This is a statement to the world - we are actually drilling a well next year
Commercial director, Eytan Uliel, talking about the order of key equipment
About the company
Bahamas Petroleum PLC (LON:BPC) has five offshore licences covering four million acres and applications for a further five.
According to broker Shore Capital, the explorer is on the “critical path towards drilling”.
In August it entered into a series of agreements as part of a coordinated approach towards drilling an initial exploration well in the first half of next year.
Some big names were hired with Halliburton providing well services on a Seadrill drilling rig, and Baker Hughes providing other equipment.
“BPC [Bahamas Petroleum has set a clear course towards the drilling of a maiden well on its southern licences, which have been substantially de-risked and delineated over several years and continue to provide world class prospectivity,” said Shore’s analyst Craig Howie in a note published in September.
“Recent technical studies provide additional confidence, we believe, with last year’s exclusivity agreement with an oil major also providing validation. Whilst securing the necessary financing has taken longer than envisaged, we now see renewed momentum, tangible evidence of progress and scope for powerful share price catalysts in the months ahead.”
Since the note was written things have accelerated, with funds now in place to start drilling in late March, or early April next year (2020).
Bahamas raised £8.8mln (US$11.4mln) via a placing and open offer of new shares and has a convertible loan facility of £10.25mln. That gets it very close to the estimated £19.5mln-£23.3mln required to sink an offshore well.
In a “sign of intent”, it recently announced it had ordered certain long lead time items such as wellheads and 36-inch conductor casing from Baker Hughes, the energy technology group owned by GE.
“This is a big deal, these are big pieces of equipment, expensive, and more than anything, highly symbolic,” Eytan Uliel, the company’s commercial director told Proactive.
“This is a statement to the world - we are actually drilling a well next year.”
Partner talks continue
Much has been made of Bahamas finding a farm-in partner to shoulder some of the costs of next year’s exploration well. Following the fundraising round, this requirement would appear moot.
Uliel said in his interview with Proactive’s Andrew Scott that talks with larger operators were continuing. But this was “less for the finance, more for the validation and expertise”, he said.
What the broker says
In September, Shore Capital’s Howie set his ‘risked’ net asset value for Bahamas at 6p a share but admitted this might prove a conservative target.
He told recipients of his note: “We are confident that our valuation approach is now more conservative than ever and continue to anticipate a significant risked NAV upgrade once BPC is fully funded for drilling (noting that our current valuation would move to almost 20p/share if we simply assume a 30% chance of success).”