Bahamas Petroleum completes drilling of Perseverance #1 well in Bahamas

BPC, the Caribbean and Atlantic margin focused oil and gas company, with production, appraisal, development, and exploration assets across the region, provides the following update on the drilling of its Perseverance #1 well in The Bahamas

Highlights

• The Perseverance #1 well in The Bahamas has encountered hydrocarbons, successfully validated the structural model and the petroleum system, and drilled a majority of the potential reservoirs of interest, thus fulfilling the core technical objectives of the well
• Whilst the well encountered oil, indicated from LWD (Logging while drilling) tools, gas chromatography and mud logs, commercial volumes of oil have not been proven at this well location
• The validation of a competent seal, good reservoir quality, charge and the presence of oil points to significant hydrocarbon potential remaining in various independent, untested play systems and structures within BPC’s extensive acreage
• Drilling has now ceased, the well having reached a depth of approximately 3,900 meters without incident, and the well will now be permanently plugged and abandoned
• Over the coming weeks BPC will undertake a detailed evaluation of all technical information gathered during drilling. In this context, BPC will review the appropriate way forward for future monetisation of its business in The Bahamas, in particular with a view to renewal of a farm-in process
• Near term operational activity will now focus on the Company’s 2021 work programme in Trinidad and Tobago and Suriname, targeting exit production of c.2,500 bopd and prospect maturation in Uruguay

Simon Potter, CEO of BPC, said:

“I am proud to say that after many years of diligent effort we did what we said we would do: BPC drilled the Perseverance #1 well safely and without incident, testing for the presence of hydrocarbons in the Southern Seas of The Bahamas. This was the very specific objective of the well – not a scientific or geologic experiment, but to seek hydrocarbons in commercial quantities.

In a technical sense, 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.

Perseverance #1 is the first exploration well in The Bahamas for decades, and the data gathered from this well will prove invaluable in providing a modern analysis as to the regional potential of the petroleum system, which, in our view, reduces technical risk for any future/further exploration in this new frontier province. The Company will proceed to undertake a comprehensive evaluation of the data derived from the well, as we believe the results provide a sound technical basis for renewed farm-in discussions.

Personally, I have worked on the Bahamas project for over 15 years and, along with the Board members and a number of the management team, have spent the majority of the last 10 years working to bring about the drilling of Perseverance #1. We all take great professional pride in the fact that BPC has delivered the well safely, responsibly and without incident, notwithstanding the challenges presented by Covid-19, low oil prices and a challenging market environment. Great credit is due to the professionalism of our operating and commercial teams, to whom I owe a huge thanks.

Elsewhere in the portfolio, in Trinidad we have producing oil fields and, in combination with assets in Suriname, we have upcoming drilling programmes scheduled in 2021, such that the near-term operational activity focus will now shift toward those activities.

All of us at BPC are resolute in support of the diversification strategy embarked on during 2020, and we remain intent on delivering the potential that is latent across the entire portfolio.”

Drilling Summary

The drilling of the Perseverance #1 exploration well in The Bahamas commenced on 20 December 2020 and continued through to 7 February 2021. Pre-drill, the well design allowed for a target depth of 4,800 meters across multiple potential reservoir horizons continuously through the Albian and Aptian aged stratigraphies, targeting P50 prospective oil resources of 0.77 billion barrels, with an upside of 1.44 billion barrels.

As of 6 February 2021, the well had reached a total depth of just over 3,900 meters. In reaching this depth, the well passed through multiple targeted reservoir sections in both the Albian and Upper and Mid Aptian horizons, which cumulatively accounted for approximately 70% of the total pre-drill prospective volume estimates.

In terms of the overall drill programme schedule, the Company was able to complete drilling and provide results within the 45-60 days estimate previously advised. Initially, well progress (rate of penetration – ROP) was hindered by extensive, very hard anhydrite seal lithologies, which caused significant vibration to the sensitive bottom hole assembly (BHA) and measuring/logging tools, and a mechanical obstruction in the hole at around 2,400 meters which required side-tracking around. However, these issues were ‘engineered out’ by the drilling team and in an aggregate sense these normal drilling issues were somewhat offset by efficiency gains, and in particular by higher rates of penetration achieved, in deeper target Aptian reservoir sections.

The information gleaned from the successful drilling of Perseverance #1 confirms that technical issues encountered during the drilling of historic offset wells (including extreme losses and very slow rate of penetration) which required several casing strings, can be overcome by the application of modern technologies and engineering design. This is particularly important in demonstrating that the costs of drilling to deeper target reservoirs, including the important Jurassic horizons and the Lower Cretaceous, deeper water reef build-ups seen within the Santaren Channel, may be commercially viable at currently prevailing oil prices.

Depth and thickness of reservoir sections encountered were generally as prognosed pre-drill, and reservoir porosity was likewise generally in line with pre-drill expectations (in the range of 10% – 20%).

Hydrocarbons were encountered at various horizons, indicated by elevated gas chromatography readings detected continually during drilling, generally increasing with depth and through the deeper Aptian reservoir column in particular. Oil was identified from high oil saturation values from logs in a number of reservoir sections thus verifying the existence of a working Lower Cretaceous petroleum system and reservoir quality sequences in the Aptian.

Given that the totality of the reservoir sections evaluated to 3,900 metres represented the majority (approximately 70%) of the total estimated prospective volumes, the lack of hydrocarbons in demonstrably commercial volumes led to the decision to TD the well at that point.

Next Steps

Over the coming weeks, BPC will be undertaking a detailed review of the technical data and results from the drilling of the Perseverance #1 well. These results will be presented to the Government of The Bahamas in accordance with the Company’s licence obligations.

A core focus of this review will be an assessment of the technical and value potential established by the drilling of Perseverance #1, and the definition of further activities that will maximise the Company’s ability to monetise and thus create value from its extensive acreage holding in The Bahamas.

The Company considers the results from Perseverance #1 – notably the confirmation of migrated oil within the Aptian reservoirs – will significantly reduce technical risk for any future/further exploration in this new frontier province. In particular, BPC considers that the results from Perseverance #1 may provide a strong technical basis for renewed farm-in discussions, with a view to future drilling at other target locations within BPC’s licence areas.

In parallel the Board, with the assistance of the Company’s advisers and brokers, will review the Company’s broader portfolio of operations and opportunities, to ensure its plans deliver maximum value for the foreseeable future. This review will focus on ensuring progress of the planned 2021 work program in both Trinidad and Suriname, and associated production growth, as well as the potential to deliver prospect/lead maturation in Uruguay from reprocessed seismic. The Company’s 2021 work programme in Trinidad and Tobago and Suriname is targeting exit production of c.2,500 bopd.

A shareholder information call will also be scheduled once this process is complete, and prior to that the Company will provide further updates as appropriate.

Funding

As at commencement of abandonment of Perseverance #1, the Company’s cash balance is $12.5 million. These funds held will be applied toward satisfying final payments relating to Perseverance #1 as the drilling programme is concluded, progressing the Company’s work programs in Trinidad and Tobago and Suriname over coming months, and general working capital purposes.

Completion of the Perseverance #1 well will trigger potential funding points under the Company’s existing funding facilities, specifically (i) the ability of the investors under the Company’s conditional fixed-conversion price senior secured convertible loan notes financing facility to subscribe for up £12 million of additional notes (pre fees and expenses), and (ii) the investor under the facility announced by the Company on 14 December 2020 (as amended) to exercise a call option (the “Call”) to subscribe for 187.5 million shares at 2p per share, which, if exercised, would see inflows of a further £3.75 million (pre fees and expenses). The Company will be discussing with both investors in the coming days and will advise shareholders accordingly of the outcome of those discussions.

Source: Company Press Release

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