The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Petroleum Company (BPC) yesterday dismissed environmental activist joy over an investor’s divestment of an £11.25m stake in the firm as old news.

The oil explorer, in a statement to Tribune Business responding to reports that Lombard Odier has exited its holdings in the company, said the move will not impact the financing for its development and exploration plans in Trinidad & Tobago and elsewhere.  

“BPC is not reliant on funding from Lombard Odier for any part of its forward investment programme in activities anywhere in its portfolio, spanning not only exploration in The Bahamas but onshore production, appraisal, development and exploration in Trinidad, an extended well test and subsequent production onshore Suriname and exploration offshore Uruguay,” BPC said.

“The Lombard Odier facility provided capital that contributed to BPC operating, drilling and safely completing the Perseverance One project nearly three months ago. As part of that facility, Lombard Odier temporarily owned BPC shares. At no time were Lombard Odier a part of the ‘project’. As far as BPC is aware, Lombard Odier has already disposed of its entire interest in the company.”

Oil exploration opponents, though, were elated at developments. Casuarina McKinney-Lambert, executive director of the Bahamas Reef Environment Educational Foundation (BREEF), told Tribune Business: “It’s very clear that the world is shifting away from fossil fuels so it’s not surprising that funding for this industry is drying up.

“Renewable energy is a future for The Bahamas that actually creates jobs. Financing for fossil fuel exploration is becoming increasingly difficult to find, especially in new pristine locations around the world such as The Bahamas. Oil drilling in the Bahamas contradicts our own climate commitments under the Paris agreement....

“There is an opportunity for The Bahamas to send a strong message now that we also take our future seriously. There is no good reason that were are aware of to renew the [BPC] oil exploration licences.”

The developments come as BPC revealed it will “relinquish” 50 percent of the area where it was previously allowed to explore for oil as part of its licence renewal bid.

The oil exploration outfit, in disclosing plans to rename itself Challenger Energy Group and recapitalise by raising a further $9.67m from existing “qualifying shareholders” via a rights issue, confirmed it had submitted formal notice of its licence renewal application to the Ministry of the Environment and Housing.

Indicating that the area given up was largely “shallower water depths” where the prospects of striking commercial oil quantities are less, BPC said: “The company will seek to renew its 100 percent interest in the southern licences by extending the licences in to the third exploration period.

“The third exploration period for the southern licences would last for three years and will require a further exploration well to be drilled before the period expires, failing which the licences would be forfeited. An extension of the licences will attract an annual licence fee (the amount to be determined during the renewal process) and requires a relinquishment of 50 per cent of the licence area.

“Notification of renewal of the licences has been submitted to the appropriate ministry, and the area to be relinquished has been identified as being the area equivalent to that over the shallower water depths covered by the southern licences (less than around 200 feet).”

BPC had until end-March 2021 to signal whether it will seek to renew its oil exploration licences, with the existing ones set to expire at end-June this year following the drilling of its first Perseverance One exploratory well, which failed to detect the commercial oil quantities it was seeking.

The name switch to Challenger, which reflects the fact the company is no longer Bahamas-centric given its obtaining of offshore exploration licences in Uruguay, and the acquisition that has given it assets in Trinidad & Tobago and Suriname, comes as Simon Potter steps down as chief executive although he will remain on the Board as a non-executive director.

He will be replaced as chief executive by Eytan Uliel, the company’s commercial director, while Ross McDonald, the former Bahamas chief for Royal Bank of Canada (RBC), is also leaving the Board. James Smith, the former Central Bank governor and minister of state for finance, remains as a non-executive deputy chairman.

Documents relating to the rights offering indicate that BPC has yet to settle licence fees the Government believes are outstanding from its second exploration period that includes the spudding of Perseverance One. They also further indicate that the company is unlikely to drill another exploratory well in The Bahamas unless it secures a joint venture partner to share the financial and technical load.