The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An oil explorer has touted the one-month extension of exclusive talks with a "major oil company" over a Bahamian well joint venture as "a clear indication of progress".

Bahamas Petroleum Company (BPC), in a statement to the markets, said the unnamed oil company had agreed to extend their confidentiality and exclusivity agreement by another month until September 1, 2018. The two parties had signed a three-month deal on May 1, 2018, which was due to expire on Wednesday.

Their agreement allows the two sides to extend the exclusivity period on a month-by-month basis for up to three months. With the first option exercised, two more potentially remain over talks on forming a joint venture to spud an exploratory well in Bahamian waters south-west of Andros, close to the maritime boundary with Cuba.

Simon Potter, the Bahamas Petroleum Company's (BPC) chief executive, did not respond to calls and messages seeking comment before press time last night. However, he said in a company statement: "The election to extend the period where BPC and the counterparty are to work exclusivity together on technical and commercial matters for a further month is a clear indication of continued progress in our efforts to conclude a transaction covering our highly prospective assets in The Bahamas."

BPC has already received cash payments totalling $750,000 for the three-month exclusivity to-date, and is now set to receive a further $250,000 for the additional month's extension. It's agreement with the "oil major" requires that it be paid $250,000 per month.

"The terms of the agreement (as extended) require BPC and the counterparty to continue to work exclusively together to finalise a detailed technical evaluation of the company's licences, and seek to develop a commercial framework for a potential transaction," BPC said.

"The work undertaken to-date between both parties will therefore continue during the term of the current extension. Further, unless and until agreed otherwise, or a definitive commercial arrangement is agreed between both parties, the identity of the counterparty will continue to remain confidential."

BPC acknowledged that the one-month extension provides no certainty that a joint venture deal will ultimately agreed, with the company having spent more than a decade conducting seismic testing and underwater evaluations to determine whether commercial quantities of extractable oil lie beneath Bahamian waters.

The amount of time that has passed has led to growing scepticism, but BPC's rate of progress has heated up rapidly in late April, with the company submitting its 'Environmental Authorisation' application for the necessary permits to the Government.

The search for a joint venture partner, who will share the financial and technical burden of drilling its first exploratory well, is the second 'parallel path' that BPC has been working on for several years, and it still appears to be moving forward on both fronts.

Mr Potter, in a previous interview with Tribune Business, said recent global oil price increases had boosted BPC's long-running joint venture partner search, with the increased margins and profits whetting the industry's appetite for offshore exploration.

"You and I have been talking about the interest a third party may or may not have in this project for quite some time now," he told Tribune Business. "It's [the exclusivity agreement] a huge step forward for the project, especially in the context of improving global oil prices and the thawing of the industry's attitude with respect to offshore oil exploration."

Mr Potter said the decline in oil prices over the past few years had driven the industry to focus on onshore oil exploration/production assets, which were closer to delivering success and cheaper to acquire.

The speed at which renewed interest in BPC's Bahamian licences had materialised into something tangible, he suggested, showed the company's prospects of success - and the potential quantity of commercially extractable oil - were among the industry's best.

Mr Potter added that the Bahamas would not have to wait for actual production to feel the economic impact of oil exploration within its territorial waters.

"The exploration [on the first well] will last for 90 days and cost up to $100 million, a considerable proportion of which will be spent locally in-country. That's an immediate benefit," the BPC chief executive pledged.

"I've been here seven years this year with a technical commitment to the project. It's a project of scale and meaningful exploration. It's a technical project as well as a potential game changer for the Bahamas.

"There are parts of the project we're very comfortable with progressing ourselves; the technical aspects of the project, the environmental and safety aspects of the project with the Government," Mr Potter continued.

"We're very happy to push that forward. But certainly a company with much greater resources than ours will provide greater assurance to the Government in terms of delivery of the project.

"From a technical point of view, a large company with more resources enhances our chances of success. We benefit, the project benefits, and the Government gets greater assurance from their participation."