Bahamas Petroleum Company (BPC) Director James Smith yesterday refuted claims by environmental activists that the company did not have enough funding to complete the Perseverance #1 well at the point of rig mobilization last month.
Following BPC’s announcement that it intended to exercise a $5 million put option to complete its funding strategy, Bahamas Reef Environment Educational Foundation (BREEF) Executive Director Casuarina McKinney-Lambert asserted that the oil company did not have sufficient funding when it began exploratory drilling last month and questioned whether the company has enough resources “to address any unforeseen incidents”.
Smith, who is also a former minister of state for finance and Central Bank governor, brushed the assertion off as the environmentalists not having a clear understanding of business financing practices.
“The lengths the environmental groups are going to in order to distort the facts is frightening and quite frankly wrong, demonstrating a stark lack of understanding of commonplace business funding practices. Like most businesses, at any point in time, BPC has a mix of “cash at bank” and other funding facilities that can be drawn as and when needed, in order to ensure the costs associated with funding are only borne when the money is actually required,” he said in a statement.
“It is worth noting that BPC bears all of the costs of the exploration well. The government does not have to contribute a single dollar, but gets to share the benefits of success. In authorizing BPC to drill this well, the Bahamian government is exercising its legitimate, sovereign right to find out if The Bahamas has its own important resource, which has the potential to benefit current and future generations of Bahamians.”
BPC maintained that Perseverance #1 has been fully funded, including a significant contingency, since the date of mobilization.
“Any other interpretation of this press release represents a deliberate and gross misrepresentation of the facts and/or demonstrates a selective naivety as to how businesses operating in The Bahamas (and internationally) maintain the capital to fund themselves,” the company noted.
Through the put option, BPC is seeking to issue 187.5 million new ordinary shares at 2 pence per share, which it said would bring total funding since August 2019 to $52 million, with current undrawn potential funding sources in place for up to a further $20 million.