The Tribune

A Bahamas-based oil explorer and its advisers last Thursday submitted a formal request for regulatory approval to open their £2m mutual fund to investments by small Bahamian retail investors.

Brian Jones, managing director of Leno Corporate Services, confirmed that the application had been made to convert the Bahamas Petroleum Company (BPC) sponsored fund from a professional fund into a lower subscription standard fund.

He explained that the switch would expand Bahamian investor participation in the BPC Investment Fund. Its present "professional fund" status means it can only seek investments from so-called 'sophisticated' investors, such as institutions and high net worth individuals, willing to commit a minimum $10,000 while excluding smaller Bahamian retail investors from any involvement.

However, should the Securities Commission approve the BPC Investment Fund being reclassified as a "standard fund", it would be open to anyone interested in investing a minimum $1,000.

The BPC Investment Fund's current offering closes on February 7, 2020, and thereafter investors can buy-in on a monthly basis at the prevailing net asset value (NAV) per share price. It will only invest in BPC shares.

Mr Jones made the disclosure as executives from Bahamas-based investment houses and financial services providers attended an invitation-only showcase at Luciano's of Chicago, where they were given presentations by BPC chief executive, Simon Potter, and Leno executives.

He said: "Leno established the investment fund to provide Bahamian investors an opportunity to participate in the BPC project. Bahamian investors have equal pricing terms with the UK shareholders, which until now was only available to investors through the London Stock Exchange.

"The professional fund will acquire shares in BPC at a price of £0.02 per share for up to 100 million shares, which are the same pricing terms at which shares were on open offer to UK shareholders in October 2019. Thus Bahamians are entering the investment deal on equal footing as the international investors.

"The Professional Fund opened on January 6, 2020, and we have now made application for a standard fund for interested individuals with an entry-level minimum initial investment and share price of $1,000."

Mr Potter added: "We at BPC have long believed that Bahamians should be able to invest in the company and, in this way, have an interest in their own national resource. We therefore initiated a process via Leno Corporate Services that created a Bahamas-domiciled mutual fund to provide a vehicle for investors to have the opportunity to invest in BPC's project of potentially national significance."

He said more than $100m has been spent on geological research to confirm the primary targeted structure for the exploratory well, which is adjacent to the Cuban maritime border. The structure lies in the southern waters of The Bahamas, is more than two times' the size of New Providence, and can potentially contain billions of barrels of oil.

"The size of the structures and rocks involved are similar to those found in the Middle East, Saudi Arabia, Iraq and Iran. Which leads us to believe that the size of the anticipated resource would be a substantial asset to the Government of The Bahamas," Mr Potter added.

"Even though we are a regarded as a small exploration company we've attracted three of the world's leading industry partners to our project. We have an agreement with Seadrill for the provision of a drilling rig, and the expert services of renowned oil field service companies, Halliburton and Baker Hughes GE."

Addressing the environmental risks, Mr Potter said BPC had worked extensively with the government to ensure global standard safety procedures are in place and regulations met. He added that the oil explorer has spent up to $5m on researching and developing environmental sensitivity maps of coastal area habitats, fauna and flora, and sensitive receptors.

"In the case of any tangible or credible threat to the environment, these maps could guide and inform anyone, including ourselves, to those sensitive areas that require immediate attention," Mr Potter said. "In other words, it allows any responders to prioritise and maximise protection efforts in specified areas.

"In April 2018, BPC submitted an Environmental Authorisation (EA) application in compliance with a new regulatory requirement. BPC's EA application included, inter alia, an updated EIA (to that already accepted in 2012) and an Environmental Management Plan (EMP). Over and above this, the government has recently modernised and strengthened its Petroleum legislation and attendant regulations to govern oil exploration activity."

These regulations, Mr Potter said, combine best practices identified in a variety of leading jurisdictions - including new procedures and equipment requirements - to reflect the best risk management practices and mandate the use of the most up-to-date technology.