(Alliance News) - Bahamas Petroleum Co PLC on Wednesday said it is on track to drill its initial exploration well in the first half of 2020 at a much lower estimated cost than expected.
Shares in Bahamas Petroleum were up 37% at 2.18 pence in morning trade in London, having reached 2.58p earlier.
The company is now expecting the initial exploration well - set to be drilled offshore in the Bahamas - to cost between USD25 million and USD30 million, and less than USD50 million in total if the company embarks on a concurrent two-well campaign.
This is far below the previous estimate of between USD60 million and USD80 million for just one well.
Moreover, the company has secured conditional agreement from Bizzell Capital Partners Pty Ltd for a GBP10.3 million convertible loan investment - covering around half the cost of a single well. As consideration for entering the agreement, Bahamas Petroleum has agreed to issue 25.0 million share options to Bizzell with a 2 pence per share exercise price.
The loan would be for three years and have a coupon of 12% per annum.
Right now, Bahamas Petroleum is in talks for a farm-out deal and also has received proposals "for other financing alternatives".
Bahamas Petroleum has signed a framework agreement with offshore drill rig firm Seadrill "for the provision of a sixth-generation drilling rig". The agreement includes a fixed day rate and specifies the time slot for drill delivery in the first half of 2020. Also included is the ability to extend the drill campaign into a two-well programme with enough funding.
Contractor Halliburton has been chosen as integrated well services provider while BakerHghes GE has been selected "to provide a range of well-related equipment" such as tubulars and well heads.
Chief Executive Simon Potter said: "Following our licences being extended to the end of 2020 by the government of the Bahamas earlier this year, rapid progress has been made across our business. Today we are pleased to update shareholders on a series of coordinated steps that the company has taken toward drilling of an initial exploration well during 2020, consistent with our licence obligations.
"This includes a framework agreement for a rig, appointments for essential well services with leading global oil services companies, as well as considerable progress on financial arrangements to fund the drilling, whether that be via a farm-in on acceptable terms, or by other means, whichever is in the best interests of the company. I look forward to updating all stakeholders as we make further progress."
Bahamas Petroleum has convened its annual general meeting for September 17, where it will seek approval for its proposals and "attend to the ordinary business" of its AGM.
