The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

While most firms would bemoan the loss of a joint venture partner, the Bahamans Petroleum Company (BPC) yesterday said Statoil’s departure would create “upside” for its approved licence areas.

Simon Potter, BPC’s chief executive, told Tribune Business that the South Riding Point owner’s decision to exit its interest in three joint licence applications would enable it to “broaden” talks with potential partners for its first exploratory Bahamian well.

He said Statoil’s decision to exit the three licence applications, which have been sitting before the Government awaiting approval for almost five years, was no reflection on BPC’s prospects of striking commercial oil quantities in Bahamian waters.

“I’m sure I’ll be fielding questions on how this is bad news,” Mr Potter told Tribune Business, “but this issue is more about Statoil doing other, better things rather than waiting for licence approvals in the Bahamas.”

Pointing out that the Norwegian-headquartered company had enjoyed success with its oil exploration activities elsewhere in the world, Mr Potter said it had simply made a commercial decision to concentrate its capital investments in areas where it was likely to get a larger, and faster, return.

“It has nothing to do with the prospectivity of the Bahamas at all,” Mr Potter told Tribune Business of Statoil’s move. “It doesn’t reflect on any increase or decrease in prospectivity.”

And, referring to the potential benefits from its former joint venture partner’s departure, he added: “It does mean the nature of the conversation with a potential farminee is much more wider or broader.:”

Statoil’s interest, which was in the form of a May 2009 joint licence development agreement (JLDA) held with BPC, covered three licence applications in Bahamian waters − Zapata, Falcones and Islamorada.

None of these oil exploration licences have been approved, although they have been submitted to the Government.

BPC now becomes the sole, 100 per cent owner of these three licences applications. When added to the five exploration licences already approved by the Government, they now make BPC and the Bahamas a more attractive prospect for drilling partners.

Mr Potter said the seismic testing work already conducted by BPC had confirmed the presence, in those five licence areas, of large rock structures that typically held commercial oil volumes.

And these structures were “trending north-west” towards BPC’s three unapproved licence areas, he added, providing further encouragement to a ‘farm in’ partner for the exploratory drilling.

“The level of prospectivity has to be inferred rather than confirmed,” Mr Potter explained, “but they’re [the structures] trending north-west, which indicates continued upside from the plate survey.

“This is what this allows the farm in partner to see we have.”

In a statement, BPC confirmed that Statoil’s withdrawal allowed it “to offer a wider suite of options to prospective partners”. It emphasised that this had no impact on its exploratory oil drilling plans, which require it to ‘spud’ a well in Bahamian waters by April 2015.

“We’re very busy looking at the farm in process and putting people through the data room. We’re very excited,” Mr Potter told Tribune Business of the search for a drilling partner.

“All I’m doing is driving to the spudding of that well as soon as possible, and that will not only realise value for me and my shareholders, but the Government and the people of the Bahamas.”

The BPC chief added that he had been “so busy” focusing on this and other issues since the New Year, there had been no conversations over advancing the company’s planned Bahamian Depository Receipt (BDR) issue to Bahamian institutional and retail investors.

Mr Potter said he had ideally wanted the BDR issue to have occurred already, but acknowledged that the Securities Commission and Central Bank of the Bahamas had their regulatory responsibilities to fulfill.

“We recognise that what we’re trying to do, while maybe not unique, is novel and new in the Bahamas - to create a BDR against a separately listed stock - and everybody’s got to do what they’ve got to do,” he told Tribune Business.

In a statement issued yesterday, Mr Potter said of the Statoil move: “We are now in a position to take whole ownership of the secondary area licence application process and provide an attractive opportunity for potential new farm-in partners.

“The three licence applications lie adjacent to four of the company’s fully permitted southern licences, and present on-trend upsides to parties already engaged in farm-in discussions.

“Coupled with a robust cash position, our positive outlook remains unchanged as we focus on preparations during the year for the first exploration well.”