Member Info for Starchild

BPC scenarios as of 16/3/20

Negatives
1. 2020 drilling could be put on hold due to current COVID-19 and stock market issues. BPC could leverage additional year(s) with Bahamas due to (a) EA procrastination delays; (b) events outside the control of BPC such as Covid-19.
2. CLN provider get’s cold feet.
3. Delayed farm-in due to oil price.
4. Share price could go to 1.5p-2p in knee jerk reactions over coming months, however the intangible assets such as licensing rights and amounts spent to date in prospecting (assuming no further share dilution), gives BPC a liquidation/fire sale value of 2-4.5p. Refer to 2018 PWC audited accounts.

Positives
5. There is no need to do a fire sale or liquidation now. There is enough cash to mothball for 2-3 years. BPC is not an airline or restaurant chain.
6. The price of oil can recover to $40-50, especially if Trump plays hardball with Saudi and subsidises Shale production…until Russia and Saudi agree to future quotas.
7. A vaccine will be found. In fact Remdesivir was used in desperation on 17 ‘about to die’ passengers on a cruise ship (with a special license) and half recovered.
8. BPC has immense potential.

I still believe, although everyone needs to make their own investment choices.

It is populist political rhetoric BS. If the Bahamas put it to vote and BPC were forced to abandon drilling plans, BPC will have legal recourse in the billions. Because they are a commonwealth country, such recourse can include the Privy Council as the ultimate court. No reputable country will risk their standing by breaching an agreement such as this.

I agree the 2.2-2.8 range is too low. Minimum value purely based on BPC's intangable assets in a fire sale or forced takeover is at least 2p. Perhaps 4p. See my post early this morning and refer to BPC's 2018 audited accounts by PWC. If oil price goes over $40, things should improve. RNS or not.

What will really help SP while awaiting next RNS is for Russia and OPEC to agree quotas. Even $40+ will make a pshycological difference to SP. Venezuala are trying to act as broker.

As of a few minutes ago FTSE futures up 4% (despite far east), DOW and Nasdaq up 4.5%. POO up 3.3%

I personally am more confident with BPC today than yesterday. I see at as additional time for positive outcomes due to this delay. Let's see what happens to SP today and monday.

It made sense to delay re Covid-19. Which incidently gives more time for a farm in, better CLN terms, oil price recovery etc

I looked back at BPC's accounts again. The following observations use round figures and simplistic assumptions otherwise this post will be 10 pages long.

BPC's bare value is its assets (mostly intangable) broken down into two figures:
(a) The value of its intanagable at fair market value according to PWC: £40m, and potentilly, ...
(b) Amount spent in total to get where we are today: £50m

With approx 2billion shareholders, in a liquidation, fire sale, or corporate hibernation (a) is 2p, (a)+(b) = 4.5p

However the potential is much more than this. Today is friday 13th. Despite this, maybe we get a positive RNS in 10 mins

good luck all

According to oil news outlets in the last few hours POO up , caused by.....
1. Oil Prices Recover as Fed Moves to Inject Cash to Treasury Market
2. Venezuela Looks To Play Mediator Between OPEC And Russia

Also S+P 500 and Nasdaq futures up by around 2% as of a few seconds ago. This could change during the next 10 hours of-course.

If you were Seadrill or a similar org at this moment in time, potentially with a number of ships that are going to be idle, could you be seduced with two innovative BPC offers? 'We want to tear up the CLN and assign it to you on the same terms'. ....or......'Drill three wells without charge in a mini-farmin and potentially earn a substantial return. It is spare idle capacity and a tiny percentage of your overall income and expenses. SIgn here.'

And then I woke up realizing Seadrill are in financial trouble with a market cap today less than BPC's! It was just a thought.

'EIA forecasts that average Brent prices will rise to an average of $55/b in 2021, as declining global oil inventories put upward pressure on prices'......... IMO it is in the intrests of oil majors to plan ahead and do farm ins now, whether or not the price of oil today is $30 or $130/b. Especially as (1) it takes several years for successful wells to enter production. (2) There will almost certainly be a Covid19 vaccine in the next 12 months. (3) Global oil inventory planning is about tomorrow not today.

see https://www.eia.gov/outlooks/steo/report/prices.php

Tomorrow , friday the Bahamas fund is active and 30m shares will come into play issued at 2p. Regardless, it is unlikley the fund managers will sell all £700k of stock to make a bit of profit as this will mean it will be the shortest living fund in investment history and against the spirit of Bahamas' citizens getting some of BPC's potential goodies. Furthermore, it will temporarily drive the price even lower possibly 2.2 levels as 30m is +/- double recent total daily share trades. It will be great timing if an RNS was issued in the morning. I've advised various BoDs over the years and a simple rule, subject to disclosure rules and laws, is deflect bad news or PR headaches amongst other bad news, and time the good news for impact. This is not a personal prediction a mega positive RNS will be issued.

BBC Biz live website a few mins ago....
'Trump White House press briefing: President Trump has welcomed falling oil prices as a result of a spat between Russia and Saudi Arabia. He described the lower oil price as being "like a tax cut", as he revealed that he had spoken to the Saudi Crown Prince about the oil market. President Trump said he likes the low prices at the pump'......

I personally doubt this is the whole discussion that took place between Trump and MBS. Trump does not want to rely on Middle eastern oil. He doesn't want American oil companies (who fund republican campaigns) losing , shale producers going under or creating unemployment. I think Trump likely commended MBS for winning some political points over Putin, and then abruptly told him to do a deal with Russia to stabalize the oil price.

i know that. which is why i said it is political populism, however last para is potentially good for BPC. It's like owning a green belt piece of land that can be built on, but no one else in the area can.

Most is political populist nonsense however note last paragraph. This is important because if the government does not plan to issue new licenses. The ones BPC own are now more valuable as an asset.

http://www.tribune242.com/news/2020/mar/12/public-have-say-oil-operations/

Interesting article in Forbes yesterday....: Russia Political Analyst Predicts Agreement With Saudi Arabia Over Output Cuts in two weeks. See
https://www.forbes.com/sites/nathanielbaker/2020/03/11/russia-political-analyst-predicts-agreement-with-saudi-arabia-over-output-cuts/

Judge-Mental: MMs are unlikley to be hoarding the sells (unless they have a tip off!). Many of the sells have been above the 2.5 bottom spread price so i think they are selling as they go along which shows buyers in the 2.575-2.7 range. If MMs could not do this, the trades would be around 2.51 and soon lead to a 2.4 spread buy price.

Findme: I have had similar problems with HL over the last few months during SP volatility. I spoke to an HL live broker and was informed limit orders outside the MM's spread, do not auto execute. Best you speak to HL about this for the tech reasons.

Interesting facts about BPC and where it is today (Updated 12/3/20)

Past
1. In April 2010 when BPC floated on the UK AIM market there were 860,000,000 shares.
2. Oil was at c$100 barrel when BPC peaked at 25.697p intraday 4th Feb 2011.
3. This gave BPC a market cap of £220m/(@1.60=) $350m in Feb 2011. This was equivalent to 10.2p based on todays 2.1 billion+ shares.
4. On 9 Aug 2018, an intraday share price high of 7.4446 was reached. Using round figures of 2.1 billion BPC shares, this made the market cap on this day £160m/$210m. Oil price was $70.
5. However the peak 25p 2011 share price and $350m market cap was before EA approval, before any sign of oil and prior to BPC exploration having seriously began.

Present
6. PoO must be over $40/b to cover extraction costs. It is very likely OPEC and Russia will come to an agreement, however Covid-19 will impact PoO.
7. Covid-19 could delay everything until a fully tested vaccine has been rolled out worldwide. The week it is announced by a reputable source that a proven vaccine is ready, stock markets will likely soar.
8. The time between an oil discovery and commercial production is YEARS. It is highly likely the price of oil will go back to normal levels. Some analysts (eg, Zac) predict a possibility of $100/b in 2022/3+ as the majors have not heavily invested in new discoveries.
9. Bahamian Government outstanding license fees (if any) are currently being negotiated with BPC and a conditional action point in the CLN. In my opinion, BPC has valid legal arguments to kick any fees due until post discovery and perhaps even leverage additional prospect acreage without paying up-front…… ‘How could we drill for oil or get farm-ins without your recently sanctioned EA that took 10 years of procrastination? Give Trump a call and ask to borrow $100m in development funds, which you can lend to us so BCP doesn’t have to prat about getting CLNs. In return we will not prospect near Florida (Trump the deal maker can get the credit) and we will drill 3 exploratory wells elsewhere by 4Q 2021.’

Future (if oil found )
10. AIM companies managed outside UK, HQ'd on Isle of Mann, pay no corporation tax
11. BPC royalties to Bahamian Government is between 12.5% for 75,000 barrels per day to a peak of 25% for 350,000 barrels per day or more.

Conclusion: Farm in options could still be on the cards. The oil major did not spent 4 months for an exclusivity fee of $1m to allow its exploration engineers to have a vacation and go deep sea fishing. Perhaps the BOD has already been offered options in an MOU, but on PUNITIVE terms. What has changed is the EA and BPC's intent to go it alone. It would not surprise me (and others on this forum) if the oil majors are waiting for BPC to be funded and ready to sail, before they make a serious farm-in offer. Assuming Covid-19 does not affect the oil major’s decision based on point 8 above.

Good luck all

Thanks Spiduk! Most people on this forum including me are half glass full. Take it with a pinch of salt and use some of the more celebral posts to make investment choices re BPC. It's been a while since i went on holiday there, however I hope one day a few people on this forum i enjoy listening to (or i should say reading from) , meet up in the Bahamas to have a beer or two on me.