Bahamas Petroleum Company, the oil and gas exploration company with significant prospective resources in licences in The Commonwealth of The Bahamas, announces that, having postponed its Perseverance #1 drilling operation from H1 2020 due to the Covid-19 pandemic, it has entered into a definitive contract with Stena Drilling for provision of a drilling rig as soon as Q4 2020. Consequent on the terms of this contract, the Company is able to provide an updated and significantly reduced cost estimate for its first exploration well in The Bahamas, along with a general update on expected timing and progress toward drilling.

Highlights

• Unconditional agreement with Stena Drilling for the provision of a state of the art, sixth generation drilling rig, including integrated supply of a Managed Pressure Drilling (MPD) unit.
• Firm window for commencement of drilling between 15 December 2020 and 1 February 2021, consistent with licence obligations as extended by the Covid-19 force majeure event.
• Reduced estimated total cost of Perseverance #1, down by approximately 15%, based on the contracted rig rate and rates for other contracted services and equipment, reflecting changes to the global operating environment.
• Perseverance #1 well targeting recoverable P50 oil resources 0.77 billion barrels, with an upside of 1.44 billion barrels. Reduced cost estimate creates scope for expanded formation evaluation work in the success case, without increasing previous estimated total capital requirement.
• Optimal funding strategy and timing, including farm-out process, being reassessed accordingly.

Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, said:
"In March 2020, we were within weeks of commencing the drilling of our Perseverance #1 well when we were compelled to defer our planned drilling programme due to the impacts of the Covid-19 pandemic. Immediately we undertook a range of activities necessary to reschedule activity toward the end of 2020 and into the first quarter of 2021, consistent with our licence obligations (as extended for the declared force majeure event), by which time we expect the worst of the broad suite of impacts of the pandemic to be behind us. To this end we are pleased to announce that we have today entered into a rig contract with Stena Drilling, which provides a firm series of parameters on rig rate, provision of MPD, mobilisation and demobilisation costs, and defines a revised drilling window of 15 December 2020 to 1 February 2021.

This decision - to lock in a rig now, at an  already favourable rig rate, rather than try and second guess what markets and availability will look like later in the year - speaks to our intent to ensure Perseverance #1 is drilled at the soonest opportunity, and provides the necessary certainty needed for operational planning. Acting decisively in this way is consistent with our single-minded focus on technical delivery. Importantly, the commercial parameters in the rig contract have allowed us to not only revise down significantly the anticipated well cost, but also clears the way to revisit our funding strategy with adequate time to ensure we have the funds available as and when we need them, on the best possible terms. I look forward to updating shareholders in the coming months as we continue making progress towards recommencing operations."

Overview

BPC has an obligation to drill an initial exploration well prior to the conclusion of the current exploration period of its four conjoined licences in the southern territorial waters of The Commonwealth of The Bahamas. That period was due to expire on 31 December 2020, but is extendable based upon declaration of force majeure occasioned by the Bahamian and global response to the Covid-19 virus pandemic, with the Company having submitted a force majeure notice to the Government of The Bahamas in early March 2020, in accordance with the terms of its licences. Based upon the licence terms and prevailing regulations (and allowing only for the duration of disruption to operations to-date) the Company expects that the current exploration period of its licences will extend until at least April 2021 (however, given the likely further continued Covid-19 related disruption the Company has sought clarification from the Government on an extension to at least June 2021).

At the same time, the Company's long-stated policy has been to avoid undertaking drilling activities during the peak of the Bahamian hurricane season, which traditionally ends in November of each year.

Accordingly, the Company has been working hard over the period of Covid-19 related shut-downs to reschedule its drilling plans, including all critical supply and service contracts, along with finance arrangements, towards a revised operational objective of drilling Perseverance #1 in the period December 2020 to April 2021.

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