Member Info for jimtheknow

Today's RNS is a bit of a mixed bag for me, there are potential positives in it but as with every investment case people should always take a cynical view and balance these out.

We must not lose focus on BPC's main objective to drill P#1 and as far as we can tell we are in a very strong position here, better than BPC have ever been so today's announcement can be seen as a positive that the company feels it is in a strong enough position to start spreading it's wings and looking for value opportunities in these depressed global conditions. History shows the companies that get these decisions right, the ones that add quality assets and resources during times when the competition are firefighting, can often propel themselves to another level.

Also, by acquiring these assets BPC cease to be a one trick pony, the have derisked their business and it will continue to be a going concern should the worst happen in the Bahamas, this adds a little layer of comfort to an investor. Having business diversity also adds a little bit of leverage at the Bahamas licence farm-out table.

On the negative side, this could prove to be a distraction and a money pit - the oil exploration industry is overflowing with examples of how companies went under in these very same circumstances. As it stands there is no proof whatsoever this is a quality asset and it will require work and funding, the latter of which has been in the balance for BPC's operations in the Bahamas for a very long time. Just as BPC look to have secured themselves and be on a stable financial footing for their main objective they now have more liabilities. It is essentially a gamble by the board in getting into a basin early which may pay off, they have obviously looked up the coastline to Guyana and thought they want to be at this party. It may pay off, it may not.

Noting Laallee's comment earlier, Mr Potter must have spat his coffee out all over his computer when trying to keep a straight face when he wrote 'nimble'. About as nimble as a hippopotamus dressed as a sugar plum fairy is how i see BPC unfortunately. The ultimate cynic may also see this as adding a few more carriages onto the gravy train that will now run a few more years.

On the whole i'm not disappointed by the RNS, the company should already have the technical resources to process the data while other work fronts may be quiet. It shows vision and diversity and ambition and that the company must be financially healthy to embark on ventures new. Just don't take the eye off the ball, we are so close!!!!!

Starchild, You really need to ignore and switch off from Oil Charlatan Jim, the man is a peniis.

Unfortunately it gets a little bit more complicated than a pure math question i.e. adding up each wells CoS. As (essentially) virgin wildcat territory the geologists have evaluated each prospect and returned a CoS, once one of the targets is picked and the drill bit makes its way to TD the geological model for the basin will be refined, as will the CoS for other targets in the basin. So in some ways this is why it's a bit futile adding up all the targets CoS now and it's why this first 'proper' well is a big deal.

I say 'virgin' but old, off target wells have been drilled with oil shows present so we know the conditions for oil were once there, this is a very encouraging first sign. How much of that oil has escaped though over the last few million years is the question we're all waiting to know.

Starchild, some interesting points discussed but i'd just like to point something very important out, 2 drills would not increase the CoS to c.65%, that is not how you calculate probability. In the example you gave the CoS doesn't increase as you describe, this is basic math.

Mr Scott was certainly trying his hardest to hold back the giggles when he dropped f-bomb question to Eytan towards the end :-)

My thoughts are that it'll all come good for BPC.

A lot of key factors BPC didn't have squared away in previous years e.g. finances, are now under their control and they are very well placed to take advantage of the general industry downturn with drilling rigs. The tables have now turned 180 degrees for BPC, they have gone from having a weak hand where companies were able to take advantage of them to now being able to dictate things on their terms - a very strange concept for us long term holders. With long lead items now purchased and sat in storage, well planning complete with target(s) full defined, the detailed requirements for all contracts likely to be fully understood, BPC are primed to fly out of the traps.

The current oil market must be a good indicator for how bad things can possibly go and although it's bad, oil in the early 30's isn't that bad considering half the worlds population is in lockdown so it can only get better from here and BPC's breakeven fiscal model is around where we are.

Tourism in the Bahamas is likely to take a long time to recover as cruise ships are likely to be some of the last modes of transport to return given their propensity for bugs and viruses to spread, another economic pillar is required for them.

An RNS on a rig and then one for a small license extension (if required) and the sp will be off.

Time for me to go back to sleep for a couple of months though.

Predicting a share price for BPC would require a crystal ball of epic proportions and i think anyone gifted with such a powerful device would be best using it in more meaningful ways than on penny oil exploration stocks, however, should a drilling campaign go well then i think it's safe to say it will be higher than it is now.

When investing its probably more appropriate to look at the macroeconomic situation over what is expected in a number of years rather than the here and now. Should BPC find oil then it will not be possible to bring this to the market for at least 3yrs, the 3yrs being the gold standard Exxon achieved in Guyana. So, what are your thoughts on where oil will be as a commodity in 3yrs?

Personally i think the world will still be hooked on oil for many decades to come, regardless of these very strange times. I also think the producers in the Permian Basin are going to be hit very very hard in the short term and a lot will go out of business for good and this will topple Americas relatively recent rise to being the worlds largest oil producer, this can only be a benefit to any new entrant to the oil supply market.

As a company that is reported as being fully funded for a world scale drill, i don't think BPC are in too bad a position.

He's an awful parasitic cretin, a rusty sheriff's badge.

PI, agree. We aren’t going to see any statements on FM or an extension for some time as the government have far more pressing matters to deal with. However, the company have enormous experience in dealing with the government in troubled times, it must be the companies number 1 attribute after all these years. We should be confident they know what they need to do and when. We are at the mercy of greater forces but I’d guess it’ll be around June/July time before clarity is gained on this.

Keith, don’t underestimate this virus. A poor 13yr old boy with no underlying health conditions died this week, so sad and tragic, my heart goes out to his parents. This virus is a killer and be in no doubts about it.

I think it’s safe to say oil will be overwhelmingly backed as an alternative industry in The Bahamas once the world emerges on the other side of this pandemic. I am very comfortable and confident with my holding in BPC even in these globally troubled times.

Look after yourself everyone and take care care of those loved ones around you.

Very pleased with today’s RNS. We know the world has turned on its head because of the virus and the company needed to make a statement on where it sat with it, it’s impact now and any potential future impact it may have and plans are being made for those various eventualities.

Good to see a statement that finances will largely be unscathed and existing known funding options will still be available.

If only the company would do more of this communicating lark and leave us less in the blind.

We all know the virus will be transient and the world will come out of it at some point in the not too distant future.

With things like the EA in the bag and other elements of the drill planning substantively complete I’ve never felt more comfortable.

I am also genuinely encouraged by what I feel is progress on a partnership.

Hobson’s Choice continues to get ever closer on the horizon, we will get their soon and then we’ll be drilling.

Following on from my previous post.

"...we've managed to access..." a little over 14 days ago now these were the exact words Simon Potter used towards the very beginning of his VOX Markets podcast and this choice of words for me is leading. In my opinion, if someone were to say this it says something quite specific, meaningful and obvious when highlighted.

There's a lot of talk about how BPC need to hire a rig but as has been mentioned a certain supermajor looks like he's got it and a lot of us have speculated that this supermajor could be some type of partner. When Simon says (no joke intended) they have access to a rig that feels to me that someone else has taken on the (majority) burden of rigs costs and it will be made available to BPC as and when they wish to 'access' it. BPC haven't signed a rig contract yet because they don't have to an this, in my mind, is why a rig contact wasn't signed when it woud have appeared there was nothing stopping it. And that it is someone elses preferred (higher) spec of rig and not BPC's.

Why the change in CLN terms by introducing 'optionality'?

I would like to clarify something from my previous post in case a point was misunderstood. BPC have been very careful about their rhetoric in the public domain over the years, often not saying anything so as to not mislead or build false hope. When i quote the CEO's words and state a resignation should be offered if it were deliberately misleading i'm emphasizing the confidence and certainty in what's being said as i don't believe he is being deliberately misleading.

I believe this virus has thrown in a huge spanner in the works and without it we would have had some very positive news by now, however, i now believe they'll be working on options before going public should the virus halt them in their tracks.

I still feel a surprise is coming.

JtK

So as little as 12 days ago these were Simon Potters exact words on the VOX podcast "...so we have our rig..." , "...we are doing what we said we're going to do..." , "...spud is looking to be roughly in a months time...", "...it's imminent."

I don't care what anyone says and how anyone wants to pretend to dress this up, these would be considered pretty confirmatory words when describing about going about ones business and if these words were spoken by a companies CEO they carry even more weight and are even more powerful. Should a man of business not be able to deliver on these words they should have the spine to offer their resignation. You are not a man of your word if you renege on rhetoric like this. And although i get Seadrills position if they have let the suspected rig go for a more lucrative contract, i still think they will do their best to deliver on the Notice of Award agreement, BPC may be a minnow but there's an industry professional reputation to manage. And should BPC drill this without Seadrill and find oil, there could be a lot of wells need drilling. Seadrill only need to look as far as Noble Drilling with Exxon in Guyana and the innovative contracts recently signed there which have huge longevity and value.

I therefore find it quite unbelievable that BPC will not deliver.

A lot of speculation has occurred over the last few days as to what should have happened by this point but there may be an absolutely perfectly good reason why we are where we are and it surely must be because it is better for the company to continue to pursue avenues in the knowledge it doesn't close doors or compromise the mission.

As i have posted before it doesn't add up why BPC didn't square off some key contracts earlier when they would have appeared to have had the opportunities to do so. Also, the people who have put up the recent £2.44m must have asked questions and received assurances, this sort of money isn't risked on a whim.

One of the beliefs i've always had is a (super)major will push BPC all the way to the end before making a sensible offer, they will hold their position waiting for them to trip up, to the point they will want to see all funds in place and the rig secured. I believe this may explain the recent changes to the CLN terms and the possible staggered payments structure. BPC will draw just enough money to secure the rig contract and probably initial operation and then wait for the (super)major, should they not join the party the outstanding balance will be drawn and it will be drilled at 100% equity.

I still believe there is a positive surprise to come.

JtK

Findme, It is if you click the first report that comes up on a google search, check the date of the report at the top. If you get their 5th Feb 2020 report it has all the details for the Valiant on there. Best to access it from the 'Investors' page on the Maersk Drilling website. Blue 'Download Reports' button as you scroll down.

On the subject of Jupiter. The West Jupiter is sat warm stacked in Tenerife, it's the sister ship to the Saturn with the same spec. and fits with Potters words. It would probably take around 2 weeks to transit but if some commercial agreement were to be agreed between both parties when the on hire time started... stranger things have happened and strange things are par for the course with the BPC story.

I forget where I read it now so i can't cite the source but i believe Exxons's requirement for a rig in Brasil was expected to be for a 3yr contract, maybe someone can correct me here.

It may may strategic business sense for Seadrill to move an idle drillship to the other side of the pond if one of their other premium rigs get's tied up for a long duration. It feels to me there would be more immediate opportunities for Seadrill with a rig sat on the cusp of GoM / Guyana / Mexico / T&T economic zones than looking for work in the Mediterranean or Africa. Although a 2 week transit time sounds a lot, it would be like doing it for 'free' if it had a short job in the Caribbean to go to. And if they found oil the 2020 H2 decision for multiple wells might come their way.

Might explain why it's taken so long to go inspect it at anchor ;-)

This story is far from over yet.

Findme, good idea but unfortunately i think you'll find this is contracted to Reposl until Aug '20. It is then lined up to go to Columbia for Noble Energy in Q3, 2020.

On the back of my post yesterday i have been through every major drilling companies fleet status reports and all the offshore online publications where notification of contracts for each vessel has been published and identified a number of potentially acceptable vessels that will either be out of contract or are warm stacked and available. There are quite a few, albeit not all of the dual derrick 2014 spec Mr Potter has stated.

It's got me fascinated trying to figure out what will come of this. Some people are confident the West Saturn has gone but we still await that being officially confirmed, it feels like there's a surprise still to be had.

Here's something for discussion....

BPC can't be a company struggling with cash flow at this moment you'd think. The aggregate proceeds from the Open Offer and Placing totaled $11.4 and from our Bahamian family-office investor we have received a further ~$2.8m (= £2.44m x 0.9 x 1.3). Disregarding the Mutual Fund and cash that was already in hand (~£2m) prior to any fund raising we should have had about US$14.2 to play with.

What have they bought? The only significant purchase to date has been the wellheads and 36" conductor casing, what is not clear is whether the full casing to TD was purchased at the same time? You were kind of given the impression this may have happened but it was left a little ambiguous. Lets assume it was and we have a pessimistic a cost per metre of $1000/m (~4600m to TD = 4.6m) and by the time we've thrown in wellheads lets assume well material costs ~$7m, about half cash available.

There are other things going on but lets assume they only require a 10% deposit up front and we know from the AGM the company were going to implement an employee share incentive scheme rather than big salary costs for drilling teams. This should still leave reasonable money to play with.

My point is, it feels like they could have put a deposit down on the rig to secure it and this would have released the CLN and this would have started the gravy train for the big costs as they came in during operations.

Why not?

...that a lot of people seem surprised BPC life isn't straight forward and easy. This has always been a share that requires a couple of stones, there's nothing new to see here, it's business as usual. There wasn't anything bad in today's RNS, it just wasn't the progress expected. Everyone read the RNS this morning in the shadow of oil prices plummeting, in a world apparently paralysed by a relation to the common cold and a knee jerk reaction ensued.

Also, I think i'm going to have to start using the Filter button on people where i read how BPC's chances are now gone because of the Price of Oil - what a ridiculous connection to make. If this were the case then the entire oil industry would cease to exist every time a downturn came along. BPC need to find some oil before they start to worry about impact on profits from an OPEC+ supply war. Companies look years in advance and BPC's extremely large localised structures would be very enticing to develop, a major can not say they turned down the chance to look at these as they may live to regret that in 10yrs.

The world is currently experiencing the effect of a transient condition, a transient condition that it will return from. As George Osbourne stated this morning, this is not the same as the broken financial system of 2008, this will be a 'short' sharp shock to the system from which it will quickly recover.

What the years of holding BPC has taught me is that when everyone thinks it's all over it usually isn't and it was us punters who misunderstood what we were being told, we allowed the skepticism in us to takeover and rule. As we stand we have no concrete facts the company has failed in it's mission, even the talk of losing the West Saturn is yet to be verified.

Seadrill are not the only company in town and the Notice of Award signed with them is not binding, there will be an alternative if Seadrill can not deliver. All the big players are in the GoM; Valaris (ENSCO & Rowan), Transocean, Maersk, Noble, Diamond Offshore, Stena...... a vessel will likely be available. The P#1 geology is not onerous, it is not HPHT.

As BPC stand they have ticked a lot of important boxes, including the most fundamental of which, the EA. They ARE drill ready. What remains is without doubt the final key piece in the puzzle but once it is sorted everything else will slot into place.

Good Luck.

JtK

PoC, my understanding is that you need to have identified the rig first before taking out insurance, if not a specific rig then at least the type of rig which will facilitate whatever method of drilling is employed. The insurance premium may differ with the type drilling method e.g. Managed Pressure Drilling versus Conventional Drilling. I believe advancements in MPD now mean it is considered a 'safer' form of drilling as it is better able to deal with kicks, etc. And MPD is potentially quicker, potentially reducing time on exposure.

I know i'm stating the obvious but identification and securing of the drilling vessel is THE key to all the final pieces of the puzzle falling into place.

My gut feeling (and no more) is that there is a Plan B if the West Saturn is unavailable.

Steveiom, In almost any other situation i would agree with you that Potter & Uliels reputation would be in question and they would find it very difficult to come back from this as they could quite rightly be accused of being a little disingenuous and economical with the truth right now but for one last thing......

....they know they have a farm-in to fall back on and all will be forgiven.

The terms for this though will be poor in their opinion. It's a big problem for them to give away c. 80% of the company for what will probably be around £12m, if they could find this then they'd be back in the driving seat. £12m is daylight robbery and i would agree. A successful drill and BPC become a £500m+ company.

They won't be able to hold out forever though and the Major(s) know this, as have we deep down.