Bahamas Petroleum Company (BPC) and Columbus Energy Resources, an international oil and gas exploration, development and production company headquartered in London, announced yesterday that they have agreed to the terms of a recommended all-share merger “by way of a share for share exchange offer to be made by BPC for the entire issued and to be issued ordinary share capital of Columbus”, which would take the company into a full-cycle exploration and production company.
In a statement on its website, BPC said the merger will be implemented through a court-sanctioned scheme. Both companies will have to bring the recommended merger to its respective shareholders for a vote.
According to information provided on BPC’s website, Columbus is an Alternative Investment Market-quoted oil and gas producer and explorer with assets and operations in Trinidad and Suriname.
“In Trinidad, the Columbus Group has five producing fields, two appraisal / development projects and a prospective exploration portfolio in the South West Peninsula, which lies in the extreme southwest of Trinidad and consists of stacked shallow and deep prospects,” the statement noted.
“A discovery was announced by Columbus in two zones in one of these prospects in late April 2020, including high-quality light oil (circa 40-degree API) recovered to surface. In Suriname, Columbus has an onshore appraisal / development project.”
BPC announced only Tuesday that it won a bid for offshore exploration in Uruguay. Now the company, before the end of the year, could be merged with an existing producer. BPC has yet to drill to its first ever well through its licenses in the southern Bahamas. It plans to do so by the first quarter of next year.
BPC’s Chief Executive Officer Simon Potter said the announcement represents a “maturing of our company into an Atlantic margin focused, full-cycle exploration and production company with multiple opportunities over the next 12-24 months for generating shareholder value across an asset base covering The Bahamas, Trinidad, Suriname and Uruguay”.
“In one bold step we have given ourselves a production base in Trinidad from which to generate cash and the opportunity to leverage a range of low-cost developments via workovers, reactivations and new wells targeting shallow reservoirs, along with a range of further options for organic growth and exploration prospects,” he said.
“We also have low-cost appraisal of existing discoveries in the South West Peninsula of Trinidad to look forward to and further infrastructure-led exploration at Weg Naar Zee in Suriname.
“It is important to note that the forward work program is largely discretionary and therefore operational sequencing can be varied to optimize the use of available resources.
“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 #1 well in late 2020 / early 2021, targeting P50 prospective oil resources of 0.77 billion barrels with an upside of 1.44 billion barrels.”
Potter said the BPC board supports the merger “wholeheartedly” and will be pushing for shareholders to support the endeavor when it is put to vote.
The statement noted that the two companies believe the merger will create a “Caribbean and Atlantic margin focused oil and gas champion”.
Columbus Executive Chairman Leo Koot said the merger is a new and exciting chapter for his company and its shareholders.
“The merger is ideal in terms of asset overlap and will create a combined company that is stronger than the sum of its two parts,” said Koot.
“Columbus shareholders will gain access to the high-impact Perseverance #1 exploration well in The Bahamas, which we expect will be drilled in Q4 2020 / Q1 2021. If successful, Perseverance #1 will transform the company as it has a P50 prospective oil resource of 0.77 billion barrels, with an upside of 1.44 billion barrels. It is rare for a relatively small oil & gas company to have access to a prospective resource of this size.
“In return, BPC will gain access to our existing production base in Trinidad and our strong appraisal / development portfolio (namely in the South West Peninsula in Trinidad and the Weg Naar Zee Block in Suriname). 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.
“The Columbus board is unanimous in its recommendation that this merger is in the best interests of Columbus shareholders and we hope you share our enthusiasm for the future of the combined entity. The Columbus board intends to recommend that Columbus shareholders accept the proposed transaction.”
BPC was forced to postpone its second quarter 2020 Perseverance #1 drill commencement because of shutdowns in The Bahamas and abroad cause by the coronavirus.