The Tribune

By DANA SMITH

Tribune Staff Reporter

dsmith@tribunemedia.net

SHARE prices at the London-listed Bahamas Petroleum Company have been negatively affected by both government’s stances on oil drilling, company CEO Simon Potter said – adding that the prices will rise if oil is found and that shares will be available to Bahamians in “the next few months”.

Speaking yesterday at BEC’s Energy Security Seminar, Mr Potter also voiced his support for the government’s planned oil drilling regulations and said BPC is gearing up for exploratory oil drilling – having spent $50 million so far.

He said oil could prove to be a billion dollar industry in the Bahamas if large, commercial quantities are found.

“We’re an exploration company. Our only right, our only asset is the right to explore. So anything that impacts that right to explore destroys your share price,” Mr Potter said.

“So at the start of 2011, the share price was 25p as we were gearing up to drill. As we ran into the election, the ex-prime minister (Hubert Ingraham) said there will be no drilling on my watch. The share price cratered by 40 per cent.

“During the course of the first year of this administration, there’s been all this talk about referendum. Again, anything that impacts my right to explore and my right to explore within a certain period of time, impacts the share price.

“So we’re down now about 4p or 5p based upon the market in London’s belief in whether the Bahamas is encouraging investment. Whether it will actually support a company investing in its own economy and whether that well will actually get drilled.

“So that’s what’s impacted us. Any kind of talk about those kind of things impact us as a company.”

He added: “I don’t think anybody really looks at the Bahamas and thinks political risk. I think it’s about, are you going to get your well drilled in a time-frame that shareholders want?

“And clearly, the shareholders have put up nearly $100 million so they’re going to want a return on their money at sometime in the future.

“Now, if we don’t find any oil, that’s just the game that they’re in. It’s a high-risk, high-reward strategy. But if we do hit oil, then clearly our share price won’t be 5p,” he said.

“We are looking to list on the Bahamian stock exchange... Hopefully in the next few months, we’ll be able to come to the market on the BISX and you will be able to buy shares in BPC; and it’s not for everyone – this is high-risk, high-reward stuff.”

Speaking to the press on the government’s planned regulatory framework for oil drilling, Mr Potter said BPC “welcomes” the draft legislation.

“We’ve completed all of the exploration that we can remotely and so what we’re looking to do now is to drill a well.

“The government said in March we can go ahead and drill that exploration well under modernised and straightened regulations which is something that we support,” he said.

“I think the regulations were promulgated in the 1970s and the attitudes of society, technology, has moved on; and we have put together our own environmental impact assessment taking account of what we believe to be international standards and we’re very confident that our plans will comply with new regulations. We welcome and look forward to making sure our future plans are in compliance with those.”

Mr Potter also showed seminar attendees a pie-chart depicting a possible $80 billion split in hypothesised profits if commercial quantities of oil are discovered.

The chart showed $20b going to the government, $20b in profits going to BPC, and another $40b going to BPC which would be spent on the costs associated with oil drilling.

Mr Potter explained the $80b split is BPC’s “best estimate at this stage” if enough oil is discovered.