RE: IDEAL SCENARIO13 Jun 2020 14:11
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Merger rationale
· Columbus is an AIM-quoted oil and gas producer and explorer focused on onshore Trinidad and Suriname. In Trinidad, the Columbus Group has five producing fields, two appraisal / development projects and a prospective exploration portfolio in the South West Peninsula, which lies in the extreme southwest of Trinidad and consists of stacked shallow and deep prospects. A discovery was announced by Columbus in two zones in one of these prospects in late April 2020, including high-quality light oil (circa 40-degree API) recovered to surface. In Suriname, Columbus has an onshore appraisal / development project.
· BPC is an AIM-quoted oil and gas exploration company focused on offshore exploration in licences located in the southern territorial waters of The Bahamas. BPC is currently on-track for drilling an initial exploration well, Perseverance #1, in late 2020 / early 2021, with the well targeting recoverable P50 prospective oil resources of 0.77 billion barrels, with an upside of 1.44 billion barrels. Across the BPC portfolio, BPC's assets in The Bahamas have an independently assessed resource potential of between 8 billion and 28 billion barrels STOIIP. BPC has also recently been awarded an exploration licence in Uruguay, which BPC considers to be highly prospective, with a potential resource of 1 billion barrels of oil equivalent.
· The Boards believe that a combination of Columbus and BPC will create a Caribbean and Atlantic margin focused oil and gas 'champion', with assets that range across the full spectrum of oil and gas activities, from exploration, appraisal and development to production. The Boards consider that the Merger offers a strong fit in terms of asset overlap and technical, operational and financial / risk diversification synergies.
· In particular, the Combined Group will have access to high-impact offshore exploration in The Bahamas with drilling expected to take place within the next nine months, material onshore exploration, appraisal and development projects in Trinidad, a material onshore appraisal and development project in Suriname, and longer-term exploration prospects of scale in Uruguay. All of this will be underpinned by existing production onshore Trinidad, which BPC believes can be materially increased at low cost by application of BPC's technical expertise.
· Moreover, the Boards believe the Combined Group will have the footprint, technical capabilities and scale to further grow and consolidate and deploy its combined expertise in the Caribbean and more broadly in oil and gas projects around the Atlantic margin, and in so doing, attract increased interest from investors / shareholders attracted to the broader, diversified portfolio of assets and risks that the Combined Group would represent.
Columbus recommendation
· The Columbus Directors, who have been so advised by VSA Capital Limited as to the financial terms of the Merger,
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