The shareholders of Bahamas Petroleum Company (BPC) have cleared the way for the company to move forward with the drilling of its initial exploration well next year.
BPC announced on its website that it received the blessing of its shareholders at its recent annual general meeting (AGM) to move forward with its contingency funding plan and continued farm-in discussions.
“All resolutions were duly passed,” BPC said on its website.
“The permissions granted by our shareholders will allow us to move forward a series of coordinated steps that the company has taken toward the drilling of an initial exploration well during 2020, consistent with our license obligations, including providing important options available to us in funding the well.
“Importantly, this will add tension into the ongoing farm-out discussions, such that the board can pursue whichever funding option it deems is in the best interests of the company and all its stakeholders.”
The company has continued to carry out geologic studies in the southern Bahamas to ensure that it is prepared to drill an exploratory well before the end of 2020 and to further entice potential farm-in partners.
Chief Executive Officer of BPC Simon Potter said the studies will reduce subsurface risk.
“As we move forward operationally, and in view of ongoing farm-in and funding discussions, we have continued to undertake related technical studies,” said Potter.
“The objective of this work has been to further reduce subsurface risk by demonstrating the existence and quality of the petroleum system components, and also to optimize the location of the wells we intend to drill.
“We are most encouraged that these four most recent studies have each produced positive results, which when taken together support the potential presence of hydrocarbons in identified fractured networks, thereby serving to further technically de-risk the drill candidates and reconfirming our view that our prospects in The Bahamas represent a drill-ready, potentially multibillion barrel prospect inventory.”
Despite its preference of moving forward with its oil exploration with a farm-in partner, BPC said recently that it is preparing to drill an exploratory well with or without that partner next year, having secured a framework agreement with deepwater drilling contractor Seadrill for the use of a drilling rig and the services of renowned oil field service company Halliburton to provide equipment tools and a drilling plan.
BPC said in its AGM notice that the cost of the well could be between $25 million and $50 million.
BPC is seeking to raise money to fund the drilling of the exploratory well if a farm-in partner cannot be secured in 2020. The company is obligated under its licensing agreement with the government to drill an exploratory well in its licensed area in the southern Bahamas before the end of 2020.
If the company is forced to extend its licensing agreement, it would be “required to relinquish 50 percent of the southern license area”.
According to BPC’s AGM notice, the company’s board of directors concluded that moving forward with drilling the exploratory well without securing a farm-in partner is the most prudent course of business in order to comply with its agreements with government.
BPC explained in its notice that the cost for rigs and drilling have decreased over the past few years, leading the company to consider commencing its exploratory well without a farm-in partner after securing financing “through a conditional convertible loan for £10.25 million”, which was approved by shareholders at the AGM.
“Additionally, the company is presently considering a range of other financing options, as well as continuing the farm-in process,” the AGM notice states.
The notice explains that BPC is hoping to secure the convertible loan through Australian-based Bizzell Capital Partners Pty Ltd., “acting on behalf of entities associated with Mr. Stephen Bizzell and Mr. Mark Carnegie (BCI)”.
BPC is asking its shareholders to approve the convertible loan as well as approve the issuance of 25 million options to BCI to subscribe for ordinary shares at a price of £0.02 per share, the issuance of 12.5 million options to BCI to subscribe for ordinary shares at £0.025 per share and the issue of 12.5 million options to BCI to subscribe for ordinary shares at £0.03p per share, pursuant to the approval of the agreement for the conditional convertible loan.
The directors of BPC are also asking, as a special resolution, that the directors allow the company to “allot and issue up to a further 1,800,000,000 new ordinary shares in the capital of the company”.