[Bahamas]

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escveritas
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[Bahamas]

Unread post by escveritas »

The Bahamas

Summary Information

Asset Southern Licences (Bain, Cooper, Eneas, Donald)*
Location Offshore, Southern Territorial Waters, The Bahamas
Ownership 100%
Operator BPC
Stage Exploration drilling
Asset Type License
Tenure 2nd Exploration Period to end 2020 + Force Majeure extension due to Covid-19
Resource Estimate Perseverance #1 targeting P50 0.77 bnbbl; upside of 1.44 bnbbl; success de-risks structure with >2 bnbbl recoverable potential
Aggregate STOIIP across licences of up to 28 bnbbls (unrisked)
Fiscal Regime Royalty; no corporate tax or CGT. 30 year production right

* In addition, BPC holds 100% of the Miami license, in the northern waters of The Bahamas, pending relinquishment or a renewal agreement with the government.

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In The Bahamas, BPC holds 100% of five (5) exploration licences covering approximately 16,000km2 (4 million acres). Four of the licences are located in the southern territorial waters of The Bahamas, together referred to as the “Southern Licences” (Bain, Cooper, Donaldson, Eneas), and a fifth, the Miami licence, in the northern territorial waters of The Bahamas. The main licences of interest and focus for BPC are the Southern Licences. All licences were awarded for an initial exploration period of three years, with up to three further exploration periods possible. The Southern Licences are commercially co-joined, meaning that the fulfilment of work obligations on any one of the Southern Licences will satisfy the work obligation in respect of all the Southern Licences.

The Southern Licences are currently in their second exploration term, during which BPC is obliged to commence activity on an initial exploration well (Perseverance #1), with equipment capable of drilling to a depth of at least 18,000 feet. Currently, given extensions arising from interruptions due to the Covid-19 epidemic, the second exploration period will expire no earlier than mid-April 2021, although the Company expects further extension given the ongoing nature of the state of emergency. BPC is focused in its efforts to drill the initial exploration well: Perseverance #1, within the Southern Licences in a safe and responsible manner, within the timeframe that is consistent with its obligations under the licences.

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Established Petroleum System, Adjacent Producing Analogues

Four commercially co-joined offshore licenses covering 12,600 km2 adjacent to the Cuban border with a further 9,400 km2 under application that would secure the on-trend prospective acreage.

The licences have a 12-year exploration period (4×3 years) with the option for a 30-year production lease on discovery.
The region is significantly underexplored with only 5 historic wells over an area of 124,000km2. All five wells encountered oil shows.
A large data base of geological information has been acquired and studied to define the prospectivity of the region. This includes 8,000 km of regional 2D, 1,100 km local 2D and 3,000 km2. BroadSeis 3D seismic acquired in 2011.
The extensive dataset and G&G analysis establishes presence of petroleum systems bracketing key source, maturity, migration pathway, reservoir and seal parameters.
escveritas
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Re: [Bahamas]

Unread post by escveritas »

In terms of exploration execution, the Company’s unshakeable commitment is to the delivery of the Perseverance #1 well, consistent with licence obligations and environmental approvals. Our dedicated drilling team is now back together and remains single-minded in its focus on this core activity. Logistics plans have been reactivated; previously delivered critical path/long-lead items have been inspected pending mobilisation; Covid-19 impact mitigation plans developed and being implemented; and, any final revisions to cost estimates are being assessed. The last quarter of 2020 will see a range of operational activities in the build-up to drilling, culminating in a mobilisation of the rig to the field, expected in late 2020. As announced on 25 September 2020, in accordance with the contract with BPC, Stena Drilling has nominated the Stena IceMax as the intended drilling rig for the Perseverance #1 well.

The Stena IceMax is one of the most technically advanced drillships in the world, being dynamically positioned, dual masted and with an integrated managed pressure drilling system. The Company anticipates arrival of the vessel into the field in December 2020.
escveritas
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Re: [Bahamas]

Unread post by escveritas »

BPC entered 2020 with a single high-impact project in The Bahamas, with a drill plan and near-term schedule focused entirely on execution of an initial exploration well consistent with licence obligations. In support of this drill plan BPC had established a drilling team operating from a field office in Houston, had set up supply contracts with Halliburton and BakerHughes, had put a clear funding strategy in place, had entered into a conditional rig contract, and had commenced work over the New Year period to collect the offshore marine data that constituted an environmental baseline survey, being the final requirement in the Company’s application for Environmental Authorisation necessary to proceed with drilling.

Work was focused on a schedule that was targeting a spud date for the well in March/April 2020, with a 45 – 60 day anticipated well duration and a budgeted cost for the well in the range $30 – 35 million, including contingencies for realised rate of penetration, additional casing strings and logging surveys.

Long lead items and critical path materials were ordered, logistics contracts let for helicopters and supply boats. In early 2020 the drill plan was peer reviewed by an independent expert such that insurance could be finalised, financial capacity was enhanced through an additional financial facility provided by a Bahamian family office investment house and finally, after months of diligent work with various departments of The Government of The Bahamas and third party environmental specialists, the Ministry of the Environment granted the requisite Environmental Authorisation.

Following this, the Company announced the well to be drilled would be named Perseverance #1, would be drilled on the B North segment of the 75 km long B structure and would be targeting a P50 resource of 0.7 billion barrels (with an upside of 1.4 billion barrels). In the event of success, the well would substantially de-risk the remainder of the B structure, which in aggregate has a most likely resource level in excess of 2 billion barrels. All was set for commencement of drilling consistent with the planned schedule.

However, in late February and early March, as the full scale of the Covid-19 pandemic began to unfold across the world, BPC began to assess the potential impact the emerging pandemic might have on continuity of operations. The key issues were to assess whether conditions would (a) allow for uninterrupted operations for the entire anticipated 60 days of the drilling programme, (b) introduce risk that the potential start date of the drilling campaign would be delayed, and therefore (c) the extent to which drilling could be completed prior to the onset of the 2020 hurricane season in The Bahamas.

After detailed consideration it was decided that it was not possible to assure that these conditions could be met. As a result, and as announced in late March 2020, the decision was taken to delay the Perseverance #1 drilling programme until after the 2020 hurricane season (i.e. until after November 2020, being a time at which these operational parameters could be more readily assured).

Whilst this decision – to delay the drilling of Perseverance #1 - was a difficult one to make at the time (and frustrating, after all the efforts and material progress made toward drilling) in hindsight it is clear that it was the correct one. Indeed, BPC was amongst the first oil companies anywhere in the world to suspend operations in view of the emerging pandemic, and to focus on formulating an appropriate response plan.

Having taken the difficult decision to delay drilling activities, the first and most pressing objective established by the Company in March / April 2020, as the crisis worsened across the world, was to protect our operating capacity. Accordingly, the drilling team was placed on temporary furlough, all delivered materials were suitably and carefully warehoused, all documentation, procedures and protocols filed, and a notice of force majeure was lodged with the Government of The Bahamas. All staff where given leave to return to the safest appropriate location to ride out the impending quarantine and lockdown period, which inevitably meant a considerable geographic separation of all employees.

The Company successfully reached agreement with its various funding providers to reschedule drawdowns of funding to a timeframe more consistent with that of the anticipated revised drilling schedule. At the same time, the Company took all steps reasonably available to reduce cash outgoings,
and conserve capital.

Management then set about assuring that Perseverance #1 activity could resume at the earliest opportunity in late 2020, or as conditions might allow. In particular, with oil prices falling and global rig rates collapsing, the Company saw a clear market opportunity to seek to negotiate a new and improved contract for the required drilling rig. Ultimately, this resulted in BPC entering into an unconditional contract with Stena Drilling (as announced in late May) for the supply and delivery of a 6th generation, technologically advanced, drill ship, inclusive of the provision of a managed pressure drilling (MPD) system. The rig contract included a very specific time window in which the rig would be delivered into the field, being between the 15th of December and the 1st of February - this time window being realistically the first opportunity to commence drilling after the abatement of the 2020 hurricane season.

Establishing this rig contract was seen by management as an important declaratory step in assuring staff, shareholders, suppliers, and Government alike that the well would be commenced within as reasonable a timeframe as practicable, whilst remaining entirely consistent with licence obligations. At the same time, industry conditions meant that BPC was able to secure a reduced rig rate such that the anticipated cost of the well program was reduced by approximately 15% compared to the original well cost estimate – a material overall cost reduction.

In aggregate, therefore, by the end of May 2020 BPC was effectively in a state of “hiatus”, but in which we had secured considerable confidence in our ability to ride out the Covid-19 “storm”: a rig contract for later in 2020 was in place, service contracts deferred, equipment warehoused, undrawn funding facilities preserved and rescheduled, the timing of the licence commitment rescheduled owing to force majeure, cash being conserved, and so on.
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