The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An oil explorer yesterday pledged its Uruguay licence success "will not distract" from efforts to drill in Bahamian waters as it remains "absolutely 100 percent focused" on its well obligations to this nation.

Simon Potter, the Bahamas Petroleum Company's (BPC) chief executive, reassured that the company will not be "diverted" from plans to spud a first exploratory well in Bahamian waters in late 2020-early 2021 after it won an initial four-year licence to conduct similar activities in waters off the South American nation's coast.

Arguing that BPC's efforts in The Bahamas "undoubtedly" aided its Uruguay bid, Mr Potter described its new exploration opportunity as "complementary" rather than competition for its oil search in this nation's waters.

He added that BPC had merely seized an opportunity to expand its exploration portfolio at a time when competition from the global energy giants, and larger prospecting rivals, had eased due to the COVID-19 pandemic and subsequent plunge in global prices and demand.

Acknowledging that BPC would likely have been "outbid" if global oil prices and markets were healthier, the BPC chief added that the government has yet to formally respond to the oil explorer's invoking of the "force majeure" clause in its contract and request for a licence extension until "at least June 2021".

Mr Potter, who said the government had acknowledged receipt of BPC's request, suggested the extension should be relatively routine given that the company's licence specifically lists a pandemic such as COVID-19 as sufficient grounds to trigger "force majeure" - a term that deals with "unforeseeable circumstances" that prevent one party from fulfilling the terms of a contract.

He added that BPC's executed rig contract with Stena Drilling means the company is obligated to drill a Christmas 2020 well in the 47-day "window between December 15, 2020, and February 1, 2021, which should provide further reassurance that the company is not abandoning The Bahamas in favour of Uruguay.

"It's certainly not going to distract us from our main focus which, of course, is The Bahamas," Mr Potter told Tribune Business of the Uruguay licence award that was announced yesterday. "We got to within two-three weeks of drilling here, and then obviously COVID-19 intervened.

"This is not a distraction from our main plan and focus, which is The Bahamas. We have a rig contract, an oil services contract and equipment that is in place. We're ready and willing to commence drilling a well as soon as we possibly can after the back-end of hurricane season. It's [the Uruguay licence] not going to interfere with that process. We're very clear on that.

"We are absolutely 100 percent focused on delivering the Perseverance well. We have been at this for so long that the scale, nature and maturity of the opportunity, and the fact we've signed a binding rig contract that is binding on us and the rig contractor, means we are ready to go there."

Perseverance is the name BPC has given to the first well it plans to spud in Bahamian waters, which will be located over 100 miles south-west of Andros near the maritime border with Cuba. With COVID-19 putting paid to the company's plans to drill in the 2020 first half, Mr Potter said the Government had requested it further delay until near year-end when hurricane season has officially ended.

BPC is now seeking "clarification from the government" that its licence, containing an obligation to spud an exploratory well before year-end 2020, can be extended beyond that date until "at least June 2021". While no official confirmation has been received from the Minnis administration, Mr Potter yesterday suggested this was likely to be a formality.

"We've had an acknowledgement that it's been received, but I think the Government quite understandably is focusing on other things and getting all the bits and pieces together to combat COVID-19," he told this newspaper. "The licence and regulations are very clear about force majeure, and very specific on pandemics.

"It's very perfunctory under the licence and regulations that force majeure applies in this context. It's a very simple extension to the licence, recognising the scale of the disruption the company and others around the world are experiencing in troubled times."

Mr Potter said the initial four-year Uruguayan exploration licence enables BPC to conduct the same seismic testing and subsea rock structure investigations it performed in The Bahamas to determine the likelihood of commercial oil quantities being present and de-risk drilling activities.

He added that Uruguay provided "a complementary set of assets" to its Bahamas ambitions, with the South American nation's rock structures largely formed from sandstone and similar to those found in the "hot bed of oil exploration" that is currently Guyana. By contrast, rock structures on The Bahamas' seabed are mainly carbonates.

Explaining that BPC's Bahamian and Uruguayan activities will operate "in parallel" to one another, Mr Potter said the company's four licence areas in the southern Bahamas - covering 12,000 square kilometres - are similar in size to the 15,000 square kilometres covered by its South American licence. Water depths are also similar.

He added that oil drilling in Bahamian waters will not coincide with similar activity off Uruguay, as the four-year licence does not include such actions. The BPC chief, though, said the company's activities in The Bahamas had likely helped it both qualify, and bid, for the Uruguay. "No doubt our actions in The Bahamas helped us in the qualifying process," Mr Potter said.

Reiterating that low global oil prices have no impact on BPC's plans, he added that the company's ability to be "nimble, forward looking and opportunistic" had helped to secure its Uruguay expansion. Mr Potter conceded that in a stronger oil market the company would likely have been "outbid or precluded from operating in Uruguay".

"We feel we acted swiftly, acted decisively in this time to expand our portfolio," Mr Potter said.