What have Weatherfords and Schlumberger got to do with this? They are perfectly good companies but they are not the ones BPC have chosen to engage with, BPC have selected and notified their contractors for these type of activities.
There certainly is a lot more to drilling a well than casings and tubulars but the essential planning of the well will be done to allow for specification, quantities and sizing of the materials.
I agree and not just because I’m a glass half full on this. There’s no way this drill is not happening because of anything BPC have control of. I accept there’s a tiny sliver of doubt posed by the EA permit but as long as BPC follow the rules and do what is required then the EA should be issued.
Only thing stopping this drill now in my eyes is some type of ‘act of god’ or a major incident like another Macondo in the hemisphere.
IK, my point related to the public & political sentiment, capabilities, preparedness, position and so on, of the Bahamas with regards oil. All the 'above ground' issues that often gets hot air. The Bahamas can just about claim to be a tiny shoot of a green stalk on a wilderness of dust in this respect.
I wasn't comparing or demeaning the geological structures if that's how it came across. The structures are truly enormous and yes you are right, comparable to almost anything in the Middle East. We just want to know if they have any oil in them now, we'll know before the summer is out!
In the very short term it would be nice to see us break to somewhere in the late 2's or early 3's as you then get the feeling all the short term players will have offloaded what they got in the OO & Placing for their set percentage and then the share is floating without the thought of huge swathes ready to be dumped, hopefully it will then move nicely on proper news.
Arm, very interesting and useful, thank you. Obviously Shore have rose tinted glasses and an interest in promoting this share but by their reckoning and based on the Moyes & Co stated Chance of Success of 25% - 35%, Shores prediction would be 15p for 25% and 21p for 35%.
If this were factored down for the removal of rose tinted glasses a value in the early 10's could possibly be expected at the time of spud as all the monetary risk associated with financing the well will have gone.
Arm, for us on the outside it is almost impossible to answer this question accurately as we are not privy to an accurate cash burn rate forecast over said period. We could maybe have a stab at it based on years where we've had no offshore activities but we will be carrying additional personnel e.g. drilling team, in this period but for how long people will be retained we don't know and if in this period the board choose to mitigate operating costs by deferring salary and/or taking shares, etc - how would this affect the sum? I would say based on what we think we know an additional £2m would almost certainly cover the requirement.
Rather than trying to figure this out as a straight back & white sum I prefer to view this requirement more holistically in that it is a (comparatively) trivial thing to satisfy when trying to arrange things like tubulars, wellheads, rigs, environmental surveys & permits. If they go to the effort of getting all this right they are not going trip themselves up at the final hurdle by not having met the 24m funding requirement. It is unthinkable this would happen.
On the Mutual Fund. I think the £2m is a nominal figure and the best thing for us would be to see the Fund heavily oversubscribed as like i posted previously this would see a good revenue stream coming in to the Company whilst ring fencing these shares and isolating them from AIM - they would never come into play to us. This could potentially see the overall requirement on the Convertible Note fall and therefore less shares from this come our way.
In my opinion this has been a good tactic by BPC in how to play the funding strategy chronology i.e. to date they have secured all the funds they require to go drilling so they've now opened it up to a potential unknown (quantity) revenue stream, one which they would like to maximise but matters little if it doesn't yield anything significant. Although not considered an affluent nation as a whole there will be institutions and high net worth individuals who will take advantage of this opportunity so my guess is £2m is a low bar and I'm expecting the Fund to be oversubscribed. That's not a ramp, it's how i see it. Do the basic math: 2000 people invest £1000 - that's the fund gobbled up without greedy institutions/investors holding on to a slice.
Fatal, it’s true there are still challenges to overcome and those who have followed this in great detail over the many years are probably well aware it is unlikely, although not impossible, the BPC story is not going be answered by one magic bullet RNS i.e. farm-in. The BPC story is one made up of many chapters with twists and turns on every page and it will continue to be this way unless a drill returns a completely dry hole, anything less than this and the story will continue to be spun with threads of hope and tales of unicorns, rainbows and pots of gold.
I think until very recently the criticism that had been levelled at the company/board was fair and justified. Without doubt it treated shareholders with contempt and the board were probably happy with the real world challenges that did happen e.g. Macondo, as they maintained a good lifestyle on the back of dragging it out. They’d have probably sat and span the farm-in yarn for longer if they could. I say this but i say it not to imply BPC management are chancers and incompetent, I don’t think that, I believe they are very competent and capable people - it’s simply that they were in a very content and comfortable place with little reason to push and accelerate things.
However, the 2020 deadline has now forced their hand and my belief is they are enacting a plan that had probably been available to them for some time.
The facts now are things really are changing and BPC will drill next year, this is not the company it was.
Why am I invested? Because when I was made aware of this company and knowing a little (enough but by no means an expert) about these things I realise the potential resource is enormous, far far far bigger than what companies chase on the UKCS & GoM, the rewards to an investor could therefore be truly exceptional.
This board is as much a cathartic process for all involved given the seeming never ending-ness of the saga. By all means raise and debate concerns but let’s not **** on the bonfire before it’s warmed our toes.
We may not have answers to things like a potential oil referendum but like many other things discussed such a thing is not fact, only rhetoric from some corners which may have no firm substance. Referendum or no referendum a fact that can not be ignored is BPC’s right to apply for a 30yr production license if deemed fit, an application under the 2016 Petroleum Regulations. I have read these regulations and at no point does it mention a referendum although I’m aware politics can always come into play from nowhere.
Shall we for now just worry about what is immediately in front of us i.e. a drill, and then we’ll tackle the next hurdle when we get to it. I think it’d be easier to climb said hurdle when stood on a billion barrels of oil. :-)
I don’t expect anything tomorrow, nor Tuesday, but Wednesday could be a possibility, same for Thursday and Friday would have definitely allowed time for people to get over the Christmas holiday blues and back in the groove.
If nothing else we have 5 interesting days ahead watching what the SP does and all coupled by that possible next day 7am red dot. I also believe there will definitely be some people taking positions before firm news breaks.
Exciting times ahead, for me at least.
Spirite, that’s exactly how I understand it to be and I 100% agree with your comments. I think I put in a post some time ago the Bizzell agreement isn’t a result of BPC going around the money markets looking for someone to fund them, these two entities know each other very well and this partnership has resulted in some very successful outcomes. Here’s to hoping for another.
Arm, I understand the concern about the 2yrs operating costs but personally this doesn’t worry me. The way I see it is this...
The Convertible Loan Note is effectively money borrowed at a generous interest rate that is secured against a huge tranche of shares. Once a well is drilled BPC fulfil the requirements of their exploration license and will look to enter another term. The requirement for 2yrs operating costs is to allow time for Bizzell to shift the huge tranche of shares without further market dilution should the results of the drill not come back as spectacular e.g. promising results but maybe not quite a commercial find in its own right and one that may require further exploration or analysis to recalibrate models.
Bizzell have the right to waive any clauses or slacken the criteria as they see fit, 2yrs is a nominal figure and will be based on Bizzell’s risk model for return of funds. We know how close the board of BPC are with Bizzell, this will not be a Black & White situation, there’ll be shades of grey in making sure this progresses and given every chance of succeeding.
Obviously if the drill returns nothing but dust this writes it’s own ending.
In some ways I see it as an element of confidence in the geology and seismic analysis that the board are prepared to put such large sums of money on the line of previously close colleagues. BPC are not taking money from a faceless bank, this is people they know.
I still think BPC are constantly considering options to lessen Bizzells maximum exposure and it will not surprise me if other fund raising initiatives are enacted and this will reduce Bizzells subscription and maybe any amounts not initially taken up become a contingency fund e.g if a side track is required.
I obviously may be wide of the mark here, we’ll know more over the next couple of months.
IK, yes Simon did say it wasn’t specifically a fund raising exercise and I do believe the funds primary purpose is to gain in country favour for various reasons. However, I believe Simon would always say something like that to alleviate any concerns about perceived funding gaps but unfortunately I don’t have 100% blind faith in all the rhetoric that comes out of the company and I believe they often play the politician in being economical with the truth whilst positioning themselves to do whatever they require.
For the record, I don’t think the Company wanted to do an Open Offer to existing shareholders at all, I think they probably had their funding targets covered by various plans they had in place. I think it was eating them alive to go ahead with the Open Offer and they pained them immensely to say they had listened to shareholders as this put another big chunk of shares into circulation.
It would turn out to be an interesting move if the mutual fund were to buy say £5m shares from BPC and this in turn mitigates the requirement on the Convertible Note.
The way I see it anything that goes the way of the Bahamas Mutual Fund will effectively be forever isolated from the main market, thus, even though the companies share capital may increase it will not be in play to us.
Maybe £5m is a little lofty but even £2m would be a good dent in how much is required of the Note.
I’m very intrigued to see how this one plays out.