Bahamas Petroleum Company awarded offshore Uruguay licence

The AIM-traded firm said OFF-1 contains a management-estimated resource potential of up to one billion barrels of oil equivalent, based on current mapping from multiple exploration plays and leads, in relatively shallow waters with significant running room.

It said the licence play system was directly analogous to the prolific Cretaceous turbidite discoveries currently being evaluated and developed offshore Guyana and Suriname

OFF-1 has an initial four-year exploration period, with a work obligation limited to reprocessing and reinterpretation of selected historical 2D seismic data.

There was no drilling obligation, and the licence included staged no-cost exit points at the company’s sole decision.

As a result, the board said OFF-1 was comparable to the ‘low cost option’ represented by the firm’s licences in the Bahamas when they were first awarded, being a modest work commitment over four years that would secure a “sizeable, technically high quality” frontier play, with regional seismic data available and “exciting” exploration upside.

The board described Uruguay as a “stable, well-regulated” operating environment with an attractive and internationally comparable fiscal regime.

Bahamas Petroleum Company said it believed OFF-1 had the capacity to generate similar value uplift to its existing licences in the Bahamas, where its primary focus remained the commencement of exploration drilling on Perseverance #1, expected to spud in late 2020 or early 2021, and targeting recoverable P50 oil resources of 0.77 billion barrels, with an upside of 1.44 billion barrels.

“The scale of the opportunity that our planned drilling campaign in the Bahamas may unlock for us, at the end of 2020, means that our personnel are and will remain entirely focussed on their efforts to deliver the Perseverance #1 exploration well successfully,” said chief executive officer Simon Potter.

“However, the current period of introspection in our industry is presenting nimble, forward-thinking companies such as ourselves with compelling opportunities to expand our portfolio and achieve countercyclical growth.

“The recently-closed Open Licencing round in Uruguay presented exactly such an opportunity for us where, for very low cost, we have been able to secure an exploration licence of an extremely high-calibre that, even as recently as a few months ago, we most likely would have been outbid on by much larger players.”

Potter said the company was “especially pleased” to have been awarded OFF-1, given that the licence represented a “similarly underappreciated opportunity” to that it had secured in 2007 in the Bahamas.

“[It is] a licence in a region with extensive existing seismic of various vintages, but largely underexplored, and requiring the application of more modern, state of the art seismic imaging technology and techniques to understand the full extent of the petroleum resource.

“We are confident that over the next four years we can bring to bear our expertise, gained in the Bahamas over the past decade, on OFF-1 so as to more fully evaluate the licence's potential, in the hope that in the longer-term we can create an opportunity of equal value and industry interest to what we have thus far accomplished in the Bahamas.”

At 1246 BST, shares in Bahamas Petroleum Company were up 10.44% at 3.15p.