The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamas Petroleum Company (BPC) director yesterday blasted "the frightening lengths" that oil exploration opponents will go to demean its project, as he branded their resistance "futile".

James Smith, the former Central Bank governor and ex-finance minister, told Tribune Business that BPC's first exploratory well was "too far gone" for environmental activists to halt it despite being given permission for their Judicial Review action challenging the project's permits to proceed.

Speaking as he and BPC blasted back at the activists' allegations that the company did not have sufficient funding for its Perseverance One well when it mobilised the Stena IceMAX drill ship, Mr Smith said of their court action: "It's futile. It's too far gone to stop anything. If they don't find anything there's no argument, and if they do it's another ball game."

The Supreme Court refused to order a halt to BPC's exploratory drilling in waters 90 miles west of Andros, and given the 45-60 timeframe in which this activity is scheduled to be completed, the well will likely be almost completed - if not already finished - by the time the merits of the Judicial Review action are heard.

BPC and Mr Smith, meanwhile, blasted the claims that the company lacked sufficient financing. The ex-finance minister, in a statement, said: "The lengths the environmental groups are going to in order to distort the facts is frightening, and quite frankly wrong, demonstrating a stark lack of understanding of commonplace business funding practices.

"Like most businesses, at any point in time BPC has a mix of 'cash at bank' and other funding facilities that can be drawn as and when needed in order to ensure the costs associated with funding are only born when the money is actually required.

It is worth noting that BPC bears all of the costs of the exploration well. The Government does not have to contribute a single dollar, but gets to share the benefits of success. In authorising BPC to drill this well, the Government is exercising its legitimate, sovereign right to find out if The Bahamas has its own important resource, which has the potential to benefit current and future generations of Bahamians.”

Mr Smith subsequently told this newspaper that "you don't go out for a well unless you have all the funding in bag beforehand", accusing the activists of trying to undermine BPC's share price with a media campaign and a legal action that should have been brought much earlier prior to the company investing some $120m in its Bahamas well.

BPC, in its statement, said it "strongly refutes the claims by various environmental groups in press articles today that the company did not have enough funding to complete the Perseverance One well at the point of rig mobilisation. As a matter of fact, Perseverance One has been fully funded, including a significant contingency, since the date of mobilisation....

"Any other interpretation.. represents a deliberate and gross misrepresentation of the facts and/or demonstrates a selective naivety as to how businesses operating in The Bahamas (and internationally) maintain the capital to fund themselves."

BPC hit back after its opponents seized on its latest corporate filing to argue their assertion that it lacked sufficient funding for its first well had been proven correct. They argued that the company's latest disclosure shows it only possessed $32.5m in cash to cover the Perseverance One well's $35m costs when it mobilised the Stena IceMAX drill ship.

They jumped on a summary of BPC's post-August 2019 capital raising efforts, which said: "By the time of mobilisation of the Stena IceMAX, BPC had secured $32.5m in cash, ($2m of pre-existing cash and $30.5m in cash raised incrementally), and had issued approximately 1.26bn shares to secure that funding. This was against a clearly articulated anticipated Perseverance One well cost of up to $35m."

However, BPC's corporate filing showed that it had raised a collective $17.6m from shareholders and new investors between August 2019 and March 2020 which, when added to the $2m it had already available, provided it with a total $19.6m war chest to finance Perseverance One at the initial March/April drilling date.

While that is more than $15m short of the well's now-estimated $35m cost, BPC's filing said that at the time it had "access to approximately" the same amount from unnamed Bahamian family office investor who had already kicked-in $6.2m in return for 310m shares in the company.

This would have largely covered Perseverance One's costs in March/April had this become necessary. And BPC's corporate filing yesterday made clear it "had secured two further sources of capital potentially available to it" beyond the $35m in cash it already possessed by the time the Stena IceMAX was mobilised.

These two sources, worth up to a combined $35m, would have covered the well's costs and enable BPC to hit back at the activists' 'lack of financing' allegations. Simon Potter, BPC's chief executive, also refuted these charges in his December 11, 2020 affidavit, in which he described them as "false".

"The suggestion that the BPC decision to postpone the planned drilling operation in April 2020 was due to constraints on its financial resources is false," Mr Potter asserted. "BPC was and is able to fund all its activities as required.

"The company is one of the larger oil and gas companies publicly listed on the AIM (Alternative Investment Market) of the London Stock Exchange. As such, it has access to the capital markets and other possible sources of financing if and when required.

"The sole reason for the postponement of the drilling operation from April 2020 was the COVID-19 pandemic reaching The Bahamas and other countries relevant to the planned drilling operation, such as the United States."