Oil explorer gains near certainty on well funds


Tribune Business Editor


An oil explorer yesterday said it has achieved near-certainty over the financing of its first Bahamas exploratory well after its latest $11.4m fund raising raise beat the target by 60 percent.

Bahamas Petroleum Company (BPC), in a statement to the markets, said it now "expects to see gross cash inflows of approximately $24.6m prior to March 2020" when it plans to spud that well in this nation's territorial waters several hundred miles south-west of Andros.

Besides raising $4.3m from nearly 50 percent of its existing shareholders via an "open offer", BPC then gained a further $7.1m via a "firm placing" of additional shares with a group of private investors. Both raises offered the same price of 2 UK pence per share.

The oil exploration outfit added that when the collective $11.4m proceeds were combined with the £10.25m convertible loan, which can be switched into equity shares, from Bizzell Capital Partners, an Australian-based oil and gas exploration financier, it now possessed "sufficient funds" to cover the $20m-$25m costs of drilling that first well regardless of whether it secures a joint venture partner.

While the $24.6m worth of anticipated cash inflows would cover the top end of those well drilling costs, BPC said it will continue to assess other financing offers and options as well as pursuing a farm-in or joint venture partner.

Simon Potter, BPC's chief executive, conceded in a statement that "the path taken to this point has not been straightforward" but the company was now within sight of its first exploratory well after a 13-14 year effort.

"Our clear focus at Bahamas Petroleum is to drill an initial exploration well on our highly prospective acreage in The Bahamas during 2020, consistent with our obligations to the Government of The Bahamas," he said. "We have been working diligently to develop a co-ordinated funding strategy so as to ensure we have access to the funds necessary for drilling, as and when we need them.

"I am thus extremely pleased to advise all shareholders of our successful open offer and placing which, in aggregate, have raised approximately $11.4m. When combined with the proceeds we expect to receive from our conditional convertible note, we will have secured the finance required for drilling activities given our anticipated well cost is in the range of $20m to $25m.

"At the same time, we continue to maintain our cost focus, monitor a range of additional funding options, and progress our farm-in process, all with a view to strategically enhancing the overall financial capacity of the company whilst not being reliant on any particular outcome for drilling activities to be implemented."

Mr Potter added: "The path taken to this point has not been straightforward but, collectively, we have stayed focused so as to realise the company's goal - the management team understands the responsibility it bears and is determined to succeed....

"I look forward to updating you all on our progress over the next six months as we ramp up for drilling operations. We strongly believe it will be an exciting time for our company." Environmental activists and others opposed to any form of oil drilling and exploration in Bahamian waters may disagree, though, especially given the Hurricane Dorian-related oil spill in Grand Bahama and climate change fall-out.

Still, BPC's announcement added: "The company considers that with the success of the open offer and the placing, and when combined with the conditional convertible note, it will likely have sufficient funds to undertake the drilling of an initial exploration well in The Bahamas during 2020 in accordance with the company's licence commitments.

"Moreover, in addition to the proceeds from these activities the company continues to pursue a farm-out as part of its overall funding strategy, and has received proposals for, and continues to develop and assess a number of other financing options. A decision to enact any of these other financing proposals will be taken, if required, based on the outcome of the farm-out process."

BPC said securing a joint venture partner could "materially increase" the funding available to it, with the monies applied to the first well's drilling or "a broader work programme than the current single well the Company intends to drill in 2020".

It admitted, though, that there was still "a degree of uncertainty" surrounding the funding from the conditional convertible note, which requires certain conditions to be fulfilled before the funds are released on or prior to February 15, 2020.

"In circumstances where suitable funds are not raised via the conditional convertible notes, or if a farm-out is not secured, the company would likely not have sufficient cash to complete the drilling of the planned initial exploration well in 2020 which, in turn, puts the company at risk of not meeting its licence obligations," BPC said.

"In such circumstances the company would look to secure funding by way of alternative sources. There can be no assurance, however, that the company would be successful in securing any such alternative funding."


Sickened 3 years, 11 months ago

Someone just convinced many people to secure his salary for another year or so.


Bahama7 3 years, 11 months ago

Guyana here we come For ya, come on Bahamas get drilling.


TalRussell 3 years, 11 months ago

Another Canadian oil and gas company closed its doors in October. The Calgary-based Houston Oil & Gas leaving has left behind in Alberta - more than $80 million in estimated costs to clean up its remaining wells, pipelines and facilities.


Porcupine 3 years, 11 months ago

Sad that a group of people can support said endeavors, yet speak to the UN about getting aid to combat sea level rise. Does the irony fall on nobody else? Here you are giving more alcohol to the alcoholic when all around them people with wiser heads are telling them this is going to kill you. For us not to stand up and demand our Prime Minister Hubert Minnis, tell the world we are divesting from fossil fuels, is the worst commentary on the Bahamian people in history. What does it take for there to be some sliver of honesty interjected into the political and social realm here? Does Dr. Minnis wash his hands between operations or delivering children? And, should he not also be held responsible for using the latest science to govern this country?


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