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I missed this point until a few minutes ago.

The 8/2/21 RNS https://polaris.brighterir.com/public/bahamas_petroleum_company/news/rns/story/xq6o4kr mentions farm-in

The 16/2/21 RNS https://polaris.brighterir.com/public/bahamas_petroleum_company/news/rns/story/xq63oqr mentions both farm-out and farm-in.

What’s the difference? If a company needs funds and partners in a JV to do exploration wells (eg, Percy-2) it is a Farm-in. If a company has found oil and wants to partner with a major player to take this further it is a farm-OUT. BPC has found oil………….

‘…….the well successfully validated the existence of oil, seal and reservoir. Together, these factors verify the existence of a working Lower Cretaceous petroleum system and sequences of reservoir quality within the Aptian, pointing to the overall hydrocarbon potential of other untested prospects captured by BPC's extensive acreage holding. However, at the Perseverance #1 location the volumes of oil encountered are not commercial’……….

Farm ins and outs happen all the time. See https://keyfactsenergy.com/news/?news_type=5

I read the 16/2/21 RNS that the BoD believes there is interest by majors/supermajors in a farm-OUT. A lot could have happened between 8/2 and 16/2. Otherwise they wouldn’t have stated this on 16/2. In the meantime, GNEISS are dealing with potential farm-ins with partners for drilling Percy-2 etc, if no deal can be done with a major.

Many LTHs took the stoic approach since 8/2 of, ‘oh well, at least we have ex-CERP.’ However, subject to tech analysis of the Percy-1 results, we have potentially a lot more. I believe the potential of a farm-OUT should not be underestimated. It’s a bit like getting a phone call from a solicitor that a distant recently deceased aunt has bequeathed an old rusty immobile car festering in her Wiltshire farm outbuilding. The initial reaction may be negative until realising it is a rare car worth £500,000 with a number-plate worth £100,000.

If a farm-OUT occurs we are looking at potential re-imbursement of up to $130m back-costs, plus a percentage of any discoveries in future. Or a buy-out. The SP would soar to at least the value of the cash + ex-CERP assets potential. And the news would likely come suddenly and out of the blue.

To be clear this is not a ramp. In fact, this post comes with a warning: if no farm-out or farm-in, we are only left with ex-CERP assets, but refer to my previous post. I am stating possibilities based on the wordage of 2 recent RNSs as I do not believe it was sloppy editing by the author.(s) Furthermore, there appears to be a LOT of interest based on the potential in Bahamas waters.

IMHO. DYOR. GLA. Opinions welcome.

Starchild
https://www.lse.co.uk/profiles/starchild/

16/4/21 is a key date for BPC. Why?

………‘the last date for subscription for further amounts of Notes, up to the total undrawn Facility availability of £10 million, is extended to 16 April 2021, and this date will be extended further to 30 June 2021 if a minimum of £8.5 million of Notes in aggregate have been subscribed for by 16 April 2021’…… (Source 16/2/21 RNS https://polaris.brighterir.com/public/bahamas_petroleum_company/news/rns/story/xq63oqr )

……. ‘(iii) in respect of any shares issued pursuant to the exercise of the Put or Call, the date on which BPC may be required to make a reconciling payment to the Investor is extended from 60 days after the date of spudding…..to 16 April 2021, this extension allowing a considerably longer window for the determination of the need for a reconciliation payment (if any), which BPC CONSIDERS TO BE TO ITS ADVANTAGE’………. (Source 7/1/21 RNS https://polaris.brighterir.com/public/bahamas_petroleum_company/news/rns/story/w0y5j8x )

……’The Bahamian people will know by April if they are an oil rich nation’ ….. (Source: BPC in local press January). It would be interesting if BPC stated in April……. ‘From the analysis of the well data, the Bahamas IS VERY LIKELY an oil rich nation, subject to more exploration’.

Had Percy-1 been commercial it is obvious why April was important. But why now?

Ideas:

1. Was a farm-in on the cards, prior to spud subject to oil quality etc, hence the para in the 16/2/21 RNS?…………. ‘[BPC] has continued to assess options for a farm-out……. including a number of oil and gas MAJORS and SUPER MAJORS, right up to the point of spudding……. Since announcing the well results, the Company has received a number of unsolicited approaches from industry counterparties. Gneiss Energy has been formally engaged…….’

2. Is a farm-in on the cards as of 16/2/21 (RNS date) based on what the BoD knows to-date about Percy-1 and BPC are hoping to do a deal by April? BPC must have war gamed all scenarios.

3. Regardless of 1 and 2, something big is expected by 16 April on the ex-CERP asset side. But what? I quote from the 16/2 RNS again:

(a) …….‘Saffron #2 appraisal well, targeted to commence in Q1 2021’…….. [with results by 16/4?]

(b) ……‘Drilling of an appraisal well and conduct of Extended Well Test (EWT) in the Weg Naar Zee Block in Suriname in Q1 2021’ ……. [with results by 16/4?]

If 3(a) and/or (b) is positive, this will likely be followed by a CPR opening doors to alternative cheaper RBL or infrastructure funding.

(c ) In the meantime, BPC is attempting to increase Trinidad production from 500/b per day (Dec 2020) to potentially 1000b+ which last occurred in 2018.

(d) CERP LTHs: what else should go in the ‘hot’ news list? The PRD CO2 project? Other stuff?

Watch Leo’s 4/5/20 18min LSE interview https://www.youtube.com/watch?app=desktop&v=H1wlRmBJEig This is where BPC is NOW.

IMHO. DYOR. GLA.

Starchild
https://www.lse.co.uk/profiles/starch

Key points:

1. LOL

Quote…..’In relation to the package of funding …. 1798 Volantis….[BPC] confirms that ……..A full and final reconciliation payment of approximately £370,000 in respect of the initial £7.5 million tranche has been made by BPC to the Investor, representing approximately 5 per cent. of the funds received by the Company under this initial tranche. This payment has been entirely OFFSET by an agreed REBATE …….such that the net cash cost….of the full and final reconciliation for this tranche of funding has been NILL….

IMO, the above was a diplomatic way of stating, ‘Dear LOL, based on your conduct publicly ‘regretting’ dealing with BPC and not waiting till after the Percy-1 result, we aren’t going to pay you a dime, but we will explain this away in an RNS so it doesn’t cause you embarrassment.’

Some were worried there was no backstop (I believed it was 2p) and BPC could have been on the rack for millions. Furthermore, I also believed NO monies would be due to LOL re their conduct. I have been proven right on both fronts. Let’s see what happens with the c$5m.

2. Funding/Cash

Quote…. ‘[BPC] has settled a number of corporate creditors through the issuance of, in aggregate, 135m new BPC shares…’

We don’t know who these creditors are other than it is unlikely to be Stena-Drilling.….’Close-out of remaining costs associated with the drilling of Perseverance #1 (a number of which will not be finalised and become payable for 30-60 days post-well completion) is also ongoing’……

Effect: Cash was conserved to be used for ex-CERP development @ 0.8p x 135m = c£1m

There were some folks concerned about bankruptcy. This is clearly NOT the case as there are various options for cash excluding the c$15m in the bank. And let’s not forget ex-CERP assets are making a daily NET profit at over $150k per month even at 480b/day. CERP reach 1024b/day in 2018.

Others were concerned a massive CLN would be issued at 0.5p. This is not the case as the new benchmark is currently 0.8p. For creditors/lenders to accept 0.8p (when the SP in the last few days was 0.5-0.7p is VERY rare), this implies short term belief it will be MORE than 0.8p.

Frankly, I don’t care if there is further dilution as long as the SP recovers to 2p+ in 12 months. Anything less than 6B shares will exceed my expectations. If Percy result can be monetized and/or ex-CERP comes up trumps, dilution will be minimized and at a higher price than the current 0.8p bar.

3. Monetizing Bahamas findings

It is inconceivable the BoD did not war game all 3 drill outcomes prior to the Percy-1 result whether a duster, non-commercial or a commercial find. There is clearly interest and GNEISS will now get involved. They have come up with the goods on 3 occasions. We await another RNS in 2 weeks or so after the Percy-1 autopsy.

IMHO. DYOR. GLA

Starchild
https://www.lse.co.uk/profiles/starchild/

Ps: court hearing today re 200k costs

Farm-in possibilities

Some good opinions yesterday on farm-in possibilities. Press https://www.lse.co.uk/profiles/tiburn/ with some additional commentary from me below.

• In 2018 a major paid $1m exclusivity for several months and even paid more to extend. They did not fall about laughing and leave after 2 weeks, nor extend their stay to go Marlin fishing. I believe one of the following happened:

1. The major offered BPC a deal at punitive rates which was declined.

2. They liked what they saw, but waited on the side-lines in case BPC failed to drill Percy-1, and then move in.

3. They liked what they saw but wanted BPC to take the risk, get the ‘deep dive’ results and come back. This is almost where we are NOW. It is also consistent with the 8/2/21 RNS…. [BPC] will proceed to undertake… evaluation of the data… as we believe the results provide a SOUND technical basis for RENEWED farm-in discussions.’ …….. (Source https://polaris.brighterir.com/public/bahamas_petroleum_company/news/rns/story/xq6o4kr )

• Geo-political Gov considerations: I have advised Govs strategically at Ministerial level and politically at election manifesto level. If I were advising one of the two Bahamian political parties (which I am not), I would suggest the promise of an ADVISORY oil referendum on the same day as the 2022 election. Privately I would advise in the event of a ‘no’ vote, it need not be binding, with the excuse the country is broke and/or, ‘we have no choice due to the watertight contract with BPC and now Exxon’. If they said ‘yes’, it would become a clear mandate with the tiny group of EA’s huffing and puffing as much as they want.

• Geo-political Major oil company considerations: Let’s assume the major(s) like what they see from the Percy-1 tech results. There could be a bidding war. If Russian or Chinese majors were involved, there would be advantages for local influence. If a western major(s) was involved, they would get a useful trump card for leveraging the USA…’OK we won’t drill in the licensed block adjacent to Florida in return for x, y, z…..Alaska…..Canada pipeline….etc

Ex CERP Potential then and now

Eggchaser1 + everyone: A wealth of info can be found in the Y/E 2019 CERP accounts. (Source: scroll down CH’s list of docs to 18/8/20 https://find-and-update.company-information.service.gov.uk/company/05901339/filing-history )
Read the first 9 pages, because this is where we are now, yet much more advance in developing ex-CERP assets. It is interesting CERP peaked at 1021 b/day in 2018.

If your X-ref recent BPC presentations, the cost of all operations 4th qtr 2020 was $4m (inc Leo’s salary), with $20/b extraction costs and 12.5% Gov royalties. Assuming no future culling of staff, $4m/year, no cap-ex, and 750b/day at $60 WTI PoO, will create gross profit of c$10m minus $4m Op-expenses: $6m free cash to develop T+T.
IMHO. DYOR. GLA

Starchild
https://www.lse.co.uk/profiles/starchild/

Petroliuminvest: You asked me 4 questions, which in total transparency I will answer. Firstly, I have several million shares and introduced selected friends, neighbours, family. I did so with all sorts of caveats on the risks involved. I selected them based on two key factors; if the investment turned out to be a disaster they could afford the loss and furthermore they wouldn’t hate me.

Your questions

1. Do I short this stock on an ongoing basis or are you a long term holder?

I am a LTH since 2014. I have never used CFDs or derivatives to short (or long) any investment.

2. Do I wait for [BPC] to spike as it historically has...then sell....then buy big again on the drops...then sell?

No. However, quite recently I have and will trade c10% based on the SP’s volatility. I’ll use a simple example rather than spell out my strategy which would be inappropriate. Let’s say someone has 10m shares, trades 10% of them, ie 1m to buy-sell-buy. If they could make 10% profit per week, they would be able to make 1% profit/wk based on total, and double their money in 100 weeks. However this example is not real world. Also note, I haven’t got time to hang around a trading console all day, auto trading such as limit orders rarely get triggered on low volume AIM, and more importantly this strategy may fail! I do this for hedging. What I will NOT do is manipulate anyone on this BB (and my friends/relatives) by talking the SP up/down for personal gain. All my comments, research and opinions are in good faith with a half-glass full mentality. I comment on this BB most days, in a generally upbeat manner so I can hardly be accused of being a pump and dumper by shorting BPC behind people’s backs. That would be quite dumb if I wanted to talk down the SP!

3. I guess your average is quite high but are very certain of an eventual success here?

Yes, but a lot lower than at 0800am on 8/1/21. Following the result I bought several million @ 0.61-0.65p. I am quite certain IMHO but DYOR, of success, subject to my answer in point 4 below.

4. What is your 1-2 years SP prediction?

I rarely give opinion on BPC SP other than to base it on NEWS, BPC presentations, pro-analysts’ opinions or P/E ratios. Even then, the question ought to be what the market cap will be, rather than the SP. Actus and Investec proposed £250-300m purely on ex-CERP if all its ducks line up in a row. If they are only half right, many LTHs are hedged And a ROI.

I trust this answers your questions in total transparency.

Finally, off-topic: OMJ has been anti-BPC for ages. What I found interesting was his quote….’That’s why I believe they’re generally only worth buying for a short-term run up to a potentially transformational event and only when fully financed for that.’ ….This is the nearest he has ever implied to buy now as SP is low.

IMHO. DYOR. GLA

Starchild
https://www.lse.co.uk/profiles/starchild/

Key dates with possible impact to SP [H = high, L = Low]

1. [H] At any time from Monday onwards: update(s) on already funded and implemented ex-CERP developments since Nathan’s 28/1 Proactive presentation.

2. At any time from Monday onwards: Whether LO exercised its put option for $5m for 189m shares @2p, the deadline of which was 12/2. I think there’s a greater probability I will be appointed to the BPC BoD than this happening.

3. [H] At any time from Monday onwards: Funding/cash-flow updates in at least 2 RNSs, but see point ‘7’

4. [L] 17/2: (Wednesday) BPC Court hearing re 200k costs application against the environmentalist groups.

5. [H] Sometime in March: we should get the full tech results of the Percy-1 drill analysis.

6. [L] 29/3: Court will hear over 2 days, the judicial review application by the environmentalists which BPC is now party to

7. [H] 26/4: Reconciliation date with LOL. BPC may have some leverage based on LOL’s knee jerk reaction press releases. LOL should not have stated it ‘regretted investing in BPC’ at such a critical time and should have waited until after the drill result. Irrespective, we will get an updated funding update soon after. IMO, it is not a certainty LOL are due any shortfall immediately after. If the ‘shortfall’ figures are already known, and BPC/LOL have negotiated a deal, this could be announced as part of point ‘3’. How can the shortfall figure already be known? 1.5 Billion shares were traded since Monday, which could have included LOL’s remaining +/-100m remaining shares.

I never thought I would be getting excited at the possibility of our BPC share price reaching the dizzy heights of 1p within the next few weeks, and higher over the course of the year, subject to potentially positive RNSs as listed above.

Also remember, most of the recent BoD presentations and profit forecasts have been based on 40/b PoO. WTI is almost $60. This makes a huge difference to a small oil company currently producing 500b per day, hoping to produce 2500b per day by year end. Ongoing PoO news will affect SP.

IMHO. DYOR. GLA

Starchild
https://www.lse.co.uk/profiles/starchild/

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