We need more money, says incoming BPC CEO

Reveals that drilling of Perseverance #1 well cost $45 million and went over budget

According to Bahamas Petroleum Company’s (BPC) incoming Chief Executive Officer Eytan Uliel, the company needs more money and 2021 will be a financially tight year for the oil exploration and production company.

BPC announced last month that in addition to changes to the company’s name, board and management, BPC also plans a capital reset including a 1:10 share consolidation and recapitalization to the tune of a $10 million open offer to current shareholders first.

Uliel said at this point the company has sufficient funds for the rest of its 2021 obligations in the amount of $16 million, but it needs more heading into 2022.

“We need more money, there’s no way around sugar coating that. We raised a lot of money over the past two years to fund the drilling of Perseverance #1, again there’s no sugar coating it, the well went over budget and that means that a lot of the capital we had allocated for activities post-Perseverance #1 is no longer available and we need to refresh our capital,” he said during a recent virtual investor forum.

“We are doing that to start, with a $10 million open offer to shareholders and thereafter a placing of any shortfall.”

BPC has estimated that the final cost of drilling Perseverance #1 was $45 million, approximately $10 million over budgeted projections.

In the wake of the failed Perseverance #1 well the company has been revalued, such that its current share price is now underpinned by the value of its production assets alone.

“In terms of cash and obligations, we expect to have base funding available to us for the rest of 2021 of about £16 million. So that is the open offering proceeds, assuming that completes. The cash we currently have, convertible note proceeds due in May and surplus cash coming from production. And that money is almost entirely spoken for at the moment,” Uliel said.

Other costs are the company’s Saffron #2 appraisal well in Trinidad and Tobago, its project in Suriname, “corporate costs and we do have a number of costs that remain to be settled from Perseverance #1, bills that we have to pay for drilling and a reconciliation payment due to the Lombard Odier fund for funding that was provided through the course of drilling”, he noted.

The executive continued, “The point here, I’m not making any pretense to
shareholders, it is going to be tight for the rest of 2021. We are going to have to run a tight ship but we have funds available to us, we have funding sources available to us and over the last two years we’ve always managed to have the capital we need when we need it and I can’t see that the rest of 2021 will be any different.

“So we are going to run a tight ship, we are not going to be spending money wildly, but we have very core things that we are going to get done; drill Saffron #2, do the project in Suriname, settle up what we owe in Perseverance #1, complete all those negotiations. We do not believe that some of these things should be entirely to our account and we are in a series of negotiations and in some cases disputes with various providers, but we’ll get through all of that.”

BPC added that it has initiated a company-wide cost reduction program.

“Obviously, the last couple of years the company was built with a view of success in The Bahamas, that didn’t happen in the way that we had hoped and we now need to resize and become fit for purpose. We’re looking to reduce overall costs in the range of 20 to 30 percent,” Uliel said.

“We have initiated a company wide cost reduction program. Obviously, the last couple of years the company was built with a view of success in The Bahamas, that didn’t happen in the way that we had hoped and we now need to resize and become fit for purpose. We’re looking to reduce overall costs in the range of 20 to 30 percent.”

Speaking to why investors should put more money behind the company, Uliel said, “Put aside the past and look at where we are today. Where we are today is you have an equity value that is underpinned almost entirely by production assets, we have 80 producing wells, we have net reserves, we have cash flow, that is something valuable to start with. Everything on top of that is upside.”

For its Bahamas operations, BPC has applied for a renewal of its four licenses for exploratory oil drilling. The government has not said publicly if it would absolutely renew those licenses, however the prime minister has said he does not support oil drilling in The Bahamas.

BPC also remains in reconciliation with the government over past license fees.

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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