to proceed with drilling of a first WNZ well, albeit operational challenges arising from the Covid-19 situation in Suriname have resulted in the decision to move the projected well spud date to July 2021.

This first well will target the largest of the undrained pools (twinning with an existing successful production well), will be drilled to a total depth of less than 1,000 ft., is expected to take around 10 days to complete, and has an estimated cost of US$0.6 million. The EWT to follow is expected to run through to the end of 2021, and cost approximately an additional $150,000.

On successful production, the forward EWT program for the balance of 2021 at WNZ could include the potential for drilling a further four production wells (subject to permitting, rig availability and capital availability), with field development drilling continuing thereafter, through 2022 to 2024. The current estimated overall field development could ultimately comprise up to approximately 50 wells in total over time, at a cost of approximately $300,000 per well (albeit with most wells paid for from cashflow generated by the project itself), with peak production projected to be approximately 900 to 1,000 bopd. A successful WNZ initial field development of four additional production wells is projected to produce around 100 bopd which, based on a US$60/bbl oil price, would result in cash flows to BPC of US$1m per annum. For context, the projected full WNZ field development scenario would generate anticipated annual cash flows for the Company in excess of US$2.5 million (based on the same oil price assumption).

Growth of Existing Production in Trinidad and Tobago

 

In Trinidad and Tobago, the Company has five producing fields - comprising of some 250 wells (of which over 80 are producing) - with current production averaging in the range of 450 - 500 bopd. This represents a stabilisation of natural production decline and, at currently prevailing oil prices, results in positive operating cashflows in Trinidad (at a US$60/bbl oil price, 500 bopd of stable production from these fields results in annual cashflows to BPC of approximately US$3 million per annum, which approximately equates to the Company's operating costs and overhead in Trinidad).

The Company uses its two owned and operated workover rigs to complete incremental workover projects across its fields of operation and in the last two months has added an additional 50 bopd to the baseline production, which serves to offset natural production decline from these aged reservoirs. Projects undertaken include both wellbore damage clean outs and addition of new oil zones. An additional 10 workover projects are planned for Q2 2021 on the Goudron and Inniss-Trinity fields that will primarily access zones that have previously not been adequately produced through recompletions and additional perforations. Further similar projects will be shortlisted and scheduled for execution throughout the remainder of 2021.

The Company has recently undertaken full-field asset reference plans for each of the operating fields, that has revealed potential unswept or compartmentalised oil that may be recovered through either further workovers or infield drilling, and accordingly plans are being put in place to capture that oil in order to enhance and grow production.

High-Impact Exploration

Whilst the Company's forward business strategy for the coming 12-18 months is firmly focussed on restoring and creating future value through significantly increasing oil production and thus cashflow from its assets in Trinidad and Tobago and Suriname, pursuing high-impact exploration activities in an effective low-cost manner, as a means of complementing production growth and cashflow generation with longer term value growth, remains a component of the Company's overall strategy and business.

In this regard, the Company is focussed on three principal exploration activity sets:

(a)  Maturing the exploration prospect represented by the Company's extensive licence position in the South West Peninsula of Trinidad,

(b)  Seeking a farm-out of the Company's licences in The Bahamas, and

(c)  Progressing the initial low-cost technical work required to mature the exploration prospectivity represented within the recently acquired OFF-1 licence in Uruguay.

The South West Peninsula of Trinidad

 

The South West Peninsula (SWP) of Trinidad, in which the Company has a large licence position, represents the Company's main exploration acreage in Trinidad with numerous prospects consisting of both stacked shallow and deeper reservoirs. The area is assessed internally by BPC as having a resource level amounting to approximately 230 MMbbls, containing up to nine Saffron-sized prospects.

BPC is undertaking reprocessing of the entire 3D seismic grid over the area in 2021. Re-processing commenced in April 2021 and is anticipated to be complete within six months. Results from this reprocessing work, along with existing data, will support the selection of future low-cost exploration drill targets.

 

The Bahamas

The newly acquired technical data from Perseverance #1 will facilitate valuable updates and refinements to basin modelling, biostratigraphy and geochemistry. In particular, the significance of the new geothermal gradient data placing the oil maturation window deeper stratigraphically has critical implications for the deeper Jurassic play that produces oil in the Eastern Gulf of Mexico from an analogous play type (and which is the current focus for several companies actively exploring in the region or in deep water Mexico). Additionally, data derived from Perseverance #1 provides a modern-day well tie to recalibrate existing 3D mapping of the Aptian intervals untested in closures and structures elsewhere in the licence areas.

As a result of this information the primary focus of the ongoing post-well evaluation work is on the deeper Jurassic pre-salt clastic, structural play and the extent to which potential multiple-target drilling locations can be optimised to access and evaluate untested shallower closures whilst testing this primary, deeper play.

Given these technical results, since announcing the outcome of the well the Company has had a number of discussions with industry counterparties in relation to a potential farm-out of the licences, and the Company has now formally launched an entirely new farm-out process via Gneiss Energy. The farm-out is seeking to introduce a funding and operating partner for the next stage of exploration activity in The Bahamas.

Concurrent with the farm-out process, the Company will seek to renew its 100 per cent interest in the Southern Licences by extending the licences in to the third exploration period. The third exploration period for the Southern Licences would last for three years and will require a further exploration well to be drilled before the period expires, failing which the licences would be forfeited (i.e., "drill or drop"). An extension of the licences will attract an annual licence fee (the amount to be determined during the renewal process) and requires a relinquishment of 50 per cent. of the licence area. Notification of renewal of the licences has been submitted to the appropriate Ministry, and the area to be relinquished has been identified as being the area equivalent to that over the shallower water depths covered by the Southern Licences (less than circa 200 feet).

As at the date of this document, applicants representing various environmental groups have been granted leave to apply (amongst other matters) for a judicial review of the Government of The Bahamas' decision to issue an Environmental Authorisation to the Company for the drilling of the already completed Perseverance #1 well. The Company has been joined as a party to that action. In order for the applicants to continue to pursue this action, the Supreme Court of The Bahamas had ordered that by 31 March 2021 the applicants were required to post the sum of $200,000 as security for costs. Thus far, the applicants have failed to do so, albeit the applicants have asserted that they have secured access to the funds to enable them to do so, and a process is ongoing to establish an appropriate joint account between the Company's and the applicants' legal advisers for deposit of those security funds, consistent with common practice in The Bahamas. On establishment of the joint account, if security for costs is posted by the applicants, the judicial review process will continue, but no date has been set for the substantive hearing of that review, which it is presently estimated would not occur before June / July 2021. Alternatively, if the joint account is established and the applicants nonetheless fail to post the required security, the judicial review action will be stayed.

Uruguay

In June 2020, following a competitive bid process, the Company was notified that it was the successful applicant for the OFF-1 offshore block in Uruguay. Subsequently, the Company has been advised by ANCAP, the Uruguayan state-owned oil and gas company, that the signing of the licence for the OFF-1 offshore block presently awaits presidential approval, which has been delayed due to the Covid-19 pandemic situation. The Company expects the formal licence execution within Q2 2021 and will thereafter commence initial desk-top and enhanced technical work. In the interim, technical work undertaken independent of the Company by ANCAP has sought to highlight exploration prospectivity across the circa 15,000 km² licence area. This involves detailed mapping of several play types and prospects, notably the syn-rift play potential within the Company's OFF-1 block. The prospect and lead screening includes the specific identification of the syn-rift Lenteja prospect with a P₅₀ estimated ultimate recovery volume (EUR) of 1.359 billion barrels and an upside case of several billion barrels recoverable (Source: ANCAP 2021), located in just 80 metres of water. This volume estimate aligns well with the earlier guidance provided by BPC of the potential within its OFF-1 licence area in excess of a billion barrels.

The Company expects near-term activities in Uruguay to be low-cost (previously indicated by the Company to be in the range of US$200,000 per annum), and whilst there is no drilling obligation during the initial four-year exploration term, the Company will be working to reconfirm attractive volumetrics and mature a range of drillable prospects encompassing syn-rift and Guyana analogue plays from reprocessed and improved 2D seismic imaging that has revealed new exploration upside previously unable to be mapped due to poor data quality.

New Business Opportunities

The Company continues to screen and evaluate potential new business opportunities in line with its objectives to expand and differentiate its existing asset portfolio, with a view to creating a broader, diverse asset base and to grow production and cashflow. The Company will continue to seek opportunities that further leverage a portfolio business with a range of assets across multiple jurisdictions, a spread of operations across the industry spectrum from production to exploration, and to deliver investors a full-cycle exploration and production company centred on the Caribbean and the Atlantic margin.

Forward Strategy and Corporate Changes

As indicated above, following the completion of the Perseverance #1 well in The Bahamas, the Company considers that its key value drivers, and hence forward business strategy for the coming 12-18 months, will relate primarily to significantly increasing oil production and thus cashflow in its assets in Trinidad and Tobago and Suriname.

In support of this forward business strategy the Company is proposing various changes and actions which can be summarised as follows:

· A transition of the Board and the senior management of the Company coupled with a comprehensive cost savings exercise across the Group (with a view to reducing overhead by 20 per cent. - 30 per cent. in the coming months), along with introduction of revised, aligned incentivisation arrangements for ongoing / new management and Board;

· A 'reset' of the Company and its capital base, to be implemented by way of:

o  a change of name of the Company to Challenger Energy Group PLC (the change of name of the Company being the subject of a Resolution at the EGM);

o  A share consolidation whereby it is proposed that the existing Ordinary Shares of 0.002 pence each in the capital of the Company ("Existing Ordinary Shares") will be subject to a 1 for 10 consolidation resulting in new Ordinary Shares of 0.02 pence each in the capital of the Company (the "New Ordinary Shares") (the "Share Consolidation") (the Share Consolidation being the subject of a resolution at the EGM);

o  An increase to the post-Share Consolidation authorised share capital of the Company;

o  The approval of a new general share issuance authority; and

o  An agreed early conversion of part of the Conditional Convertible Notes currently on issue, along with a reapproval of the ability to issue shares in satisfaction of future conversions under the Conditional Convertible Note Facility, as required

(each the subject of resolutions to be proposed at the EGM ("Resolutions")); and

· A recapitalisation of the Company, seeking to raise up to, in aggregate, approximately £6.9 million of new equity by way of an Open Offer to holders of Existing Ordinary Shares (other than treasury shares) on the Company's register of members at the Record Date (other than certain Overseas Shareholders) ("Qualifying Shareholders") (and a Placing of any Open Offer Shares not taken up).

When taken together, this set of actions represent what the Board considers to be a coordinated approach to charting a viable and value-restoring future course for the Company.

A circular in relation to the Open Offer and a Notice of Extraordinary General Meeting, including explanatory notes in relation to the resolutions to be put to holders of Existing Ordinary Shares ("Shareholders") at the EGM, will be posted to shareholders on 24 April 2021] and will be posted to the Company's website at the same time. The EGM  will be held at IOMA House Hope Street Douglas, Isle of Man IM11AP at 11:00 a.m. on 17 May 2021.

Detailed below is a brief explanation for each of the elements above.

Changes to the Board and Management

 

With the drilling of Perseverance #1 in The Bahamas completed, and with the near-term focus on the Company shifting toward significant growth in profitable production and thus cashflow from operations in Trinidad and Suriname (and in parallel pursuing a renewal of licences and farm-out for those licences in The Bahamas) the Board considers that it is an appropriate time for changes to be made to the Company's Board and executive management team, as follows:

(a)  Mr Simon Potter, the Company's Chief Executive Officer since 2011, will step down from this role effective 20 May 2021 (or immediately following completion of the Open Offer and the Placing if later). Thereafter, Mr Potter will remain on the Board of the Company in the capacity of non-executive director, with a remit to provide ongoing support to the Company's executive team given Mr Potter's long history with the Company, and his deep industry knowledge and experience.

(b)  Mr Eytan Uliel, the Company's Commercial Director since 2014, will replace Mr Potter as Chief Executive Officer of the Company effective 20 May 2021(or immediately following completion of the Open Offer and the Placing if later, and will join the Board on, and subject to, completion of required due diligence and onboarding processes for new Company directors).

(c)  Mr Adrian Collins, initially Chairman and then a non-executive director of the Company since 2011, has advised of his resignation from the Board, to take effect from 20 May 2021 (or immediately following completion of the Open Offer and the Placing if later).

(d)  Mr Ross MacDonald, a non-executive director of the Company since 2012, has advised of his resignation from the Board, to take effect from such time as Mr Stephen Bizzell joins the Board of the Company (as detailed in point (e) below).

(e)  Consistent with the broadened operating remit of the Company and the geographies in which it does business, the Chairman intends to seek to supplement the revised Board's capabilities over the coming months, as necessary with the addition of suitably qualified directors. As part of this process, Mr Stephen Bizzell, principal of Australian investment and financial advisory firm Bizzell Capital Partners, the provider and arranger of the Company's Conditional Convertible Notes facility, has indicated his intention to join the Board of the Company (which will occur on, and subject to, completion of required due diligence and onboarding processes for new Company directors).

(f)  Therefore, assuming the above changes are completed, the Board of the Company will comprise William Schrader (Non-Executive Chairman), James Smith (Deputy Non-Executive Chairman), Simon Potter (Non-Executive Director), Stephen Bizzell (Non-Executive Director) and Eytan Uliel (CEO), with the potential for the additional of further independent Directors in the future, as may be deemed appropriate.

(g)  The various committees of the Board will be appropriately restructured to reflect the revised composition of the Board, and a further announcement will be made in this regard in due course.

(h)  Mr Benjamin Proffitt, the Company's Finance Director and Company Secretary since 2010, will step down from this role once a suitable replacement has been recruited, allowing ample time for an orderly transition of key financial and secretarial functions within the Company.

(i)  As appropriate with the ongoing level of HSE/ESG delivery, operations management, commercial impact and requirement for Government and stakeholder relations in each of the jurisdictions of operation - Trinidad and Tobago, Suriname, The Bahamas and Uruguay - the CEO will make recommendations to the Board as to the appropriate management structure, skills maintenance and staffing levels appropriate, with a view to implementing any further management and organisational changes in the coming 3-4 months.

The revised Board membership and all relevant personnel will be working in the coming months to deliver a comprehensive cost savings exercise across the Company, with a view to reducing overhead by 20 per cent. - 30 per cent., whilst at the same time ensuring a smooth and seamless transition of both the Board and executive team. As part of the cost savings exercise, it is the intention that part of the existing compensation of the Board and members of the senior management group will, for at least the next 6 months, be satisfied in shares.

Change of Name

From 2008 to mid-2020, the Company's only business was the various licences held by the Company in The Bahamas. In this context, the Company's name, "Bahamas Petroleum Company plc", was entirely appropriate.

Since mid-2020, however, the Company's operations and business strategy have expanded considerably, such that it now includes assets and operations in Trinidad and Tobago, Suriname and Uruguay, in addition to those in The Bahamas. As detailed in this document, the near-term focus of the Company has shifted toward a rapid build-up of profitable production from operations in Trinidad and Tobago and Suriname, initial technical work in Uruguay, and in parallel pursuing a farm-out (and renewal) for those licences in The Bahamas. The Company in the future may also become involved in assets and operations in other jurisdictions.

As such, the Board considers that the name of the Company, referring solely to The Bahamas, is no longer an accurate representation of the Company's overall business or strategic direction.

Accordingly, the Board is proposing to change the name of the Company to Challenger Energy Group PLC.

A 'reset' of the Company's capital base

The Company's current capital base is, in large part, a reflection of the last several years' focus on fundraising necessary to secure the funding needed for Perseverance #1. At present, the Company has approximately 4.85 billion shares on issue. At the same time, the Company has used up almost all of its current share issuance capacity, such that the Company has no ability to respond flexibly to opportunities to secure new assets or secure new capital. Finally, for the reasons detailed in in the Financial Information section below, in order to execute on its planned 2021 work programs, the Company requires the infusion of fresh capital.

To address these issues, the Company is proposing to 'reset' its capital base by way of a 1:10 share consolidation and then increase the post-share consolidation authorised share capital of the Company, the approval of a new general share issuance authority, and a reapproval of the ability to issue shares in satisfaction of the agreed partial early conversion of Conditional Convertible Notes currently on issue and in satisfaction of future potential conversions of Conditional Convertible Notes that remain on issue or may in the future be issued under the Company's Conditional Convertible Note facility (all these matters are the subject of resolutions at the EGM).

Share Consolidation

The Board is of the view that it would benefit the Company and shareholders to reduce the number of ordinary shares on issue with a resulting adjustment in the market price of such shares. This is expected to assist in reducing the volatility in the Company's share price and enable a more consistent valuation of the Company, thus making the Company's shares more attractive to long-term institutional shareholders whilst not impacting overall liquidity.

It is thus proposed that all existing ordinary shares will be subject to a 1 for 10 consolidation.

New Ordinary Shares issued pursuant to the Share Consolidation will have exactly the same rights as those currently accruing to existing ordinary shares under the Company's Articles, including those relating to voting and entitlement to dividends.

General share issuance authority

At the EGM, Shareholders will be asked to increase the Company's authorised share capital post share consolidation, and thereafter to approve a temporary authority for the Company to issue up to 750,000,000 new ordinary shares (on a post-share consolidation basis). If this authority was ultimately to be used in its entirety (and assuming the consolidation of the Company's share base is approved, the Open Offer is fully taken up or any Ordinary Shares not taken up are successfully placed, and the various other actions described in this document are completed) this would represent a total potential dilution of approximately 50 per cent. on a fully diluted basis, without the need for seeking further shareholder approval, and with such capacity to be in place until the end of 2022.

The rationale for the proposed temporary general issuance authority is directly related to the Company now embarking on a course to restore value through a strategy aimed at significantly increasing production and thus cashflow, and which will necessarily involve the need to secure fresh capital over time, and which may also include the issuance of additional ordinary shares to secure access to new assets or portfolios of assets complementary to this strategy. In the absence of a near term value uplift from The Bahamas, it is this activity - and the ability to execute on this activity quickly and flexibly - which the Board consider offers the best opportunity for Shareholder value restoration and creation over the coming 12-18 months.

Further, as discussed below, it is intended that the implementation of revised incentivisation arrangements - considered essential to the ability of the Company to continue to retain key existing employees and attract, retain and incentivise future employees - will be conducted under this general share issuance authority .

Approval of early conversion of Conditional Convertible Notes and ratification of the amended terms of the Conditional Convertible Note facility

In September 2019, the shareholders of BPC approved the Company entering into a £10.25 million convertible loan facility (the "Conditional Convertible Note") with Bizzell Capital Partners Pty Ltd (an Australian based investment and investment management firm), and the terms contained within that facility. The facility has been amended and extended on several occasions, including on 26 November 2020, when the Conditional Convertible Note facility was expanded to a total of £15 million of available funding. Subsequent to this date, £3 million of Convertible Notes were drawn down.

On 15 February 2021, and as announced as that time, certain key terms of the Conditional Convertible Note facility were further amended by mutual agreement, including, amongst other matters, to reduce the conversion price of all Convertible Notes issued and to be issued under the facility from 2.5 pence to 0.8 pence per Existing ordinary share (this price will change to 8 pence per New Ordinary Share on completion of the Share Consolidation), and to amend the manner and timeline in which interest payments will be made. These variations were entered into with the facility provider to reflect the changed business environment of the Company, most notably the re-rating of the Company share price following the results of the Perseverance #1 well.

At that time, a further £2 million of Convertible Notes were committed on an unconditional basis, and were due for draw down and funding at the end of February 2021. As yet, however, the Company has not drawn down on these funds, pending ongoing negotiations with the provider of the Conditional Convertible Note facility in the context of the Company's overall financial requirements and in anticipation of the Fundraising detailed in this document.

The Company and the provider of the Conditional Convertible Note have now mutually agreed further amendments to the terms of the Conditional Convertible Note facility, as follows:

(a)  Of the £3 million of Convertible Notes that have already been drawn down, £2.5 million (and all accrued interest in respect of those Convertible Notes, amounting to approximately £113,000) will be converted by the noteholders into approximately 74.7 million New Ordinary Shares (that is, at a conversion price equal to the Open Offer issue price), with such conversion to occur concurrent with (and subject to) closing of the Open Offer,

(b)  The date for funding and issue of the £2 million of Convertible Notes previously committed on an unconditional basis and initially intended to be drawn / funded at the end of February 2021 has now been rescheduled to be no later than 14 June 2021 (that is, concurrent with the anticipated completion of the drilling of the Saffron #2 well, but not dependent on the completion or outcome of the Saffron #2 well), as well as now expressed to be conditional on the Open Offer process having successfully secured at least £5 million,

(c)  Convertible Notes remaining on issue after the closing of the Open Offer, and those to be issued by 14 June 2021 as described above, will continue to be governed by the terms and conditions of the Conditional Convertible Note facility as amended (and with the conversion price of those Convertible Notes amended in accordance with the share consolidation to 8 pence per share),

(d)  The balance of the Conditional Convertible Note, under which up to a further £10 million of funding is potentially available to the Company on a conditional basis, will remain unchanged, and will be available for draw down (subject to satisfaction of conditions) until the end of July 2021 (that is, broadly speaking in line with the potential need for funding for the start of Saffron field development expenditure, in the event of success with Saffron #2), and

(e)  As indicated previously, Mr Stephen Bizzell will join the Board of the Company being a right afforded under the terms of the Conditional Convertible Note facility (with such to occur on, and subject to, completion of required due diligence and onboarding processes for new Company directors).

The Directors believe the Conditional Convertible Note facility, as amended, continues to represent a useful and flexible component of the overall package of funding sources available to meet the ongoing capital needs of the Company in the current commercial environment.

New Incentivisation Arrangements

As the Company embarks on the above-noted process of Board and executive management transition, the Board considers it appropriate that incentive arrangements for the ongoing / future Board and management / employee team of the Company - especially those charged with executing the Company's future business and strategy - be appropriately refreshed.

This is because the existing incentive arrangements for the Company's Board and team of executives and employees has, to-date, been entirely conditional on, and singularly linked to, the delivery of the Perseverance #1 well in The Bahamas (notwithstanding a significant expansion of the Company asset portfolio and business since mid-2020). The non-commercial result of Perseverance #1 means that the options previously issued to the Company's current Board and team of executives and employees are substantially 'out of the money', and hence the holders of those options will for all intents and purposes receive no future benefit. This is entirely appropriate: the incentive arrangements operated as intended, such that there has been an alignment of interests between the value outcome for shareholders with that of Board / management.

However, going forward, it is imperative that the Company continues to have dedicated, competent people at work on delivering the planned work programs and executing the Company's future strategy focussed on production and cashflow growth. Equally, the Company must continue to be able to recruit, retain and incentivise high-quality personnel, whether that be existing employees, or new ones. BPC operates in a competitive global job market for skilled and talented personnel, and thus it is essential that the Company has the ability to offer fair, market-based incentive arrangements which serve to align management with the creation of shareholder value.

To ensure this, the Company is thus proposing to issue new options only to certain key continuing members of the Board / executive / employee group. These new options will be granted in three tranches, with new vesting and exercise conditions linked directly to delivery of production growth and shareholder value growth - that is, linked directly to and consistent with strategy.

The new options to be allocated only to key continuing members of the Board / executive / employee group will be in various tranches, each tranche having an exercise price at a premium to the Issue Price and that steps up further with each tranche, and certain of the tranches will have vesting criteria based on achieving production outcomes and shareholder value creation. The detailed terms and allocation of the new options will be determined by the Board following recommendation from the Remuneration Committee, and will be advised by the Company at that time. 

Of the intended allocation of new options, both initially and over time, only a very small proportion will be to non-executive Board members, with the vast majority of options to be allocated to, or available for future allocation amongst, key executive management and other critical employees. That is, to incentivise those people directly responsible for delivery of the future of this Company, and with their aggregate reward directly linked to building production and generating future value creation for all Shareholders.

The implementation of these revised option arrangements will be conducted under the Company's general share issuance authority (assuming this is approved at the Extraordinary General Meeting). As such, these revised option arrangements, which as noted will be fully disclosed once allocated, do not require specific approval of shareholders outside of the approval of the general share issuance authority. However, the allocation of the new options will likely be deemed a related party transaction in accordance with the AIM Rules for Companies, and for which a fairness opinion will be obtained as required.

A recapitalisation via an Open Offer (and potential shortfall Placing)

In order to pursue activities designed to increase production and cashflow, the Company requires fresh capital, which it intends to secure via an Open Offer (and a subsequent placing of any New Ordinary Shares not taken up under the Open Offer (the "Placing")).

The Company is progressing its recapitalisation via an Open Offer because the Board considers it important to provide the Company's loyal and supportive Shareholders with the first opportunity to participate in the future of the Company.

Under the Open Offer, qualifying shareholders will have the ability to subscribe for, in aggregate, up to approximately £6.9 million (before expenses) in Open Offer shares without the Company having to produce a prospectus (in accordance with the Prospectus Rules) which would have both cost and timing implications for the Company.

The Open Offer provides an opportunity for all qualifying shareholders to participate in the fundraising by acquiring Open Offer Shares pro rata to their current holdings of existing Ordinary Shares. Qualifying Shareholders are also being given the opportunity to apply for excess shares through an Excess Application Facility, provided that they take up their Open Offer entitlement in full.

Qualifying Shareholders will be able to subscribe for shares under the Open Offer Shares at a price of 0.35 pence per share (on a pre-share consolidation basis, which equates to 3.5 pence per share on a post share consolidation basis), pro rata to their holdings of Existing Ordinary Shares on the basis of 1 Open Offer share for every 2.46 Existing Ordinary Shares.

The issue price of shares under the Open Offer represents a discount of approximately 35 per cent. to both the closing share price on 20 April 2021 and the average VWAP of the Company's shares in the 30 trading days to 20 April 2021.

To the extent all of the shares available for subscription under the Open Offer are not fully taken up, the Company intends to appoint its brokers and advisers, together or individually, to place any Open Offer Shares not taken up to institutional investors at the same price as the Open Offer and via the Placing.

Assuming full take-up under the Open Offer (or full placing of any Open offer Shares not taken up under the Open Offer) the issue of the Open Offer Shares will raise gross proceeds of £6.9 million for the Company.

Mr Eytan Uliel (the Company's incoming Chief Executive Officer) has confirmed his intention to participate for his pro rata entitlement in the Open Offer in respect of any Ordinary Shares held. Certain other members of the Company's continuing Board and senior management have also confirmed their intention to participate in the Open Offer to varying extents.

Further details in relation to the Open Offer will be included in the Open Offer circular, to be posted to shareholders no later than 24 April 2021, and to be posted on the Company's website at the same time.

Financial Information

 

Funding Requirements

 

Over the balance of 2021, the Company presently estimates that it will have a requirement for total potential funding of between US$22.5 - US$40 million depending on the range of activities undertaken. The higher end of this funding range (that is, approximately US$40 million over the balance of 2021) includes up to $20 million of drilling and business costs that represent discretionary or enhanced activity in a success case (that is, the decision to incur these expenses is at the Company's discretion, and will depend not only on capital availability but positive technical outcomes from planned drilling activities).

The total range of activities to be considered during the balance of 2021 (based upon the level of funding available and the final estimate of costs, in respect of which certain elements are unknown at this time and some of which would be incurred in 2022) is summarised as follows: 

(a)  drilling and evaluation of the Saffron #2 well planned to be drilled in May / June 2021: US$3 million capital expenditure - as noted previously, the Company is projecting a successful Saffron #2 to produce in the range of 200 - 300 bopd and based on a US$60 / bbl oil price, this well would generate cashflows to BPC of US$1.8 - US$2.6 million per annum, with a full well payback of 12-18 months and a ROI of in excess of 200 per cent;

(b)  drilling an extra 5-9 production wells at the Saffron project, the decision for which will depend on the technical outcomes of the Saffron #2 well and the pace of which will depend on permitting, rig availability and capital availability: US$12 - US$20 million capital expenditure, of which an estimated US$7m - US$12 million would require capital funding, with the balance anticipated to be able to be funded from cashflow generated by the project - as noted previously, this initial program of activity is projected to achieve an average daily production of 1,000 - 1,500 bopd by the end of 2021 which, based on a US$60/bbl oil price, alone would generate annualised cashflows to BPC of US$8 - US$12 million going forward; the current estimated overall field development could ultimately comprise up to 30 wells in total, with a peak projected production of approximately 4,000 bopd;

(c)  the EWT project (including drilling and evaluation) at Weg Naar Zee in Suriname planned to be drilled in July 2021: US$0.7 million capital expenditure;

(d)  drilling an extra 4 production wells at the WNZ project in Suriname, a decision and pace for which will depend on the technical outcomes of the initial well at WNZ and on permitting, rig availability and capital availability: US$2 million capital expenditure - as noted previously, such an initial field development is projected to produce around 100 bopd which, based on a US$60/bbl oil price, would result in cash flows to BPC of US$1m per annum, and with a projected full WNZ field development scenario anticipated to generate annual cash flows for the Company in excess of US$2.5 million;

(e)  proceeding with in-fill drilling well opportunities at existing producing fields in Trinidad, the decision for which will be taken in H2 2021, and will largely be dependent on capital availability at that time: up to $6 million capital expenditure;

(f)  completion of the seismic reinterpretation work in the SWP of Trinidad, with a view to delineating additional drillable prospects: US$0.3 million capital expenditure;

(g)  drilling up to two exploration wells targeting discoveries from Saffron lookalike prospects by the end of 2021 based upon the results of high grading the 3D data set, and capital availability: up to $6 million capital expenditure;

(h)  following the completion and outcome of the drilling of Perseverance #1, a final reconciliation payment to a fund managed by Lombard Odier ($4 million) is due in June 2021, and the Company is in the process of finalising residual costs, payment terms, schedule and resolving various items in dispute relating to the drilling of Perseverance #1, which process it expects to complete in due course but is expected to amount to approximately $14 million payable through into H2 2021 (although the Company expects to achieve a discount/reductions to this amount as a result of commercial negotiations and agreed resolutions to items in dispute and/or be able to satisfy part of this amount in the form of shares, and has assumed an aggregate 20 per cent. - 30 per cent. reduction in cash required for settlements on this basis);

(i)  realising business development opportunities to expand the portfolio based upon projected value generation (to be determined);

(j)  any incremental costs associated with renewal of the Company's licences in The Bahamas, including community programs, and ongoing legal costs as may be required to continue to successfully defend the Company's licences in the event of ongoing environmental challenges in The Bahamas (to be determined), and

(k)  corporate overhead costs up to $4 million, although as noted previously, the Company is initiating a cost reduction exercise across its business with a view to reducing corporate overhead costs by 20 per cent. - 30 per cent.

It is the intention of the Board and management to undertake as much activity as possible but at all times remaining within the overall funding capacity of the Company. In other words, given the discretionary / success-based nature of much of the Company's intended activity, capital availability will be a core determinant in the decision to proceed with particular items of work, and the timing of those decisions.

Funding Sources

 

The Company presently considers that it has sufficient financial resources available to it to meet the lower end of the above-noted required funding range (that is, approximately US$22.5 million) through the balance of 2021. The Company's expectation in this regard includes and assumes:

 

(a)  cash at hand, proceeds of fee rebates described below, and expected amounts of not as yet received funds under the Conditional Convertible Note facility (approximately $10 million);

(b)  assumed surplus income from production based on an assumed US$60/bbl oil price and current projected production through the balance of 2021 (including from Saffron #2) (approximately $3 million);

(c)  the proceeds of the Open Offer (assuming full take of the Open Offer and/or a successful Placing of any Open Offer Shares not taken up) ($9.7 million);

(d)  successful implementation of the cost cutting program being initiated across the Company, resulting in overall cost reduction in the range of 20 per cent. - 30 per cent. (approximately $2 million); and

(e)  completion of negotiations in relation to licence renewals in The Bahamas and completion of invoicing, payment scheduling and resolution of disputes and final settlement of estimated costs associated with the completed drilling of Perseverance #1, such that the aggregate amount of cash payments required in respect of licence fees and 'close-out' of Perseverance #1 are consistent with the description in (h) above (approximately $4.5 million).

In circumstances where current funding assumptions (as summarised above) do not materialize or do not materialize in the timeframe expected (for example if the £2 million currently expected under the Conditional Convertible Note facility is not received, or if expected surplus income from production, and/or the proceeds of the Open Offer (assuming full take of the Open Offer and/or a successful Placing of any Open Offer Shares not taken up) are not available, or the Company is unable to negotiate expected reductions in cash required for settlements as described above, absent securing capital from alternative sources, the Company would not have sufficient financial resource available to undertake all of the work and meet the obligations projected in the $22.5 million, and would be required to manage cash resources accordingly.

 

In circumstances where the Saffron #2 well is not a success, the Company will be required to secure capital from alternative sources or the Company would be required to effect greater reductions to overheads, negotiate greater reductions in cash required for settlements as described above and/or not proceed with or defer discretionary expenditure on all or some of the work as summarised above.

 

Equally, in the event of success with the Saffron #2 well in Trinidad, and/or success with the WNZ well and EWT in Suriname, the Company will need additional funding to pursue development of those projects and for general working capital purposes, presently estimated to be $15 - $20 million in additional funding required through the balance of 2021.

 

In any of the above-noted circumstances where the Company would look to secure funding by way of alternative sources to meet any funding shortfall / incremental funding needs, there can be no assurance that the Company would be successful in securing any such alternative funding.

 

However, the Board believes there are a wide range of potential funding sources available to the Company, and as such the Company is confident that it will be able to secure additional funding, if and when required. In particular, those additional sources of funding that may become available to the Company, and which would increase the Company's overall financial capacity with a view to placing the Company in a position where it would have sufficient funds available to meet its requirements, including:

 

· Assuming the £2 million is provided in June 2021, undrawn availability under the remaining limit of the Company's Conditional Convertible Note facility, which is up to £10 million. Availability of this portion of funding under the Conditional Convertible Note facility remains conditional, primarily on the Company and the provider of the facility agreeing and documenting suitable security arrangements. In this regard, the following points are noted:

 

o  As noted previously, £3 million has already been advanced to the Company under this facility (notwithstanding that security documentation has not been agreed), and of which £2.5 million will be converted into Ordinary Shares coincident with and on the same price basis as the Open Offer.

 

o  A further £2 million has been committed under this facility. These funds, initially scheduled to be advanced at the end of February 2021, have been rescheduled to now be due coincident on completion of, but not dependent on the results of, the drilling of Saffron #2 (and provided that the Open Offer has been successfully completed).

 

o  The availability of the remainder of the facility (subject to conditionality) has been extended to the end of July 2021, to accommodate for the expected Saffron timeline, and

 

o  Mr. Stephen Bizzell will be joining the board of the Company in due course.

 

Given the foregoing, the Company considers the Conditional Convertible Note facility to be a viable and important part of its overall funding sources, and considers that a material amount of further funding could become available under the facility in the future, particularly in the event of a successful outcome with the Saffron #2 well so as to enable a rapid development of that project in particular;

 

· Increased income from production, whether as a result of higher levels of production or a higher oil price than the US$60/bbl assumed in the Company's forecasting;

 

· Proceeds from a successful farm-out of the Company's assets in The Bahamas - as noted elsewhere in this document, the Company has engaged Gneiss Energy in relation to this process, which is underway;

· Proceeds and/or offset of costs in relation to other assets in the Company's portfolio. Specifically, the Company considers that in the event of a successful Saffron #2 well a viable alternative to development of that project at 100 per cent. would be a farm-out of that project to fund the overall development costs, and given the recently enhanced view of the prospectivity of the Company's asset in Uruguay (as detailed in Section 2.3.3 of this letter) the Company considers that a farm-in to this asset may be a viable near-term option;

· Proceeds from any asset sales, the Company noting that assets in Trinidad regularly transact, should the Company elect to consider this as an option;

· The offset of costs from any successful "drill for equity" type arrangements, and

· Proceeds from any other financial facilities that may become available to the Company in the period, such as a reserve-based lending facility and/or a production prepay facility (the Company being in active discussions with various providers of these types of facilities).

If currently anticipated funding is not available and no suitable funding from other sources is able to be secured to enable the Company to undertake the work program and meet the obligations detailed in this document, the Company would need to scale back the intended work program (which is largely discretionary in nature at the upper end of the funding requirement), and/or reschedule that work program, and/or cut overhead and operating costs to match the Company's actual capital availability, and/or further revise payment terms, amounts and schedules in relation to residual amounts to be paid to close-out Perseverance #1.

Finally, the Company notes that it has negotiated an agreed cash rebate of advisory and fundraising fees paid by the Company previously, amounting to approximately £500,000 (thus increasing the amount of cash available to the Company) and has settled a number of current corporate creditors through the issuance of, in aggregate, 340.5 million new Existing Ordinary Shares on a pre-Share Consolidation basis (which will become 34.05 million New Ordinary Shares on a post Share Consolidation basis) (the "Fee Shares"). Application has been made for 149,385,766 of the Fee Shares (the "First Tranche Fee 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 the First Tranche Fee Shares will commence on or around 27 April 2021 at 08:00 a.m. The remaining 191,114,234 Fee Shares (the "Second Tranche Fee Shares") will be admitted to trading on 21 May 2021 upon, and conditional on, the closing of the Open Offer and Placing.

Total Voting Rights

 

Following admission of the First Tranche Fee Shares, BPC's issued share capital will consist of 4,987,934,115 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 4,987,934,115 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.

Notice of Extraordinary General Meeting

A notice convening the Extraordinary General Meeting to be held at the Company's registered office at IOMA House, Hope Street, Douglas, Isle of Man, IM1 1AP at 11:00 a.m. on 17 May 2021 will be set in the Circular.

At the Extraordinary General Meeting, the following resolutions will be proposed:

1.  As an ordinary resolution, to consolidate every ten (10) Existing Ordinary Shares into one (1) New Ordinary Share, thereby reducing the total issued share capital of the Company from approximately 4.85 billion shares to approximately 485 million shares.

2.  As an ordinary resolution to increase the authorised share capital of the Company to £400,000 divided into 2,000,000,000 New Ordinary Shares of 0.02 pence each.

3.  As a special resolution, to change the name of the Company to Challenger Energy Group PLC.

4.  As a special resolution, to authorise a general share authority such that the directors may, prior to 31 December 2022, issue up to 750 million New Ordinary Shares (on a post-share consolidation basis) without the need for further Shareholder approval (and from within which general share authority the proposed new incentive arrangements for continuing and future executives and management will be implemented).

5.  As a special resolution, to ratify the amendments previously made to the Company's Conditional Convertible Note facility, to authorise the agreed early conversion of part of the Convertible Notes currently on issue, and to approve the current and future issue of New Ordinary Shares pursuant to that facility.

All of these resolutions are to be proposed on an inter-conditional basis: that is, the Company is seeking to comprehensively reposition and recapitalise at the same time, and the resolutions being proposed should thus be regarded as a "package", each alongside with and integral to the other changes being made.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Record Date for entitlement under the Open Offer	6:00 p.m. on 21 April 2021
Announcement of the Open Offer	7:00 a.m. on 23 April 2021
Ex-entitlement date of the Open Offer	8:00 a.m. on 23 April 2021
Publication and posting of this Circular (inclusive of the Notice of Extraordinary General Meeting) and the Application Form and Proxy Form	23 April 2021
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts in CREST of Qualifying CREST Shareholders	as soon as practicable after 8:00 a.m. on 26 April 2021
Latest recommended time and date for requested withdrawal of Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST	4:30 p.m. on 6 May 2021
Latest time and date for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements in CREST	3:00 p.m. on 7 May 2021
Latest time and date for splitting Application Forms (to satisfy bona fide market claims)	3:00 p.m. on 10 May 2021
Latest time and date for receipt of Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate)	11:00 a.m. on 12 May 2021
Announcement of the result of the Open Offer and the launch of the Placing	4:35 p.m. on 13 May 2021
Announcement of the results of the Placing	7:00 a.m. on 14 May 2021
Latest time and date for filing of proxies for the Extraordinary General Meeting	11:00 a.m. on 15 May 2021
Extraordinary General Meeting	11:00 a.m. on 17 May 2021
Announcement of the result of the Extraordinary General Meeting	17 May 2021
Admission and dealings in the Open Offer and Placing Shares, Shares issued pursuant to the Conversion of £2.5m Convertible Notes and S econd Tranche Fee Shares expected to commence on AIM	8.00 a.m. on 21 May 2021
Where applicable, expected date for CREST accounts to be credited in respect of Open Offer Shares in uncertificated form	As soon as practicable after 8:00 a.m. on 21 May 2021
Record date for the Share Consolidation	4:30 p.m. on 21 May 2021
Dealings in the New Ordinary Shares expected to commence on AIM	8:00 a.m. on Monday 24 May 2021
Share certificates dispatched for Open Offer Shares and the Placing (as applicable)	By 31 May 2021

Notes:

(1)  All of the above times refer to London time unless otherwise stated. The dates set out in the Expected Timetable of Principal Events above and mentioned throughout this document and the Application Form and Proxy Form may be adjusted by the Company, in which event details of the new dates will be notified by means of an announcement through a Regulatory Information Service and, where appropriate, to Shareholders.

(2)  Completion of all events in the above timetable following the holding of the Extraordinary General Meeting are conditional upon, inter alia, the passing of the Resolutions at the Extraordinary General Meeting.

(3)  The ability to participate in the Open Offer is subject to certain restrictions relating to Shareholders with registered addresses outside the UK, details of which will be Set out in the Circular: "Terms and Conditions of the Open Offer".

(4)  Different deadlines and procedures for return of forms may apply in certain cases.

Recommendation

The Directors of the Board consider the 'package' of actions proposed to be undertaken, including the resolutions to be proposed at the Extraordinary General Meeting and the Open Offer and Placing to be in the best interests of the Company and its shareholders as a whole as these actions are designed to put the Company in a position where it can best seek to significantly increase production and cashflow, and thereby restore and create future shareholder value.

If the various resolutions are not passed at the EGM, the Open Offer and Placing will not proceed, nor will the other intended corporate actions be able to proceed in the manner presently contemplated. If the net proceeds of the Open Offer and Placing are not available to the Company, the Company will need to seek alternative sources of funding or seek alternative methods of realising shareholder value. Neither of these alternatives is expected to be favourable for shareholders given the current stage of the Company's development. The Board considers that it is therefore of the utmost importance that Shareholders vote in favour of the package of resolutions to be proposed at the EGM, and to support the Open Offer.

Regulatory Statements

In accordance with the AIM Note for Mining and Oil & Gas Companies, BPC discloses that Mr Nathan Rayner, the Company's Operations Director, is the qualified person who has reviewed the technical information contained in this announcement. He is a qualified Petroleum Engineer, a member of the Society of Petroleum Engineers, and a member of the Institution of Engineers, Australia. He has over 20 years' experience in the oil and gas industry. Nathan Rayner consents to the inclusion of the information in the form and context in which it appears.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European (Withdrawal) Act 2018.

For further information, please contact:

Bahamas Petroleum Company plc Simon Potter, Chief Executive Officer	Tel: [phone]
Strand Hanson Limited - Nomad Rory Murphy / James Spinney / Rob Patrick	Tel: [phone]
Shore Capital Stockbrokers Limited - J oint  Broker Jerry Keen / Toby Gibbs	Tel: [phone]
Investec Bank Plc - J oint  Broker Chris Sim / Rahul Sharma	Tel: [phone]
Gneiss Energy - Financial Adviser Jon Fitzpatrick / Paul Weidman / Doug Rycroft	Tel: [phone]
CAMARCO Billy Clegg / James Crothers / Hugo Liddy	Tel: [phone]

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 onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay. 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

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