By NEIL HARTNELL
Tribune Business Editor
An oil explorer yesterday said its pending merger with another Caribbean-based operator "assures rather than threatens" the delivery of its first well in Bahamian waters by year-end 2020.
Simon Potter, Bahamas Petroleum Company's (BPC) chief executive, reiterated for the second time this week that the company's latest expansion move poses no danger to its ability to fulfill its licence obligations to drill an exploratory well in waters south-west of Andros.
Speaking after BPC unveiled its all-share merger with Columbus Energy Resources, an oil and gas producer with interests in Trinidad and Suriname, Mr Potter said the deal and its execution will prove no distraction to its Bahamas ambitions.
Arguing that the merger would provide increased strength behind BPC's Bahamian well plans, with the two companies having a combined £125m market capitalisation on London's Alternative Investment Market (AIM) prior to the deal's announcement, Mr Potter said the cash flows from Columbus' already-producing wells in Trinidad now gave it cash flow/revenue streams to finance its Bahamas activities.
"What we were absolutely clear about when we did this merger was it doesn't involve cash; it's an all-share merger," Mr Potter told Tribune Business. "Once we complete the company will have no debt, and with such an expanded platform it's essentially a de-risked portfolio even though we have a much broader investment base. That's the whole ethos of this.
"What it does is is assures the delivery of Perseverance One [the first exploratory well in The Bahamas] rather than threatens it. This creates a balanced company that is absolutely committed to the delivery of The Bahamas well. We've been at this for so long there is nothing that will distract us from delivering that exploration project."
Still, the Columbus merger, following so swiftly behind the winning bid that secured BPC an exploration licence off the coast of Uruguay, is likely to make many Bahamians wonder whether BPC is hedging its bets on its Bahamas ambitions and whether it may depart for pastures new.
Mr Potter, though, sought to also dismiss such notions in BPC's statement announcing the merger, where he said: "This enhanced asset base in Trinidad, Suriname and Uruguay is entirely complementary to, and in no way detracts from, our determined focus on our existing exploration base asset in The Bahamas, where we will see the build-up to drilling of the Perseverance No.1 well in late 2020 - early 2021 - targeting P50 prospective oil resources of 0.77bn barrels (with an upside of 1.44bn barrels).
"A rig contract has already been signed for the drilling of this well, long-lead and critical path items have already been purchased, and globally renowned service companies are ready to work with us to ensure the safe and responsible completion of the well."
The merger, which has to be approved by both companies' shareholders, has been billed as creating "a Caribbean and Atlantic margin focused oil and gas 'champion', with assets that range across the full spectrum of oil and gas activities, from exploration, appraisal and development to production".
Columbus has five producing fields, two appraisal/development projects and a prospective exploration portfolio in Trinidad. It announced a discovery in two zones in one of these prospects in late April 2020, including high-quality light oil recovered to the surface. In Suriname, Columbus has an onshore appraisal / development project.
"The combined group will have access to high-impact offshore exploration in The Bahamas with drilling expected to take place within the next nine months; material onshore exploration; appraisal and development projects in Trinidad; a material onshore appraisal and development project in Suriname; and longer-term exploration prospects of scale in Uruguay," BPC said in its statement.
"All of this will be underpinned by existing production onshore Trinidad, which BPC believes can be materially increased at low cost by application of BPC's technical expertise. Moreover, the Boards believe the combined group will have the footprint, technical capabilities and scale to further grow and consolidate and deploy its combined expertise in the Caribbean and, more broadly, in oil and gas projects around the Atlantic margin, and in so doing, attract increased interest from investors/shareholders attracted to the broader, diversified portfolio of assets and risks that the combined group would represent."
Leo Koot, Columbus executive chairman, added: "Columbus shareholders will gain access to the high-impact Perseverance No.1 exploration well in The Bahamas, which we expect will be drilled in the fourth quarter of 2020 into the first quarter 2021.
"If successful, Perseverance No.1 will transform the company as it has a P50 prospective oil resource of 0.77bn barrels, with an upside of 1.44bn barrels. It is rare for a relatively small oil and gas company to have access to a prospective resource of this size.
"In return, BPC gains access to our existing production base in Trinidad and our strong appraisal/development portfolio. Importantly, BPC brings a strengthened balance sheet to the combined group, and I believe the combined entity will be able to progress faster in unlocking the value of our appraisal and development assets."