(AIM: BPC) THE BAHAMAS: A GIANT OIL PROVINCE IN THE MAKING
Investor Presentation June 2011
Isle of Man Head Office: IOMA House Hope Street Douglas Bahamas Petroleum Company Plc 2D Seismic Tel: +44 1624 647883 Acquisition 2011
Email: [email protected] Website: www.bpcplc.com Important Notice
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2 Bahamas Petroleum Company Corporate Highlights
2010 - Significant Year • Significant growth in shareholder value • 2D results large structures - first seismic survey since 1987 • Two additional licences applied for covering 6,210 km2 • JV application with Statoil for Cay Sal Bank licences progressing – initiated EIA
2011 – Fund Raise • Over-subscribed placing of £45.6m (before expenses) • Strengthened balance sheet • Strong cash position - no debt • Progress exploration across licence areas earlier than planned • New and existing institutional investors
2011 – Busy Programme • First 2D survey designed to define prospects (January) • PSTM confirmed supergiant size of prospects • 3D seismic survey by CGGVeritas BroadseisTM • Multibeam geochemical seabed survey • Ryder Scott initiated resource estimate and portfolio ranking • Programme on track to drill first large prospects in 2012
Ongoing Discussions Regarding a Farm-Out • Strategy - review potential farm-in partners for a proportion of licence areas • Retaining a 100% interest in selected acreage
3 Google Image showing Bahamas Petroleum Company Awarded Licences and Licence Applications
4 Bahamas Petroleum Company Board
Alan Burns: Non-Executive Chairman – Isle of Man
− Alan Burns is founder of the Bahamas Petroleum Company Group and has a successful 39 year career in the oil business including founding Hardman Resources, which was sold to Tullow Oil in 2006 for AUD$1.6bn − Involved in 28 new oil and gas field discoveries and developments including original Uganda discovery
Dr Paul Crevello: Director & Chief Executive Officer – USA/Bahamas
− Dr Paul Crevello is a carbonate reservoir oilfield expert and has wide international experience in the discovery of major oilfields − Considerable experience in Bahamas geological investigation
Michael Proffitt: Non-Executive director – Isle of Man
− Michael Proffitt is formerly an international banker with Barclays as worldwide Chairman of Barclays Private Clients International Limited. He is a former resident of The Bahamas and is well known in the Bahamian business world − Fellow of the Institute of Chartered Accountants in England and Wales
Dursley Stott O.B.E: Non-Executive director – Isle of Man
− Dursley Stott has played an important part in the Isle of Man’s financial growth during the last 50 years and is a founder of a successful stockbroking firm on the Island − Experienced international businessman
Edward Shallcross: Non-Executive director – Isle of Man
− Edward Shallcross has almost 40 years’ experience in the financial sector, predominantly at Barclays Bank plc, where he worked from 1960 until his retirement in 1998, at which point he held the role of Isle of Man Director and Senior Executive Director of the bank − Fellow of the Chartered Institute of Bankers 5
Corporate History – First Mover Advantage
US$17.5 Million Spent on Geological, Geophysical and Well Core Acquisition, Evaluation and Processing
The Company Paul Crevello is announces appointed as CEO preliminary and Alan Burns results of becomes Non-Exec seismic Chairman Group is The Company Target for first Licence Five licences The Company founded Paul Crevello joins completes RTO onto Bahamas Initiates 3D seismic, well in awarded and approved by announces by Alan Burns AIM market through Government Company multibeam and EIA Bahamas 2012 the Company as Governor intention to re- reassigned acquisition of Falkland announces raises £45.6m around potential Chief Operating General of The domicile the November Gold and Minerals temporary before costs Officer Company in drilling prospects 2006 Bahamas freeze on for 3D seismic IOM licence and further 3D seismic applications exploration processed and interpreted
Apr May Jun Jul Aug Sep Jan Feb Mar Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Jul Aug Sep Apr May Jun Oct Nov Dec Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Q2 2005 Q3 2005 Q1 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q3 2008 Q2 2009 Q4 2009 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012
The Company Finalise applies for 2 The company negotiations additional licences announces and announce and tenders for The Company Board expands completion of 2D farm-out Ministry of Energy The Company additional seismic submits licence to include The Company seismic survey transaction applications Michael Proffitt grants the applies for signs Statoil joint and successful as Financial licence additional exploration initial results Director application licences agreement on Ministry gazettes CPR by three licences The Bahamas Petroleum Ryder Scott Company Company Statoil on resource raises Cay Sal applications potential £5.1mn for 2D seismic campaign
6 Corporate Overview
GBP USD Price* 0.1850 0.3000 52 Week High 0.2575 0.4172 52 Week Low 0.0205 0.0332 52 Weeks to date Percentage Growth** 507 507
Market Cap (mm) 227.6 368.8
Cash and Cash Equivalents (mm)*** 3.8 6.1 Debt (mm) - - Enterprise Value (mm) 223.8 362.7 • Share price and Market Cap correct as at 10th June 2011 ** Based on share price as at 10th June 2011 *** Cash balance as of 31tst December 2010
Shareholder Shares Held % Fidelity 83,950,700 6.82% TD Waterhouse 55,000,339 4.47% Hargreaves Lansdown Asset Management 47,621,480 3.87% Barclays Wealth 46,369,618 3.77% Halifax Share Dealing 44,839,118 3.64% Morgan Stanley Inv Management 44,576,084 3.62% J M Finn & Co 37,522,199 3.05% Petroleum Geoscience* 17,730,000 1.44% Petrexasia Consulting* 15,300,000 1.24% Burns Family Investments* 15,164,989 1.23% Gumbo Investments* 12,360,000 1.00%
Total Management & Founders 61,139,989 4.97% Total - Top 25 Shareholders 651,044,825 52.91%
• In March 2008 licences extended to 2012, when they will be further extended for 3 years Total Shares in Issue 1,230,479,096 ** Licences under review by Bahamian Government – no guarantee they will be granted
* Director Shareholdings
7 Share Price Chart
The Company raises £43.3 Bahamas Gov’t Company million at a price of 18.75 pence Bahamas Petroleum Company begins to attract announces announces a number of other well known institutional suspension of preliminary results investors and further broadens shareholder new licence of 2D seismic base applications
Bahamas Petroleum Bahamas Company raises £2.4 Petroleum million from institutional Company complete shareholders placing of at a price of 3.5 pence £5.1million Bahamas Petroleum Company Bahamas and StatoilHydro sign JV Petroleum Agreement for oil exploration in Company Bahamas waters announces 2D seismic programme results Reverse Takeover The Company of FGML by Bahamas finalise Petroleum Company agreement with CGGVeritas to undertake 3D seismic survey
8 Bahamas Petroleum Company Technical Team
. Dr. Paul Crevello has over thirty-four years experience in US domestic and international exploration in more than 40 countries. − University of Miami (Master of Science in Marine Geology) and Colorado School of Mines (Doctor of Philosophy in Geology) − Marathon Oil (1978-1994) directed worldwide carbonate geologic exploration research. − Founded SE Asia’s first university petroleum studies programme in 1994 and founded Petrex Asia in 1997, developing it into a leading technical consulting firm. − Numerous awards and distinctions from international societies for authorship and invited papers on carbonate and sandstone. reservoirs, AAPG International Distinguished Speaker, Chairman of Joides Ocean Drilling Program and served on numerous committees and ancillary societies. − Conducted research exploration in The Bahamas since 1975.
. Dr. Paul Gucwa has 37 years experience as a Geoscientist as well as in technical and business management roles developing exploration and production projects throughout the United States and Canada. − University of Texas (Master of Science and Doctor of Philosophy in Geology). − Marathon Oil Company (1974-1978); directed research in structural geology/tectonics; transferred to Gulf of Mexico Exploration in 1978. − Marathon Oil Company (1992-2000;) Manager of US exploration. − Chief Geologist for BP America; involved with projects in most North American petroleum basins. − Founded Texas 3 Star Energy Investment in 2000; technical contributor to Tetra Technologies oil and gas unit Maritech Resources. − Serves as a member of the Advisory Council of the Jackson School of Geoscience at the University of Texas.
. Standing U.S. and U.K. Consultants − Mr. Michael Coulthard, Subsea Completion Engineer − Mr. Jock Drummond, Seismic Processing Expert − Mr. James Ehrets, Reservoir Geologist and Engineer − Dr. Jon Kirkpatrick, Geophysicist and seismic specialist in carbonate exploration and exploitation − Mr. Paul Ozanich, Seismic Interpreter − Dr. Mark Rowan, Structural Geologist, expert in Gulf of Mexico and fold and thrust belts − Mr. Ian Thomson, Drilling Engineer − Dr. Douglas Waples, Geochemistry and Petroleum Systems
. University Industrial Programmes University of Texas, Bureau of Economic Geology RCLR University of Utah, EGI 9
Why The Bahamas?
Overview . A politically stable country, with an uninterrupted parliamentary democracy of over 275 years Commonwealth of The Bahamas Population: 310,426 . Excellent fiscal terms and English based Rule of Law GDP (US$ Bn): 7.38 GDP per capita (US$): 28,600 Unemployment Rate (%) 14% . Benefits from proximity to extensive oil field service and Median Age (years): 29.9 infrastructure providers in US Gulf of Mexico Literacy 96% Key industries: Tourism, banking, cement, oil transhipment, . Close proximity to energy-hungry US market, both in the GoM salt, rum, aragonite, pharmaceuticals and along the US Atlantic coast Source: CIA World Fact Book, Bahamas Department of Statistics - 29/12/2010
Industry in the Bahamas . Freeport is the major industrial centre – Container facilities, oil off-loading terminals, dry dockage and an oil storage terminal – BORCO – 4th largest storage terminals in the world, largest in Caribbean; Buckeye Ltd acquired 80% rights in January 2011 and acquired the remaining 20% in February 2011 for an additional $340 million. In the aggregate, Buckeye paid $1.7 billion in a combination of cash and equity to acquire BORCO
– Statoil acquired South Riding Point Terminal for $263 South Riding Point Terminal, Grand Bahamas million recently leased to Statoil – Both committed to $200 million to $250 million dollars in upgrades together totaling approximately $500 million dollars worth of upgrades to Freeport – Ship registration under The Bahamas flag: Fifth largest World’s largest registry for oil tankers
World shipping traffic including oil tankers near and through The 10 Bahamas
Why The Bahamas? Attractive Fiscal Terms
Royalty Rates and Leases terms: Production Level Royalty Rate Oil Production, up to 75,000 bopd 12.5% E&P Project Revenues/ BOE – Sorted by Free Cash Flow Oil Production, from 75,000 to 150,000 bopd 15.0% Oil Production, from 150,000 to 250,000 bopd 17.5% 100% 90% Oil Production, from 250,000 to 350,000 bopd 20.0% 80% Oil Production, in excess of 350,000 bopd 25.0% 70% 60% Gas Production 12.5% 50% Rentals: $0.92 per acre per annum charged for the area of a 40% lease, but these charges are deductible from royalty payments 30% Income taxes: Nil in The Bahamas 20% 10% 0%
Comparison of Licensee Revenues – GoM vs. Bahamas US
UK
Iraq Libya
Egypt
Congo
Gabon
Angola
Nigeria
Canada
Guyana
Norway
Namibia
Falklands
Bahamas*
Sierra Leone Sierra Cote d'Ivoire Cote
Government Take Capex Opex Free Cash Flow The increased potential return to the licence holder in The Bahamas Source: Rystad Energy, FirstEnergy Capital (February 2011) is largely due to zero * Based on a single 600mmbbl discovery with production start-up in 2015 corporate income tax Revenue splits based on all projects in country over 2010 to 2025. $100/bbl Brent oil pricing Fiscal regimes according to contractual framework for oil, condensate/NGL and natural gas
Exploration licence - 12 years in total based on 3-year renewal periods 1) Initial 3 year award 2) 1st Renewal (years 4-6) @ 100% of acreage – renewal requires commitment to spud well before end of year 4 3) 2nd Renewal (years 7-9) @ 50% - requires well drilled every 2 years 4) 3rd Renewal (years 10-12) @ 50% - requires well drilled every 2 years
2007 Production licence – 30 years plus additional 10 years (subject to approval of extension) 11 Bahamas Petroleum Company Licences and Bahamas Petroleum Company / Statoil JV Exploration Applications Asset (1) Holder Licence Area The Bahamas – Bain Bahamas Petroleum 775,468 acres 2 Licence (offshore) Company 3,138 km The Bahamas – Cooper Bahamas Petroleum 777,934 acres 2 Licence (offshore) Company 3,148 km
The Bahamas – Bahamas Petroleum 778,855 acres 2 Donaldson Licence Company 3,152 km (offshore) The Bahamas – Eneas Bahamas Petroleum 780,316 acres 2 Licence (offshore) Company 3,158 km The Bahamas – Miami Bahamas Petroleum 760,973 acres 2 Licence (offshore) Company 3,080 km
Application (2) Holder Licence Area The Bahamas – Bahamas Petroleum 777,900 acres 2 Islamorada Licence Company / Statoil 3,148 km (offshore) The Bahamas – Zapata Bahamas Petroleum 776,200 acres 2 Licence (offshore) Company / Statoil 3,141 km
The Bahamas – Falcones Bahamas Petroleum 774,600 acres 2 Licence (offshore) Company / Statoil 3,135 km Application (3) Holder Licence Area The Bahamas – Santaren Bahamas Petroleum 760,100 acres 2 Licence (offshore) Company 3,076 km
The Bahamas – Andros Bahamas Petroleum 774,500 acres 2 Licence (offshore) Company 3,134 km •Cay Sal and 3rd Round Licence Applications contingent on lifting of Government imposed application freeze – appendix 6.1.
(1) Interest for all licences: 100% (2) Statoil – Bahamas Petroleum Company Joint Venture Applications - there is no certainty they will be granted (3) July 2010 applications with 100% working interest . There is no certainty that they will be granted 12
Bahamas Petroleum Company Technical Achievements (2006-2011)
. Retrieved and described original core and cutting samples
. Completed modern computer workstation analysis: seismic, well logs, gravity and magnetics
. Petro-physics well log analysis on original digital and scanned logs
. Seismic and borehole structural geologic analysis
. Risk analyses, cost comparisons and reservoir simulations
. Geochemistry and petroleum systems evaluation
. Shot new advanced 2D seismic, gravity and magnetics on its 100% owned areas in June 2010 and January 2011
. Completed PSTM 2D interpretation and Exploration Update in April 2011 ** . EIA initiated in March 2011 * * * * * . CGGVeritas BroadseisTM 3D seismic * initiated >3000 km²; largest for GoM- Caribbean
•Cay Sal and 3rd Round Licence Applications •** Not all licences have been granted 6 prospects and 30 leads confirmed 13 2010 - 2011 2D Seismic Grid and Mapped Prospects & Leads
Seismic grid plan undertaken by Norwegian seismic companies SeaBird Exploration (www.sbexp.com) in 2011 and Spectrum (www.spectrumasa.com) in 2010. Following various negotiations with other oil companies, it is expected that an additional partner will join our project post the structural definition and potential volumetrics determined by this more detailed survey. 14 Previous Wells Drilled – Core Interpretation
Numerous hydrocarbon shows throughout all wells
15 Bahamas Petroleum Company 2010 2D Survey Giant Prospects & DHIs
N S
Seismic confirms continuity of Reservoir-Seal Pairs Seafloor vent – active hydrocarbon seepage creates vent on seafloor 16 Giant Prospects - Bahamas Petroleum Company Map Structure top of Cretaceous – PSDM Data
25 Km
17 2011 - 2D Seismic showing top of Cretaceous Across folds A, B and C
5 km Fold A Fold B Fold C
Near top Cretaceous Intra lower Cretaceous
Jurassic Top lower cretaceous
Section is horizontally compressed approximately 2:1. 18 Size of Prospects Identified by January 2011 2D Survey
Top Cretaceous Polygons Based on Lowest Closed 50 ms Contour, May 2011
Surface Fold Length (Km) Sq. Km Acres Closure 2-way time Comment Color Top Cret. A 59 205 50,600 150-200 ms Based on 1.200 contour Red
Top Cret. B & C 75 524 129,400 400-750 ms Based on 1.650 contour Red
Top Cret. B 71 350 86,400 200-650 ms Based on 1.550 contour Yellow Top Cret. B-N 37 76 18,800 150 ms Based on 1.300 contour Blue Top Cret. B-S 24 97 24,000 400 ms Based on 1.300 contour Blue
Top Cret. C 19 72 17,800 300 ms Based on 1.550 contour Yellow
Top Cret. D-N 24 76 18,800 <50 ms Based on 1.900 contour Yellow Top Cret. D-S 10 24 6,000 <50 ms Based on 1.850 contour Yellow
19 Identified Giant & Super-Giant Leads
Tenneco Max Case Most Likely Case Minimum Case Resource est 100% Structural Fill 50% Structural Fill 33% Structural Fill bn bbl bn bbl bn bbl
Manta Ray 1.447 0.543 0.049 Sand Shark 1.386 0.244 0.071 Blue Fin 3.469 0.406 0.069 Lion Fish 1.322 0.268 0.16 Blue Marlin 1.94 0.439 0.238 Grouper 6.492 1.665 0.837 Tenneco Map Hammer Head 1.007 0.299 0.121 1986 TOTAL for play in 17.063 3.864 1.545 • GREEN - 4-way isolated closure (COMBINED 33,581 ACRES) billion barrels • YELLOW - 4-way combined closure (COMBINED 122,441 ACRES) • BLUE - 4-way & fault closure to spill (201,144 ACRES) • Structure map on Lower Cretaceous Tenneco & Bahamas Petroleum Company lead maps and resources of same structures. Bahamas Petroleum Company was unable to identify Tenneco’s named leads relative to Bahamas Petroleum Company’s.
Bahamas Max Case Most Likely Case Minimum Case Petroleum 100% Structural Fill 50% Structural Fill 33% Structural Fill Company* bn bbl bn bbl bn bbl Resource est
C1 11.947 4.420 1.770 C2 5.865 2.170 0.870 C3 3.693 1.366 0.550 C4 2.791 1.030 0.410 2007 TOTAL for play in 24.296 8.986 3.600 billion barrels
•Based on volumetrics work by consultant petro physicist. Numbers represent a highly 20 speculative assessment of potential resource. Giant Prospects - Bahamas Petroleum Company Map Comparison of 2011 Prospects versus 2007 Leads*
Contour Interval 0.100 seconds = 100 ms
* 2007 leads outlined in black
21 Cuba Ramps Up Exploration Activity
In 2005 Repsol, with partners Statoil and World class operators have been attracted to India ONGC, drilled a well 60 miles west of Cuba and The Bahamas Cay Sal Bank. The group plans to drill another one or two wells this year in the same area. In 2009, based on knowledge of the Cuban petroleum province, Statoil joint ventured with Bahamas Petroleum Company to explore the Cay Sal Bank.
Other recent Cuban exploration news: • April 6, 2011, Repsol YPF expects to have Chinese-built drilling rig in Cuban waters by end of the summer (Reuters) • April 5, 2011, Cuba to drill wells by 2013 (Dow Jones Newswires) • November 17, 2010 – Gazprom, the Russian oil company farms into four Petronas Offshore Cuba Blocks earning a 30% stake. First well 2011 • “Russia`s Zarubezhneft to drill Cuba oil shelf in 2011 – CEO” (RIA Novosti, Moscow + www.cubastandard.com 14 July 2010) • “Russian Oil Company JSC Zarubezhneft * Opens Office in Cuba” (Latin America Herald * Tribune + www.cubastandard.com 25 June 2010) • “Cuban offshore oil exploration preparations”
(Reuters 01 Aug 2010) * Cay Sal and 3rd Round Licence Applications contingent on lifting of Government imposed application freeze (appendix 6.1.) 22 Key Conclusions
. First mover advantage in assembling acreage in The Bahamas
. Oil province with world-class exploration potential
. Strategy to use farm-outs and also retain 100% owned acreage
. Size and scale of the opportunity attractive to Majors and NOCs
. 2D modern seismic acquired in June 2010 and January 2011 confirms the Company’s petroleum assessment of multiple giant size structures capable of holding > 500 MBoE
. CPR underway to define scope of seismic analysis and to identify high-grade prospects to be drilled in 2012
. CGGVeritas BroadSeisTM initiated >3000 km2 survey over southern prospects
. In discussion with other potential partners and more deals expected in time
. Raised US$ 73.0 million before (before expenses)
Intended use of placing proceeds:
. 3D seismic and 2D shallow seismic US$ 36.8m
. Geochemical sniffer / multibeam US$ 6.4m
. Working capital and other exploration costs US$ 26.1m
Bahamas Petroleum Company believes there are supergiant oilfields to be found in Bahamas waters and is working on its own and with partners to find them 23
Appendices
1. Historical Bahamas Activity 1.1. Great Isaac Oolite – Anhydrite Reservoir – Seal Pairs
2. Bahamas Petroleum Exploration Programme Update 16 May 2011 3. Preliminary results for the year ended 31 December 2010 – 31 March 2011 4. Placing to raise approximately £45.6 million – 16 March 2011 5. Seismic Data Analysis February 2011 6. “The Bahamas: Petroleum system evaluation and hydrocarbon charge potential”, Dr. Steve Thompson – October 2010 7. Seismic Data Analysis, J Drummond, Dr. Norman Neidell – 15 September 2010
8. Industrial Port, Grand Bahama
9. Nassau Guardian: Government stance on oil drilling unchanged – 14 June 2011 10. Cuba, Repsol to follow US rules when drilling offshore 3 June 2011 11. Cuba, Repsol Jaguar prospect PTD, Scarabeo 9 day rate 20 May 2011 12. Cuba, Partners to drill 5 Gulf Wells this summer 5 April 2011 13. Repsol Moving ahead with Cuba Oil plans 5 April 2011 14. Buckeye Partners completes acquisition of 100% interest in BORCO – 16 February 2011 15. Government suspends consideration progress for oil exploration - 31 August 2010 16. Statoil acquires rights to South Riding Point – October 2009
24
Historical Bahamas Activity
WELL YEAR OPERATOR TOTAL AGE AT TOTAL DEPTH DEPTH
Andros Island – 1 1947 Superior 4.446m Early Cretaceous
Cay Sal – 1 1959 Bahamas 5.763m Jurassic or Early California Cretaceous
Long Island – 1 1970 Bahamas 5.351m Jurassic or Early Gulf Cretaceous
Great Isaac – 1 1971 Bahamas 5.440m Jurassic California
Doubloon Saxon – 1 1986 Tenneco 6.626m Early Cretaceous
. Five wells drilled in The Bahamas between 1947-1986 − Indicate active petroleum systems based on the presence of oil shows of varying quality, abundant reservoirs and seals, indications of source rocks and hydrocarbon saturations from log interpretation
. All licences abandoned prior to 1988, largely due to the lack of deepwater drilling capability and seismic expertise, with the exception of Kerr McGee who undertook a nominal programme north of The Bahamas Islands, subsequently exiting in 2006
. All Bahamian Government geological technical data was destroyed in 1980’s hurricanes
. No compelling incentive for international exploration Source: The Commonwealth of The Bahamas activity post-1985 due to low oil price from 1986 to 2003 which in turn led companies to remain in more conventional producing areas
Appendix 1
Great Isaac Oolite – Anhydrite Reservoir – Seal Pairs
Great Isaac 10,313’
OM
IG
cm
1 m m 10,343’
OOID GRAINSTONE - PRESERVED INTERGRANULAR (IG) ANHYDRITE – SEAL ROCK & LEACHED OOID GRAIN MOLDS (OM) POROSITY NOTE: ANHYDRITE IS THE EXCELLENT RESERVOIR POROSITY (BLUE DYE) & TYPE SEAL ROCK FOR THE PERMEABILITY CHARACTERISTICS WORLD’S LARGEST OILFIELD IN SAUDI ARABIA Appendix 1.1 Bahamas Petroleum Company Plc Exploration Update 16 May 2011
RNS Number: 9518D Bahamas Petroleum Company plc 16 May 2011
Exploration Programme Update
Bahamas Petroleum Company plc, the oil and gas exploration company with offshore licence permits in The Commonwealth of The Bahamas, announces preliminary evaluation results from the fully processed 2011 PSTM and 2010 PSDM 2D seismic data, set out in an Exploration Update Report (Report) which has been posted on the Company’s website at www.bpcplc.com. The Report includes results from independent experts on structural analysis of PSTM (Pre Stack Time Migration) and PSDM (Pre Stack Depth Migration) seismic data, structural and stratigraphic interpretation of PSTM data and definition of size and closure of prospects. The data interpretation includes newly processed maps, seismic lines and preliminary Amplitude versus Offset (AVO) analysis.
Highlights from the Report
•Seismic interpretation of recently acquired 2D seismic surveys in the southern Commonwealth of The Bahamas confirms the shipboard results released on 18 February, 2011. The data show multiple structures with 4-way closure ranging in length from 10 to 75 km, but with overall larger aerial extent (acreage) than previously reported.
•The study determines that folds were formed primarily during the late Cretaceous and were buried by early Tertiary to Recent sediments. The seismic data indicate that the structures were not breached and that potential reservoirs and seals in the Lower Cretaceous to Jurassic section were not subject to erosion or exposed to shallow diagenetic processes.
•The processed PSTM results confirm earlier interpretations of the 2010 PSDM seismic data that reservoir-seal pairs are continuous across the folds without appreciable structural deformation.
•A contract has been awarded to CGGVeritas for a 3,000 km sq 3D seismic survey in the southern licences. The seismic vessel is expected to be onsite by the end of May 2011. The survey is anticipated to take approximately 90 days to complete, with fast track interpretation to follow within approximately 4-5 months.
•The newly processed PSTM seismic data have been transferred to Ryder Scott Associates, who are undertaking a Competent Person’s Report. Ryder Scott will evaluate the prospect portfolio and reservoir facies and provide risked resource estimates.
•An Environmental Impact Assessment (EIA) is underway to evaluate the risks associated with drilling wells in the southern licence area. Contracts have been awarded to Acorn International and to the Oceanographic Department of the Rosentiel School of Marine and Atmospheric Sciences, University of Miami, specialist in ocean current modelling. These studies have commenced and will be completed in Q3 2011.
•Negotiations are underway with companies to undertake a multibeam seabed and hydrocarbon detection survey. These negotiations will be completed in the coming week.
Appendix 2 Bahamas Petroleum Company Plc Exploration Update 16 May, 2011 cont’d
16 May 2011 Bahamas Petroleum Company plc Highlights from the Report
Dr. Paul Crevello, CEO of Bahamas Petroleum Company plc said:
“I am very pleased to be able to report the fully processed results from our 2D seismic surveys which confirm and expand upon the initial shipboard results earlier this year. What is most exciting is the scale and size of the structures we have been able to map and the value creation potential to the shareholder as we approach our first drilling campaign.
These independent studies verify the exceptional size of these prospects and now allow visualization and interpretation of the internal character of potential reservoir systems. The size of the prospects, ranging from 10 to 75 kilometres, and 6,000 to over 120,000 acres, are recognized as some of the largest structures identified to date in the wider Gulf of Mexico area. We verify from the seismic that the structures were not breached and that reservoir and seal integrity are intact. The structures identified are similar to supergiant structures of the Mexican fields in the southern Gulf of Mexico and the Middle East.
The Company continues to analyze the data for further reservoir and resource evaluation. This data will be transferred to Ryder Scott to compile a CPR in Q3 2011. In addition, we are pleased to have Acorn International and the University of Miami working together on the EIA. These groups have considerable experience in the field of environmental studies, ocean current and oil spill mode modelling respectively.
We recently announced that CGGVeritas will undertake 3D seismic acquisition using their BroadSeis TM technology. The ship will arrive in late May 2011 to begin deployment of ten 8km streamers. This will be the first time that a survey using this technology is deployed in the Gulf of Mexico area. The Company welcomes the opportunity to apply this advanced technology to better defining the prospects identified in the 2011 PSTM study.
I am extremely pleased with the results of these studies and of the projects that are in place and imminent. These results and newly signed agreements confirm that the Company is progressing well with its exploration program and is expecting to be drilling in 2012. I maintain that all results have been positive and support the Company’s earlier projections on the highly prospective nature of the assets and that the Company is pressing ahead to prove the presence of pooled hydrocarbons in the exceptional structures."
Appendix 2 cont’d Preliminary results for the year ended 31 December 2010
RNS Number: 9518D Bahamas Petroleum Company plc 31 March 2011
Preliminary Results for the year ended 31 December 2010
Bahamas Petroleum, the oil and gas exploration company with licences in The Commonwealth of the Bahamas, is pleased to announce its preliminary results for the year ended 31 December 2010.
Highlights:
· 2010 was a busy and successful year for the Company;
· successfully shot the first modern seismic survey in the area since 1987, producing some encouraging results that indicate large structures containing hydrocarbon indicators;
· applied for two additional licences that cover approximately 6,210 square kilometres (1,534,600 acres);
· strong balance sheet at the period end, which has been further strengthened by equity placing post year end, raising £20.6 million before expenses with a further £25 million before expenses to follow conditional on shareholder approval;
· completed re-domicile of the Company to the Isle of Man;
· change of the Company's name to Bahamas Petroleum Company plc, to properly reflect the Company's focus; and
· remain on track to drill our first well in the first half of 2012.
Alan Burns, Non-Executive Chairman of Bahamas Petroleum, commented:
"We made good progress during 2010 and this has continued into 2011 with our successful equity placing firmly raising £20.6 million and conditionally raising £25 million before expenses in March. The Company is now well funded with a strong balance sheet and a clear strategy to develop its assets in the Bahamas. We are in negotiations with CGGVeritas to undertake a 3D seismic survey, which we hope to finalise after the EGM, and we look forward to reviewing the results in due course.
"2011 looks to be another strong year for Bahamas Petroleum and the Board continues to look to the future with confidence."
Appendix 3 Placing to raise approximately £45.6 million
RNS Number : 0208D Bahamas Petroleum Company PLC 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.
Appendix 4 Placing to raise approximately £45.6 million cont’d ...
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:
● 2D and 3D Seismic acquisition and processing £23 million ● Geochemical seabed sampling survey £4 million ● Working capital including financial resources to further technical £16.3 million investigations within existing awarded licences, on-going and new licence applications, associated corporate expenses and farm out negotiation costs Total £43.3 million
Appendix 4 cont’d Placing to raise approximately £45.6 million cont’d ...
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."
Appendix 4 cont’d Seismic Data Analysis - February 2011
RNS Number : 4546B Bahamas Petroleum Company PLC 18 February 2011
· Preliminary onboard processing of recently completed 2D seismic survey in southern Commonwealth of Bahamas waters shows numerous structures with four way dip closure significantly larger than previously expected.
· Detailed processing will take approximately two months, which will verify the preliminary interpretations and give further in depth analysis.
· Potential 3D seismic survey being considered with a number of suitable vessels available on short notice.
· The presence of a potential Middle Jurassic salt layer may point to a further "sub-salt" play in the area.
Bahamas Petroleum, the oil and gas exploration company with licenses in The Bahamas, is pleased to announce the posting on its website of two recently completed, independent consultant studies by Dr. Mark Rowan of Rowan Consulting Inc (Jan 2011) and Mr. Ozanisch of Lago Petroleum Consulting (Feb 2011). These documents provide important results from the June 2010 fully processed Pre-Stack Time Migration (PSTM) data along with preliminary mapping results of shipboard analysis of the January 2011 2D seismic survey. Both provide evidence of 'giant' size structures in the southern licences held by the Company's subsidiary, Bahamas Offshore Petroleum Ltd., capable of holding several hundred million barrels of oil. They provide the first structure maps documenting the size and extent of closure of these features, based on 1,120 km of seismic data and demonstrate the consistency of fold formation, the continuity of folds along the structural trend, the ability to seismically map internal stratigraphic consistency (i.e., continuity of reservoir-seal strata) across the folds and the geometric form of the folds.
These results are preliminary and the full PSTM processing of the 2011 2D seismic data is due for completion by end April 2011 and will form the basis for detailed structural interpretation and prospect evaluation. In addition to the seismic data, gravity and magnetics data were acquired which are currently being processed.
Dr. Paul Crevello, CEO of Bahamas Petroleum Company Plc , said:
"Rowan and Ozanich's reports are significant because they provide the first modern interpretation of seismic data and exploration potential of the Bahamas Offshore Petroleum licences from the Bahamian fold belt. These independent studies verify the extent and style of structural geometry of the large-scale folds which was not possible from the historical seismic data.
"Improved technology enabled exceptional resolution within the folds, allowing us to see for the first time the lateral continuity of potential reservoir and sealing strata. These studies are important for several reasons:
Appendix 5 Seismic Data Analysis - February 2011, cont’d ...
1) the 2010 PSTM data indicates that the structures are simple folds and that reservoir-seal strata appear to be continuous across the extent of the structures;
2) continuity of reservoir-seal pairs will enhance long-distance drainage of reservoirs;
3) the detachment of the compressional folds suggests the presence of a Jurassic salt layer and may provide a deeper 'subsalt' exploration play which we had believed was present but could only document in the June 2010 seismic, and;
4) the size of the fold belt prospects are considerably larger than those previously defined in the 2007 Competent Persons Report ('CPR').
We are waiting for completion of seismic processing of the January 2011 survey through PSTM and a new CPR to determine undrilled and unproven resource potential."
Non-Executive Chairman Alan Burns, of Bahamas Petroleum Company plc, said:
"These structures are exceptional in the size and extent of the 4-way closure, indeed I am not aware of any anticlines of this size in the Gulf of Mexico - Caribbean region. We look forward to testing these structures with the drill bit to determine if hydrocarbons are present. Bahamas Petroleum intend to stay on course to drill a well within the next twelve months, once appropriate drilling and environmental regulations are in place in the Commonwealth of The Bahamas."
Appendix 5 cont’d Conclusions of the Report "The Bahamas: Petroleum system evaluation and hydrocarbon charge potential”- October 2010
A study by: Applied Petroleum Technology (UK) Ltd. (www.aptec.no) Oct 2010 conducted independently for Bahamas Petroleum Company Limited
Disclaimer – General This report contains a number of assessments and opinions presented by Applied Petroleum Technology (UK) Limited (APT UK) based on the information provided and on the company experience. However, as the oil and gas business is an inherently risk business, no one can accurately predict the outcome of any drilling or completion operation. APT UK neither warrants nor guarantees the results of any work programme carried out as a result of any predictions or comments made in this Independent Report.
Disclaimer – Specific It should be noted that given the actual well density in the Bahamas (there are only 5 wells over some 100,000 square miles) there is a high level of uncertainty about the true nature of the sub surface. The reader should be aware that this report has been based on the data available but given the uncertainty the ranges of actual maturity and some quality in the area may vary widely from those presently understood. The estimates and conclusions in this report being scientific judgments, may vary considerably from the currently available results and the authors make no claims as to the accuracy of any information herein or assume any liability or responsibility for actions or decisions taken as a result of reading this report.
All parties reading this report should also be aware that exploration and drilling for hydrocarbons involves a degree of inherent risk and is considered speculative. There is the possibility that wells drilled as a result of the current work carried out, may not recover oil and gas in commercial quantities. Discussion of potential traps, structures, facies changes, generation of oil, maturation and timing and migration of hydrocarbons and hydrocarbon volumes, should not be taken to imply that any commercial accumulations exist.
The following conclusions are excerpted from an independent technical report that has bearing on the hydrocarbon analysis of Bahamas Petroleum Company's acreage.
SUMMARY
A regional geochemical review study has been carried out on behalf of Bahamas Petroleum Company Limited on the Bahamas area with the specific objective of assessing:
1) The likelihood of the presence of source rocks within or adjacent to the area of interest (AOI); 2) The likely thermal maturity of the potential source rocks to generate oil or gas; 3) The evidence for the presence of mature generative source rocks in the area of interest.
The conclusions are as follows:
Source rocks:
• It is believed that there are source rocks of sufficient quality and maturity to generate significant volumes of hydrocarbons in the Bahamas although they are poorly quantified in the very few wells drilled in this very large area.
Appendix 6 Conclusions of the Report "The Bahamas: Petroleum system evaluation and hydrocarbon charge potential”- October 2010 cont’d...
Maturity:
• Geothermal gradients are believed to be genuinely low in the area of interest but given the thicknesses of sediment accumulated at the depths where the potential source rocks are likely to exist, these source rocks should have been oil generative. Current low temperatures will be conducive to the preservation of hydrocarbon accumulations.
Manifestation:
• Live hydrocarbon shows have been encountered during drilling of at least four of the five deep wells drilled in the Bahamas and even in a number of the relatively shallow stratigraphic boreholes (ODP/DSDP) in or close to the AOI; • Sea bottom sediment sampling has recorded the possible presence of migrated hydrocarbons of thermogenic origin in several drop cores close to the location of the Doubloon Saxon-1 well; isotopes suggest oil prone source; • There is evidence of hydrocarbon seepage in the form of an area of seismic opacity in the near surface close to one of the recently mapped seismic leads likely caused by vertically migrating gas.
Preservation:
• Hydrocarbon accumulations derived from the Bahamian source rocks are thought most likely to occur in deep prospects in the fore deep close to the known Cuban effective source rock system. • Hydrocarbon quality is likely to be influenced by the source rock system and provide aromatic oils and (depending on the source) possible traces of sulfur. • Gravities are likely to be in the 35 to 40° API range. Degradation processes are unlikely to have negatively affected oils generated.
Dr. Steve Thompson Patrick Barnard Applied Petroleum Technology (UK)
Appendix 6 cont’d Seismic Data Analysis September 2010
DG Consultant Services 607A Kipling St., Houston, Texas 77006, 713 927 2251
September 15, 2010
Introduction:
Bahamas Petroleum Corporation (Bahamas Petroleum Company) acquired 194 kilometers of 2D seismic data in July 2010 in order to evaluate the capabilities of improving seismic data quality through modern acquisition techniques, and processing algorithms utilizing massive computer power.
Analysis:
Data results of this survey show better data quality than previous vintages acquired most recently in the 1980’s. Vintage geologic and seismic data (1986) previously documented the potential presence of multiple >500MMboe fields. These historical studies and recent independent consultant reports (2007-2010) indicate that the area has a high probability for oil, which is supported by oil shows in exploratory and ODP (Ocean Drilling Program) wells drilled in The Bahamas, well tests from offshore Florida Keys and offshore Cuba. Bahamas Petroleum Company's June 2010 seismic confirms the previous work and reduces risk placed on hydrocarbon presence.
Bahamas Petroleum Company's 2010 data is more suitable for both structural and stratigraphic interpretation, as well as advanced analyses for hydrocarbon and porosity detection, through amplitude and velocity variation, and frequency absorption due to hydrocarbons.
The new data present clear evidence of large structures (figure 1) with continuous layering of probable reservoirs and seals across the breadth of the folds and hydrocarbon fluid flow features including chimneys or vents, and direct hydrocarbon indicators as can be seen in figures 2 and 3. There is further evidence from the sections of likely fluid controlled amplitude variations and flat-spots (figure 4) which may indicate fluid interfaces of various phases of hydrocarbon contacts. Vertical chimneys into the sea bottom as well as amplitude dimming and frequency absorption in figures 2 and 3 are direct evidence of in situ escaping hydrocarbons from well charged structures. Typically the light ends of the hydrocarbons escape through micro-faults and fractures and provide indicators of hydrocarbons preserved within the structure.
The types of features observed over the structures and along rock layers are indicative of an oil-prone system with minor amounts of lighter ends escaping to the surface. The abundance of hydrocarbon indicators supports recent consulting studies that proposed the petroleum system is operative (see APT summary of report posted on Bahamas Petroleum Company website).
Summary:
Bahamas Petroleum Company’s 2010 seismic acquisition and processing program successfully demonstrates the advantages of modern acquisition and processing systems and computer power. As well as imaging large structures with over 700 hundreds of milliseconds (2-way time; i.e., ~4000 feet) of closure, there are numerous geophysical indications of porosity variations and hydrocarbons in the system. It is anticipated that a closely spaced 2D grid or 3D will prove up drillable prospects by the end of the year.
J. (Jock) Drummond Dr. Norman S. Neidell
Appendix 7 Industrial Port, Grand Bahama - 2010
BORCO Oil storage terminal at Freeport Industrial Port is the largest oil storage facility in the Caribbean
Tanker off-loading at Freeport Industrial Harbour, Grand Bahama Appendix 8 Government's stance on oil drilling unchanged
JAMMAL SMITH NG Business Reporter Published: Jun 14, 2011
Deveaux: More studies needed before drilling
The government’s stance on drilling for oil in Bahamian waters remains unchanged, with the Minister of Environment Earl Deveaux saying companies like the Bahamas Petroleum Company (BPC) are not getting the green light to drill in the near future.
Deveaux said last week Thursday that the moratorium that has been in place since the Deepwater Horizon spill last year has not been lifted, and more environmental studies will have to be conducted before any drilling activity occurs.
“We have required that any of the oil companies doing something outside of their league that they have to do an environmental impact assessment (EIA),” Deveaux said. “For example, Statoil has sought permission to engage in exploration and is currently doing an EIA, but the work that BPC has been talking about is frankly more of a business promotion than it is anything else. They have licenses but in order to continue to be viable they need to encourage and promote investment, so the likelihood of them finding oil is elevated whenever they announce that they are in close proximity of this discovery. “
Deveaux’s comments came after he was asked a question regarding oil drilling and the environmental impact stemming from it in the House of Assembly by Member of Parliament for Englerston Glenys Hanna-Martin. The response was his first made in a public forum in weeks regarding the topic.
He mentioned that he had decided not to comment on BPC’s activity because it could have affected stock prices and investor confidence. The environment minister added that the government’s unchanged stance on oil has been communicated to BPC, despite its CEO Dr. Paul Crevello saying the company is targeting 2012 to start drilling.
“We have a moratorium, we have not gone outside of it, we have not issued any new leases, and any exploration that is intended to take place in The Bahamas will be undertaken with an approved EIA,” Deveaux said. “We have no application for oil drilling and I’ve told [BPC] emphatically that we’re not entertaining any of that. That’s something we’ll take up at another time.”
BPC holds five petroleum exploration licenses covering 3.87 million acres in Bahamian territorial waters and its maritime exclusive economic zone (EEZ). Four of the licenses, named Bain, Cooper, Donaldson and Eneas, are in the southwest Bahamas near the Cuban border. The licenses expire on April 26, 2012, according to BPC's web site.
Appendix 9 Cuba, Repsol to follow US rules when drilling offshore 3 June 2011
Source: Reuters 03 Jun 2011
Spain's Repsol has reassured the United States it will follow American environmental requirements when it drills offshore Cuba this year and will allow U.S. officials to inspect the drilling rig, U.S. Interior Secretary Ken Salazar said on Friday.
Following the BP oil spill last year in the Gulf of Mexico, the U.S. government is worried Cuba may be unable to ensure the safety of its offshore drilling. The United States does not have full formal relations with Cuba. Salazar told reporters in a conference call that the government was concerned about oil drilling in Cuba's portion of the Gulf of Mexico, about 50 miles from the Florida border.
The issue was discussed when Salazar met representatives from Repsol this week during his visit to Spain. 'What they said is that they will be complying with United States' environmental requirements,' Salazar said of Repsol's commitment. He said Repsol spelled out the company's planned drilling offshore Cuba and how they would meet U.S. rules and regulations.
Cuba is eager to develop its oil resources in the Gulf of Mexico, which it estimates could total 20 billion barrels of crude. The United States pegs the total at a more modest 5 billion barrels.
Salazar said there was no discussion with Repsol on what would happen if the company did not follow U.S. offshore drilling rules while doing business in Cuba, such as limiting Repsol's access to future drilling leases in U.S. waters as punishment for noncompliance. 'We'll continue to monitor the situation closely,' he said.
Repsol already has drilling leases in the U.S. Gulf of Mexico and in Alaskan waters.
Appendix 10 Cuba, Repsol Jaguar prospect PTD, Scarabeo 9 day rate 20 May 2011
Source: Evaluate Energy May 20, 2011
Saipem-owned semisubmersible Scarabeo 9 is set to leave Keppel Shipyard in Singapore next month or July and arrive offshore Cuba sometime in September to drill the Jaguey prospect for Repsol in 5,300 feet of water, a little bit deeper than the Macondo well, said Jorge Pinon, a visiting fellow with the Florida International University Latin America and Caribbean Center's Cuban Research Institute.
The Jaguey well will be drilled to more than 20,000 feet approximately 55 to 60 miles south of Key West, Florida and 22 miles north of Havana, said Pinon (former president of Amoco Oil Latin America, retired in 2005 from BP, which acquired Amoco).
According to RigLogix, Scarabeo 9 will earn a day rate in the low-$470,000s.
While Cuba opened its offshore Gulf of Mexico zone for drilling five years ago, Repsol and other operators who hold interests in Cuban blocks, including Malaysia's Petronas and Russia's Gazprom, encountered difficulty starting their drilling programs as the U.S. embargo on Cuba meant that rigs used to drill in Cuban waters must be outfitted with no more than 10 per cent of U.S components.
Operators then ordered the Scarabeo 9, which has been outfitted to meet U.S. embargo requirements. The rig is expected to be used for drilling five to seven exploratory wells. Repsol will use the Scarabeo 9 to drill two exploratory wells for Repsol, Petronas is expected to use the rig to drill two wells. Venezuelan state energy company PDVSA and Angola state energy company Sonangol might pick up the rig for drilling offshore Cuba as well.
Last year's Macondo oil spill has raised concerns about what would happen if an oil spill occurred offshore Cuba. A spill here would threaten Key West and the U.S. East Coast; The embargo means that, if an emergency arises or if a piece of equipment is needed, international oil companies operating offshore Cuba could not turn to U.S. based companies in these situations. The U.S. also does not have a spill agreement with Cuba as it does with Mexico, with drill exercises conducted twice a year. Pinon noted that companies with interests offshore Cuba would ask for a general license to allow them access to U.S. Gulf Coast companies and assets in both situations.
The embargo means that Repsol and other companies have to bring in workers for planned exploratory programs offshore Cuba are being brought in from Norway, the UK and Canada. "Utilizing workers from the U.S Gulf Coast would be the most economic and closest, but the embargo doesn't allow that," Pinon said.
Pinon said that the Cuban government has adapted into their regulations many of the regulations that came out of Bureau of Ocean Energy Management, Regulation and Enforcement since the Macondo oil spill and will use many of the lessons BP learned from Macondo for exploratory drilling offshore Cuba. Cuban officials discussed drilling and safety plans at a conference in Trinidad and Tobago two weeks ago.
Appendix 11 Cuba, Partners to drill 5 Gulf Wells this summer - April 2011
Andrea Rodriguez Associated Press Tuesday April 5, 2011, 5:24 pm EDT
HAVANA (AP) -- Cuba and partner companies will begin drilling five oil wells in the Gulf of Mexico this summer in hopes of locating enough crude to justify the costly exploration, an official said Tuesday.
"The prospects are very promising" of finding valuable reserves, said Manuel Marrero, an official with the Ministry of Basic Industry. Cuba's domestic production is exclusively heavy oil with a high sulfur content. Its offshore Gulf waters could contain large quantities of lighter, sweet crude, although a test well in 2004 turned up only modest deposits. Studies since then have pointed to "oil traps" in the marine floor, persuading partner companies to take on the expensive task of exploration in deep water, Marrero said during an earth sciences convention. The drilling is expected to run through 2013.
The Cuban government has designated 59 blocks in Gulf waters encompassing 43,200 square miles (112,000 square kilometres) where private energy companies have said they could drill deep-water test wells. The area opened for international investment in 2000, and currently a half-dozen companies, including Spain's Repsol-YPF, have contracted for 22 of the blocks. None of the companies are American -- due to Washington's decades-old ban of U.S. business dealings with the communist-governed island -- although some U.S. firms have expressed interest in the past.
Marrero repeated Cuba's position that it would be open to partnering with U.S. companies. "Any company could participate under Cuban laws," Marrero said. Earlier this year, Brazilian officials announced that country's state-run energy giant, Petrobras, would withdraw from the Cuban area. "They had a small block, barely 1,500 square kilometres," Marrero said. "They discovered prospects, but that can't compete with the hundreds of prospects they have" in Brazilian territory.
According to geologic studies conducted by several institutions, some of them U.S.-based, Cuba's Gulf reserves could be 5 billion to 9 billion barrels of crude. Nearly a year after the Deepwater Horizon disaster that killed 11 workers and led to more than 200 million gallons of oil spewing from a BP well a mile beneath the Gulf of Mexico, Marrero assured reporters that Cuba's exploration will be carried out safely.
"The equipment that will be used is the most modern, the safest. The regulatory framework is very strict, and the companies that will drill are prestigious and experienced," he said. "I don't think we are going to have any more risks.“ Earlier this year, Cuba reported its 2010 production totalled 4 million tons of petroleum equivalent -- oil plus natural gas -- or about 46 per cent of its domestic consumption. The rest it obtains from Venezuela on preferential terms.
Appendix 12 Repsol moving ahead with Cuba Oil Plans – April 2011
By: Jeff Franks Tue Apr 5, 2011 www.reuters.com
HAVANA, April 5 (Reuters) - Repsol YPF (REP.MC) expects to have a Chinese-built drilling rig in Cuban waters by the end of the summer and start drilling immediately into a prospective undersea oil field that looks like it could be a big one, a geologist for the Spanish oil company said on Monday. Repsol, in a consortium with Norway's Statoil (STL.OL) and a unit of India's Oil and Natural Gas Corp. (ONGC.BO), plans to drill one well with the high-tech Scarabeo 9 rig and another if the first is successful, said senior structural geologist Gonzalo Zamora at Cuba's Earth Sciences Summit in Havana.
"The perspectives are to find something, if not, we wouldn't be drilling. And the sizes are big," he told reporters after making a presentation at the conference that is heavily focused on Cuba's oil and gas development.
"To drill with so much risk like we have in Cuba, we have to look for a big prospect because the investment to develop it is very big," Zamora said. He said seismic studies of the offshore blocks Repsol has leased have turned up "very interesting prospects" in several geological zones. The company drilled the only well in Cuba's offshore in 2004 and found oil in an "area of much potential," Zamora said.
It has not sunk a second well for various reasons, but contracted with Italian offshore oil services company Saipem for use of its Scarabeo 9 rig, which has been built in China and is now in Singapore undergoing preparations for the trip to Cuba.
Zamora was expected to arrive in Cuba by the end of the summer, but delays were always possible in the offshore oil business. Sources have told Reuters the rig should arrive at the communist-led island by mid to late August.
He said Cuba, which is anxious to tap into its unexplored sector of the Gulf of Mexico, wanted Repsol to commit to drilling two wells, but Repsol limited its risk by agreeing to do one well for sure. Cuba has said it may have 20 billion barrels of oil offshore, although the U.S. Geological Survey has estimated a more modest 5 billion barrels.
After Repsol finishes with the Scarabeo 9, which is capable of drilling in 12,000 feet (3,657 meters) of water, the rig will be handed over to Malaysia's Petronas to drill in its Cuban offshore leases, then to ONGC Videsh, which is a unit of ONGC, for its Cuba exploration. Venezuela's PDVSA may also be in line to get the rig for its Cuban blocks, where areas of "great potential" have been found, PDVSA senior basin analyst Jose Noya told reporters at the conference. He said exploratory drilling could take place "maybe in a year.“ "Once we have the equipment, it will be drilled. Probably we are in the line for drilling ... with the same rig, because it is a rig that can drill in 2,000 meters (of water)," he said of the Scarabeo 9. Last summer, Cuban officials were saying they expected to drill seven wells, but Cuban senior oil adviser Manuel Marrero told the conference that the number now was five. He did not specify who would drill the wells. (Editing by David Gregorio)
Appendix 13 Buckeye Partners – February, 2011 Completes acquisition of 100% interest in Bahamas Oil Refining Co. Ltd
February 16, 2011
Buckeye Partners, L.P. (“Buckeye”) (NYSE: BPL) announced today that it has completed the purchase of the 20 percent interest in FR Borco Coop Holdings, L.P. (“FRBCH”), the indirect owner of Bahamas Oil Refining Company International Limited (“BORCO”), from Vopak Bahamas B.V. (“Vopak”) for $340 million. As partial consideration for Vopak’s interest in FRBCH, Buckeye issued 1,095,722 of its Class B units and 620,861 of its LP units to Vopak.
As previously announced, Buckeye acquired its initial 80 percent interest in BORCO from affiliates of FRC Founders Corporation on January 18, 2011. This now completes Buckeye’s acquisition of 100 percent of BORCO.
In the aggregate, Buckeye paid $1.7 billion in a combination of cash and equity to acquire BORCO.
www.buckeye.com Accessed 1st March, 2011
Appendix 14 Government Suspends consideration process for oil exploration - August 2010
News Article in The Bahamas Tribune: Govt suspends consideration process for oil exploration August 31, 2010 By TANEKA THOMPSON Tribune Staff Reporter
GOVERNMENT has suspended the consideration process for all oil exploration and drilling applications until the country has stringent environmental protocols in place to mitigate against a catastrophic oil well leak.
According to Environment Minister Earl Deveaux, the new stipulation comes in response to British Petroleum's (BP) devastating oil leak in the Gulf of Mexico - which threatened fragile marine ecosystems and fishing industries - and the large volume of oil exploration applications inundating the government.
"The Ministry of the Environment has suspended consideration of all applications for oil exploration and drillings in the waters of the Bahamas. The ministry seeks, by this decision, to maintain and safeguard an unpolluted marine environment for the Bahamas notwithstanding the potential financial benefits of oil explorations," said a statement released by Mr Deveaux yesterday. The release added that all existing licenses will be reviewed to ascertain any legal entitlement for renewal.
"We are not seeking to interfere with any existing licenses and the people who have licenses know of the policy. The recent events showed us that (a) oil if it is to be found, will likely be in the marine environment and (b) we want to maintain an unpolluted environment.
"And so before we explore for oil we want to have the most stringent environmental protocols in place," said Mr Deveaux when asked to clarify this point yesterday.
BPC Ltd recently partnered with Norwegian oil heavyweight Statoil to search for oil in some 2.5 million acres in Cay Sal Bank and hold five licenses for oil exploration. The government has not issued any licenses for oil drilling in Bahamian waters.
Environment Permanent Secretary Ronald Thompson said that while the ministry has yet to draft the necessary safety protocols, government will frame its future policies around existing ones from other countries. "We haven't drafted any but there are ones that are in existence in other places where oil is current being harvested or explored. We will in short order review all of those and come up with what we think will be the best (policies) for the Bahamas," said Mr Thompson.
Deepwater Horizon's oil rig exploded on April 20, killing 11 workers, and leaking an estimated 4.9 million barrels of oil from BP's underwater well. Yesterday's statement said that calamity underscored the need for precautions. "Given recent events involving oil exploration and the efforts to prevent pollution, this prudent safeguard is essential to preserving the most vital natural resource of the Bahamas - its environment," said the statement.
Speaking to The Tribune, Mr Deveaux said more stringent protocols could have prevented BP's disaster. "Everything we learned about BP suggests that there were a few mishaps that could have been avoided," he said.
In May, Mr Deveaux said it would be "impractical and unreasonable" for the Bahamas to shy away from oil exploration or drilling as a consequence of the environmentally devastating oil leak off the coast of the US state of Louisiana.
"The world is not going to shy away from oil because of this accident. This is not the first or the last," he said at the time. He also said earlier that proper management of resources would be vital to any oil discovery in Bahamian waters.
Appendix 15 Statoil acquires rights to SRP and agrees to capital expenditures and upgrades - October 2009
On 22nd October, 2009 Statoil completed the acquisition of SRP Holding Limited, which holds the lease for the South Riding Point crude oil terminal in The Bahamas until 2049. The lease includes oil storage as well as loading and unloading facilities.
The terminal, which is located on Grand Bahama Island, consists of two shipping berths and ten storage tanks with storage capacity for 6.75 million barrels of crude.
We plan to upgrade the terminal to allow for the blending of crude oils, including heavy oils. Future blending operations will normally be carried out onshore, but facilities will also be installed that allow for blending from ship to ship at the jetty.
The acquisition is a strategic measure that will both support our global trading ambitions and improve our handling capacity for heavy oils. We have rented capacity at the terminal since 1993. New blending facilities and full terminal capacity will strengthen both our marketing and trading positions in the North American market. The terminal will also be an important part of our plans to market our own volumes of heavy oil.
In addition to the existing lease period, we have an option to extend the agreement for an additional 30 years until 2079.
www.statoil.com Accessed 1st March, 2011
Appendix 16