(Sharecast News) - Caribbean and Atlantic margins-focussed oil and gas company Bahamas Petroleum updated the market on cost estimates and funding arrangements for well operations in the Bahamas on Friday, reporting that the sustained impact of Covid-19 meant that itself and Stena Drilling had decided to implement "enhanced" coronavirus mitigation measures.
The AIM-traded firm said that included heightened isolation and testing measures for all crew and personnel, extended mandatory quarantine in secure hotel facilities, and private charter flights.
Those enhanced Covid-19 mitigation measures and associated operational impacts meant the cost estimate for Perseverance #1 was revised upward by about 15%, to between $24m and $28m, with the contingency element expanded to $7m from $5m.
To provide appropriate financial headroom, the conditional convertible note facility was increased by £4.75m to £15m, the board said, with an initial subscription notice issued for £3m and the balance of the facility to be provided in a timeframe said to be consistent with the demands of operations.
"Given the ever-evolving and escalating Covid-19 situation around the world, the sobering reality is that preventing the Covid-19 virus spreading onto the Perseverance #1 drilling installation in the first place is dramatically more cost effective than having to deal with it once it has arrived offshore," said chief executive officer Simon Potter.
"Hence the considerable efforts put in by BPC, Stena and participating contractors and service companies to develop even more stringent measures to detect and diminish the risk of infection, which are now being implemented, but which will come at a cost.
"Fortunately, given the flexible range of funding options the company has developed over the course of the last two years, we have successfully agreed an increase to the size of our conditional convertible note facility by £4.75m to offset this increased cost."
Potter said the company was "pleased" that the providers of the facility had demonstrated their commitment to the project by agreeing to provide a portion of the facility unconditionally once the well was spud, with the balance expected to be available as required.
"In aggregate, these arrangements provide enhanced financial capacity, notwithstanding a worsening Covid-19 environment.
"We are aiming to assess what hydrocarbon resource potential lies within the territorial waters of the Bahamas, for the mutual benefit of the nation and people of the Bahamas, the shareholders of BPC, and all other stakeholders.
"Safe, responsible, and uninterrupted operation is our key objective in the ever changing global Covid-19 environment, and these additional costs and increased funding arrangements reflect a prudent approach to achieving this objective."
At 1328 BST, shares in Bahamas Petroleum Company were down 6.13% at 2.91p.
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