BPC.L Regulatory News (BPC)

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16 March 2011

Bahamas Petroleum Company plc

("Bahamas Petroleum" or the "Company")

Placing to raise approximately £45.6 million

Notice of Extraordinary General Meeting ("EGM")

Bahamas Petroleum, the oil and gas exploration company with licences in The Commonwealth of the Bahamas, announces that Canaccord Genuity Limited, FirstEnergy Capital LLP and Novus Capital Markets Ltd, on behalf of the Company, have firmly placed 110,000,000 new ordinary shares of 0.002p each in the capital of the Company ("Shares") ("First Tranche Placing Shares") and conditionally placed a further 133,100,000 new Shares ("Second Tranche Placing Shares", together, the "Placing Shares") (the "Placing") with new and existing institutional investors at a placing price of 18.75 pence per Share, to raise (assuming all Placing Shares are issued) approximately £45.6 million (before expenses).

Net funds raised will be used to accelerate the Company's exploration programme (including the acquisition of new 3D seismic, geochemical seabed sampling and other technical work) and for general working capital purposes. The proceeds of the Placing will also provide financial flexibility to develop additional leads in awarded licences and to progress on-going licence applications.

The Placing Shares will rank pari passu with all existing Shares and will, assuming all are issued, be equivalent to 24.6 per cent. of the current issued share capital of the Company, and will represent 19.8 per cent. of the issued share capital of the Company as increased by their issue. The Placing is not being underwritten.

The issue of the First Tranche Placing Shares and the Second Tranche Placing Shares will take place separately. Application has been made for the First Tranche Placing Shares to be admitted to trading on the AIM Market of the London Stock Exchange ("AIM") ("Admission") and it is expected that, subject to the placing agreement becoming unconditional in all respects and subject to Admission, the First Tranche Placing Shares will be admitted to trading on AIM at 8.00 a.m. on 18 March 2011.

The issue of the Second Tranche Placing Shares is conditional, inter alia, on the passing by the Company's shareholders at an EGM of a resolution to authorise their issue. Accordingly, the Company will shortly be posting a circular ("Circular") to shareholders containing a notice (the "Notice") convening an EGM to be held at 10:30 a.m on 11 April 2011 at which the resolutions summarised below will be put to shareholders. Application will be made for the Admission of the Second Tranche Placing Shares and, subject to shareholder approval, the issue of the Second Tranche Placing Shares is expected to be completed at 8.00am on or around 12 April 2011 on their Admission. For information purposes, the Circular will be shortly available on the Company's website: www.bpcplc.com.

Following the Admission of the First Tranche Placing Shares, the enlarged issued share capital of the Company will total 1,097,379,096 Shares. This figure may then be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in Bahamas Petroleum under the Financial Service Authority's Disclosure and Transparency Rules. The Company does not hold any shares in treasury. 

Background

Since June 2010, the Company has been focused on a targeted 2D seismic program with the aim of defining drillable prospects and assigning resource estimates across its current 100 per cent. owned acreage offshore of The Bahamas. Initial results of the 2D seismic surveys undertaken to date have been encouraging and the Company has commissioned Ryder Scott Company L.P., Petroleum Consultants to conduct an independent technical review of the existing and newly acquired seismic data. This work is expected to be completed during summer 2011.

The Company's strategy going forward is to continue to review potential farm-in proposals in relation to a portion of its licences, whilst also retaining a 100 per cent. interest in selected acreage. The Company is currently holding discussions with potential farm-in partners and believes that the scale of the potential projects will be attractive to major and national oil companies. The Company believes that the additional funding raised or proposed to be raised pursuant to the Placing will allow the Company to progress exploration across its licences earlier than planned and will strengthen its negotiating position with any potential farm-in partners.

Reasons for the Placing

As at 31 December 2010, the Company had approximately US$6m of cash. The Placing will provide the Company with the additional funds necessary to move forward the technical work needed to prioritise and rank drill-ready prospects in the southern licences and to advance exploration of previously defined leads in its licences and licence applications. The proceeds of the Placing will also give the Company the financial flexibility to review additional opportunities in The Bahamas.

Use of Proceeds

The Company intends to use the net proceeds of the Placing for the following purposes:

The expected use of the proceeds of the Placing referred to above represents the Board's current intentions based on the Company's present plans and business condition. The Company will retain broad discretion in the allocation and use of the proceeds. If the Second Tranche Placing Shares are not issued, these programmes will be scaled back.

EGM

The Company's articles of association ("Articles") contain an authority for the issue of up to 120 million new Shares for cash on a non-pre-emptive basis each year. The allotment and issue of the First Tranche Placing Shares will utilise all but 10 million of this current authority. The allotment and issue of the Second Tranche Placing Shares would exceed the available authority under the Articles to allot new Shares for cash on a non pre-emptive basis without seeking prior shareholder approval. 

At the EGM, Shareholders will be asked by way of special resolutions to approve:

(1) the disapplication of the pre-emption provisions in Article 6.3 to enable the allotment and issue of 250 million new Shares (i.e. the Second Tranche Placing Shares and some additional Shares); and

(2) a minor amendment to the Articles.

The Circular will contain a recommendation that shareholders vote in favour of the resolutions at the EGM. Holders of the First Tranche Placing Shares at the relevant date will be entitled to vote in respect of such Shares at the EGM. Subject to the first resolution described above being passed and the allotment and issue of the Second Tranche Placing Shares, the Directors would have authority to issue up to an additional 126,900,000 Shares on a non-pre-emptive basis until 31 December 2011 (which includes the 10 million Shares available under the current authority which will not be utilised by the issue of the First Tranche Placing Shares).

Copies of the existing Articles and the Articles as proposed to be amended will be available for inspection during normal business hours at the registered office of the Company until the date of the EGM or upon request. Copies will also be available at the EGM until its conclusion. A copy of the Circular, together with form of proxy, will be available on the Company's website.

Paul Crevello, Chief Executive Office of Bahamas Petroleum, commented:

"We are very pleased to announce this successful and oversubscribed Placing and support from existing and new institutional investors. The quality of the investor base and level of support we have enjoyed to date is further validation of the prospects for the Company and its assets. Farm-in negotiations are progressing well.

"The Placing is timely as a suitable 3D seismic vessel is due to arrive in the region earlier than anticipated, allowing us to take the opportunity to expedite our exploration programme. The funds will principally be used to fund this 3D seismic survey and associated exploration activities, focused around prospects identified in the recent January 2011 2D survey (reported 18 February 2011)."

Alan Burns, Non-Exec Chairman of Bahamas Petroleum, commented:

"I am very pleased with the successful outcome to the Placing, which further validates our original vision of the Bahamas as a prospective oil and gas bearing area. With these funds we will be able to bring our most prospective licences closer to being drill-ready and look to identify further exploration leads within our licence and application areas."

For further information contact:

The material set forth herein is for informational purposes only and does not constitute an offer of securities for sale in the United States or any other jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the laws of any state, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state laws. No public offering of securities will be made in the United States.

Canaccord Genuity Limited, FirstEnergy Capital LLP and Novus Capital Markets Ltd, which are authorised and regulated by the Financial Services Authority, are acting for the Company in connection with the Placing and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of the Canaccord Genuity Limited, FirstEnergy Capital LLP and Novus Capital Markets Ltd nor for providing advice in relation to the Placing or any other matter referred to in this Announcement.

The distribution of this Announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or Canaccord Genuity Limited, FirstEnergy Capital LLP or Novus Capital Markets Ltd that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company, Canaccord Genuity Limited, FirstEnergy Capital LLP and Novus Capital Markets Ltd to inform themselves about, and to observe, such restrictions.

This Announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events. These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the Directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Announcement is subject to change without notice and, except as required by applicable law, the Company does not assume any responsibility or obligation to update publicly or review any of forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement. No statement in this Announcement is or is intended to be a profit forecast or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.