By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
An oil explorer is aiming to seize "the current window of opportunity" to drill its first Bahamas well after five years of regulatory and oil price-related delays "abated".
Simon Potter, Bahamas Petroleum Company's (BPC) chief executive, told shareholders that the company "had gained considerable momentum" in its efforts to both secure a joint venture partner and government approval for its first exploratory well in waters south-west of Andros.
He added that talks with "a major international oil company", with which BPC has signed a three-month exclusivity, were "progressing constructively" as it bids to tie-down a "farm in" partner to share the costs and technical risks associated with that first well.
Tribune Business reported last month that the exclusive joint venture partner talks, as well as BPC's request for the necessary government permits, brought oil exploration in Bahamian waters two steps closer following a period where Mr Potter conceded progress had been "disappointing".
"The outlook for the oil and gas industry in 2018 is more positive than it has been in any of the past five years, given the sustained recovery in the oil price and the pick-up in global exploration activity," Mr Potter told BPC's shareholders in commentary attached to the company's 2017 annual results.
"The strong fundamentals of our project remain unchanged - we have a world-class asset, with multi-billion barrel potential. It is thus incumbent on us at the company to use the current window of opportunity, and during 2018, move forward to finalising an agreement sufficient to enable the commencement of the first exploration well on our licences."
Mr Potter said these factors had "added energy and urgency to our farm-out process, which has gained considerable momentum over the year... We are currently in an exclusivity period with a major international oil company, and I am happy to report that discussions are progressing constructively".
The Bahamian-based oil explorer will entertain no other parties during the three-month exclusivity agreement, with Mr Potter previously telling Tribune Business that the oil major's move represented a show of confidence in BPC's project and its prospects of success.
He declined to name BPC's potential partner, citing confidentiality agreements, but it will pay the company $250,000 per month for the duration of the initial exclusivity - netting the company a total $750,000. The prospective "farm-in" partner also has an option to extend the exclusivity for a maximum further three months, again paying the same rate.
BPC's rate of progress had already heated up the previous week, with the company submitting its 'Environmental Authorisation' application for the necessary permits in that area to the Government.
The search for a joint venture partner, who will share the financial and technical burden of drilling the first exploratory well, is the second 'parallel path' that BPC has been working on for several years, and it is now moving forward on both fronts.
Mr Potter said BPC was now talking to the Government about a further extension of its licence, which runs until June 2019, as well as the process for dealing with its 'Environmental Authorisation' application.
"The company is presently in ongoing discussions with the Government in relation to the extent to which a further extension is warranted as a result of other events outside of the company's control since 2015," he added of BPC's licence.
"In compliance with requirements introduced under the newly-implemented environmental protection regulations, the company filed an application for Environmental Authorisation in April 2018, representing the mandated first step under the regulations to commencing offshore field activity.
"The company is presently in ongoing discussion with the Government in relation to the process by which the application will be progressed in a timely manner."
Mr Potter blamed regulatory issues, as well as the "oil price collapse" between 2015-2017, for the protracted time it has taken to secure a joint venture partner and move its first exploratory well to the point of drilling.
"Progress in this regard over the last few years has been disappointing, despite our best efforts," he conceded. "Initiatives over this period were impeded by a variety of 'above ground' issues, in particular, the compound effect of two factors: The extensive length of time taken for licence renewal and the implementation of updated petroleum regulations in the Bahamas - in aggregate, over five years, and the oil price collapse in the period 2015-2017."
Describing the 'exclusive' negotiating partner as "a suitable candidate for partnership", Mr Potter said should talks prove successful it will take an ownership interest in BPC's licences "in return for paying all or a substantial part of the costs of an agreed drilling program (but at a minimum sufficient to see the first exploration well completed), and making a cash contribution towards the costs historically incurred by the company".
Bill Schrader, BPC's chairman, told shareholders that the Minnis administration viewed development of an oil and gas industry as a key component of the Bahamas' economic future based on its embrace of the $5.5 billion Oban Energies project.
"The new Government has made the development of a robust and successful local oil and gas industry a key plank of its vision and strategy for the Bahamas," Mr Schrader wrote. "This has included, for example, the new Government indicating its support for a $5.5 billion oil and gas refinery development on Grand Bahama in February 2018.
"Over the past six months, company management has engaged proactively and productively with the new Government, and we look forward to working collaboratively as we continue to progress our project."
Comments
Porcupine 5 years, 10 months ago
Very interesting video. All Bahamians should watch this. https://topdocumentaryfilms.com/disob...">https://topdocumentaryfilms.com/disob...
Porcupine 5 years, 10 months ago
I think this and Oban are two of the most important issues facing this country. The Bahamian people need to study these issues. We need to demand a sensible energy strategy for the future. I think this precludes oil. We should demand that the government denounce these projects immediately. Unequivocally, in perpetuity, never.
170200 5 years, 10 months ago
You are misguided
Porcupine 5 years, 10 months ago
You are likely a paid shill.
170200 5 years, 10 months ago
Then i guess you will be happy to pay more tax to pay for a renewable energy programme
proudloudandfnm 5 years, 10 months ago
Resume ready to go!
170200 5 years, 10 months ago
I have looked in to this and it is a fantastic opportunity for the Bahamas. A chance to wipe out the country
s debt and to provide the means to make all Bahamians lives improve. Renewable energy needs money, lots of it, oil revenue can pay for this. The chances of an oil spill is low, even if there was Cuba would be affected, not The Bahamas. Most people dont realise that the world`s busiest oil shipping channel goes straight through Bahamian territory. The whole of the Caribbean has realised the potential of this, lets not waste it. Lets hold the government to account what they do with the revenue, a sovereign wealth fund must be set up for the people. A chance in a generation170200 5 years, 10 months ago
I have looked in to this and it is a fantastic opportunity for the Bahamas. A chance to wipe out the countrys debt and to provide the means to make all Bahamians lives improve. Renewable energy needs money, lots of it, oil revenue can pay for this. The chances of an oil spill is low, even if there was Cuba would be affected, not The Bahamas. Most people dont realise that the world`s busiest oil shipping channel goes straight through Bahamian territory. The whole of the Caribbean has realised the potential of this, lets not waste it. Lets hold the government to account what they do with the revenue, a sovereign wealth fund must be set up for the people. A chance in a generation
Porcupine 5 years, 10 months ago
It disappoints me to see this short-sighted mentality. Perhaps a true indication of our sub standard educational achievements. "A chance in a generation" to put the nail in the coffin? "The chances of an oil spill is low, even if there was Cuba would be affected, not The Bahamas." How Christian of you. Cuba would pay for our mistakes. But, obviously you are not a boater. The Gulf Stream flows north. Obviously, you didn't look into this hard enough. Renewable energy does not need lots of money. It is already economically cheaper, even in the short term. It is a lack of vision, and a lack of good credit that has slowed this essential industry here. Even your "Bahamas territory" statement is wrong. Are you a paid troll to this site? Because you don't seem to know The Bahamas and you don't seem to have a lick of sense.
170200 5 years, 10 months ago
a lack of good credit
jamani2 5 years, 10 months ago
Plain and simple. When it comes to oil refineries, oil storage facilities, oil rigs (drilling for oil), you can either have paradise or paradise lost.
No sensible government would ever, ever agree to drilling in the clear blue-green waters of the Bahamas.
Porcupine 5 years, 10 months ago
There's the catch. "No sensible government......................".
realitycheck242 5 years, 10 months ago
With the wide spread use of Fracking technology in the united states and the US now being the largest largest exporter at 15.3% of the world oil supply. There is no need for the Bahamas to go this route.Get rid of BPL and and her British share holders and court green technology companies to the Bahamas
banker 5 years, 10 months ago
It's obvious that Bahamians, including the press are too naive and gullible to understand that BPL is a penny stock play and nothing else. There isn't any oil. The company has sat on its ass for years doing nothing but churning stock out and making millions for the majority the stock owners, the promoters, and doing sweet f%^k all else. And Neil Hartnell, is merely a stenographer shill, printing their BS without even educating himself on how junior resource companies work with flogging stock and never actually find a resource. This is a penny stock play, pure and simple, with no intention of finding oil, and everyone is swallowing the BS. Hartnell should be ashamed of himself. Doesn't he ask the question on how the company sustained itself in the past 5 years and why they haven't produced anything. Why haven't they asked Potter and the rest of the BPL "executive" what their holdings are. The naivety blows me away. There is no sophistication in the business sector at all, and Hartnell is out of his league.
170200 5 years, 10 months ago
BPC (not BPL) have spent $50 US Dollars in seismic data in The Bahamas. They got their money by going to the market and a share offering. What is there to be gullible about, they haven
t come to The Bahamas and asked for money, they have taken all of the risk with the intention of making a profit IF oil is found. Thats what explorers do. I don`t think you are a banker with your ill informed commentsbanker 5 years, 10 months ago
And I think that you are a shill for BPC (I stand corrected with the name). Obviously you want to hide the penny stock play, which I have seen played out all over the world. Statistically, junior resources companies have a success rate of 0.01 of one percent. It's all about the stock play baby, and if you say it aint so, you are a liar. And you say that it spent $50 million and yet the market cap fluctuates between 12 to 46 million Great Britain pounds. It jumped from 1 penny to 3 pence on fake news in May, and it was a typical stock flog on fake news -- the way that all penny stocks operate.
TheMadHatter 5 years, 10 months ago
170200 i sure hope you are right. What i see, however, is that just like Oban, we the people will not even get one cent per barrel of oil pumped.
I had suggested that we get $1 per barrel of oil pumped, and that this money be disbursed evenly amoung all the National Insurance accounts of Bahamian citizens every 6 months. However, is was called an a$$.
I've heard that instead the money will go into something called a "sovereign wealth fund" which will be a fund like the "consolidated fund" to which Bahamians see no bank statements nor any interest in their own pockets.
It's kinda like Crown Land. It belongs to "anyone but us."
Bahama7 5 years, 10 months ago
Hopefully BPC will be drilling with a major oil company next year. The budget was dire, I dont see any of the doom mongers above coming up with any other ideas to kick start the economy. There is little risk here, no more than currently exists with tankers passing through the waters every day loaded with oil.
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