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Bahamas Petroleum: Diversified, funded and counting down to Perseverance well

Snapshot

  • Will be Caribbean & South America ‘champion’
  • Adds production
  • Countdown to Perseverance
  • Major opportunity: testing a 770mln target
Bahamas Petroleum Company PLC -

Quick facts: Bahamas Petroleum Company PLC

Price: 2.525 GBX

LSE:BPC
Market: LSE
Market Cap: £102.25 m
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About the company

Bahamas Petroleum PLC (LON:BPC) is becoming a multi-asset ‘full cycle’ oil and gas firm, with assets in the Caribbean and South America.

In the Bahamas, it has five offshore licences covering four million acres and applications for a further five. The most advanced exploration prospect is Perseverance, a high impact prospect that could drilled later this year.

In June, the company expanded its exploration footprint as Uruguay awarded the OFF-1 licence covering a high-potential but early-stage area off the Atlantic coast.

Through an agreed takeover deal the company is set to acquire Columbus Energy Resources PLC (LON:CERP) for £25mln.

The deal adds production, appraisal/development, and exploration assets across Trinidad and Suriname.

BPC told investors that the combination will create a “Caribbean and Atlantic margin focused oil and gas champion”.

This ‘champion’ will own stakes in five producing fields, two appraisal and development projects  in Trinidad, including a brand new discovery, a high impact (800mln to +1bn barrel) exploration well in the Bahamas, and expansive frontier exploration acreage offshore Uruguay and Suriname.

How it is doing

In October, BPC raised £9.5mln in an institutional share placing to boost the explorer’s funds ahead of the high impact Perseverance-1 well. Some 475mln new shares are being issued to a range of institutional investors, priced at 2p each.

Perseverance-1 is a high-impact exploration well – high risk and high reward – targeting estimated potential resources in the range of 770mln to 1.4bn barrels.

The equity raise is part of a drive to optimise its funding to achieve lower cost of capital, less aggregate dilution and greater certainty. As a result of the share placing, the company doesn’t expect it will need to draw on a previously arranged £16mln convertible bond.

The hotly-anticipated first exploration well is expected to get underway potentially in the fourth quarter.

The Perseverance-1 well will be drilled in the northern segment of the ‘B Structure’ to target some 770mln barrels of recoverable prospective resources, with the ‘upside case’ estimates potentially pitched twice as high.

The B Structure is seen across some 70-80 kilometres and could host up to multi-billion barrels of crude resources.

Elsewhere, newly acquired acreage in Uruguay is described as being directly analogous to the prolific Cretaceous turbidite discoveries that are currently being evaluated and developed further north, offshore Guyana and Suriname. BPC secured the project via a low-cost option.

BPC described the Columbus assets as entirely complementary.

The production base in Trinidad will allow the company to generate cash. It comes with opportunities to leverage a range of low-cost developments via workovers, reactivations and new wells targeting shallow reservoirs, and new wells targeting shallow reservoirs.

Funded for Perseverance

BPC recently doubled a £8mln convertible loan facility with a local family office to £16mln, though it still wants to bring in a farm-in partner to help with costs of drilling the well.

In a statement, the group said the estimated cost of drilling its 100%-owned and operated Perseverance #1 well, targeting recoverable prospective resources of up to 1.4 bn barrels of oil, is between US$25mln and US$30mln.

The company's overall funding capacity for its strategy was said to be approximately US$45mln.

What the boss says 

“In one bold step we have given ourselves a production base in Trinidad from which to generate cash … We also have low-cost appraisal of existing discoveries in the South West Peninsula of Trinidad to look forward to, and further infrastructure-led exploration at Weg Naar Zee in Suriname,” said chief executive Simon Potter.

What brokers say

SP Angel analyst Sam Wahab, in a note on 20 February, said: “Whilst a farm-out would be the company’s preferred source of funding for its first well, the [convertible] facility does provide shareholders comforts that BPC’s long-awaited well will be delivered this year in our view.

“If successful, Perseverance-1 would be transformational for the company, and indeed the frontier region in which it operates.”

Read our initiation research report: Bahamas Petroleum Company - Countdown has begun 

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Watch

Bahamas Petroleum targeting annual revenues of at least $15mln by end of 2021

Bahamas Petroleum Company PLC's (LON:BPC) Simon Potter and Eytan Uliel caught up with Proactive London's Andrew Scott following its recent merger with Columbus Energy. Last week the company issued a new corporate presentation to communicate its new strategy. Potter says they're making rapid...

on 17/8/20

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