The Tribune

By NEIL HARTNELL

Tribune Business Editor

A BAHAMAS-based oil explorer yesterday said it had appointed RoyalFidelity Capital Markets to advise it on a Bahamian Depository Receipt (BDR) offering and subsequent Bahamas International Securities Exchange (BISX) listing, its chief executive confirming this was likely to happen in 2012.

Speaking after Bahamas Petroleum Company (BPC) unveiled its 2011 financial results, Simon Potter told Tribune Business that analysis of the seismic data shot in its licence areas, located in the southern Bahamas, was continuing to "lower the risk" associated with oil exploration in this nation's territorial waters.

And, in his statement to BPC's shareholders, Mr Potter said the Environmental Impact Assessment (EIA) submitted to the Bahamas Environment, Science and Technology (BEST) Commission showed "Mother Nature was looking out for the Bahamas".

He explained that even in a worse case scenario of a major oil spill, "an insignificant fraction" would be washed up on Bahamian shores, sparing this nation's fragile environment and tourism industry from a major negative impact.

Confirming that Bahamas Petroleum Company's Board has decided to appoint two-Bahamas based directors, Mr Potter told Tribune Business the Board had also decided to proceed with a BDR offering to Bahamian retail/institutional investors, and subsequent BISX listing.

"We're working constructively with both the Securities Commission and BISX," he said. "We know what we need to do, and understand what needs to be done in complying with Bahamian regulations.

"It's up to the Board to take a decision to move ahead with that, which they've done. We'd like to move forward as soon as we can on that."

Mr Potter confirmed that Bahamas Petroleum Company had appointed RoyalFidelity, which has acted as the financial adviser/placement agents for the Bahamas' two previous BDR offerings, Kerzner International and Consolidated Water, to play the same role this time.

While the value of any Bahamas Petroleum Company BDR offering, and the amount of shares to be made available to Bahamian investors, have yet to be determined, Mr Potter said in his 2011 report to shareholders: "These instruments represent tradable, listed securities which will provide Bahamians, currently precluded from purchasing shares via the existing London Stock Exchange AIM listing, with access to any capital growth in the stock of the company as it proceeds towards drilling.

"Provision is being put in place for Bahamians to benefit from the potential wealth creation of the company's capital growth, thus allowing them to enjoy the benefits of successful oil exploration in their native waters. All indications suggest the presence of potentially giant fields within the licence area."

The Bahamas Petroleum Company's activities in this nation have become a 'political football' in recent times, with the Democratic National Alliance's (DNA) candidate for Montagu, Ben Albury, especially vocal in trying to make the firm a 'point of controversy'.

Mr Potter, in his message to Bahamas Petroleum Company investors, indicated that the company could not wait for the impending general election campaign to be over, so that it could recommence talks with the Government over issues such as the ongoing moratorium on oil exploration activities in Bahamian waters.

The Ingraham administration implemented this to give it time to develop a proper regulatory, environmental and safety regime for the sector, following the explosion that devastated BP's Deepwater Horizon rig in the Gulf of Mexico.The moratorium, if it continues, would interfere with Bahamas Petroleum Company's licence obligations, which require it to "spud", or drill, its first exploratory well by April 26, 2013.

"As the company enters 2012 there are a number of major catalysts that will underpin and sustain future growth," Mr Potter wrote.

"These include the outcome of regional drilling activities, principally in Cuban waters adjacent to the company's Bahamian licences, completion of the Bahamian elections ahead of their May 2012 deadline, and timely progress towards seeking a partner to participate in the drilling of a deep well.

"The company looks forward to the outcome of the Bahamian Government elections scheduled to be conducted before May 2012. Notwithstanding the political outcome, we anticipate a refreshed mandate that supports exploration activity and seeks to drive growth and wealth creation."

Emphasising this, Adrian Collins, the Bahamas Petroleum Company's non-executive chairman, told shareholders: "We greatly look forward to working with which ever government is elected, to help set down a formal oil and gas regulatory framework; satisfy the concerns of all parties; and overcome the numerous challenges ahead."

Referring to the fact that the Bahamas Petroleum Company's late chairman, Alan Burns, had described the potential for oil in this nation as the 'best prospect' he had seen in 40 years, Mr Collins said: "It has the potential to transform the Bahamian economy, bringing untold benefits to future generations of Bahamians and significant gains to our shareholders."

Confirming that Bahamas Petroleum Company had submitted an EIA to the BEST Commission, Mr Potter added: "This report includes a very sophisticated, long-term simulation study designed to assess the transport of oil away from any potential spill site, undertaken as part of the company's oil spill contingency planning.

"The key conclusion from this study is that regardless of the spill size, ocean current, wind direction or sea state pertaining over the last seven years, Mother Nature is looking out for the Bahamas, as an insignificant fraction of the likely spilled oil, even in the worst possible event, will ever make it to shore in Bahamian territorial waters, although cooperation with neighbouring territories would be a clear priority."

Mr Potter yesterday explained to Tribune Business that the existing moratorium did not prevent the Bahamas Petroleum Company from analysing its existing 3D seismic data, an effort that would ultimately enable it to determine the location, angle and type of well it would dig.