By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamas-based oil explorer's push for a "faster" conclusion to its joint venture partner search has been boosted by industry developments impacting the Caribbean.

Simon Potter, Bahamas Petroleum Company's (BPC) chief executive, told Tribune Business that its search for a 'farm-in' partner to share the burden of a first exploratory well in Bahamian waters was "dictated" by market forces "outside our control".

He added, though, that interest in BPC's prospects appeared to be heating up, with five groups having completed or scheduled visits to conduct due diligence on its database during the 2017 second half.

With the global oil industry having seemingly accepted $50 per barrel as the 'new norm', Mr Potter said the renewed interest in BPC's Bahamian licenses had been given further impetus by a recent oil discovery off Guyana and a successful offshore licensing round for acreage off Mexico's Gulf coast.

"There's a broad kind of interest in the prospects in our region, so things are progressing," the BPC chief told Tribune Business of the farm-in partner search. "This review process [by potential partners] takes quite a long time, and with the oil price stabilised at $50, it's obviously a bit lower than it used to be at $100 per barrel.

"Companies are a lot more careful, and there's a lot more due diligence and governance rules in the process. We'd like it faster, but it is what it is. It's a market. We don't dictate it; it's dictated to us, but we're progressing."

The 12-month extension granted to BPC's license last March gave the company until April 2018 to spud, or drill, its first exploratory well in waters south-west of Andros near the maritime border with Cuba.

The oil exploration firm has always wanted to secure a joint venture partner to share the financial, and technical, burden of that first exploratory well, with the search now lasting several years.

With the April 2018 deadline fast approaching, and now just seven months away, Mr Potter refused to be drawn on whether BPC would seek another license extension should it be unable to seal a joint venture partnership in time.

He reaffirmed, though, that BPC was determined to fulfill its obligations to both the Bahamas and its shareholders.

"We clearly, on behalf of the shareholders, want to see a well as soon as possible," Mr Potter told Tribune Business. "That has always been a target, and will always be a target. The timing of that we don't control ourselves."

BPC, in unveiling its 2017 half-year results on Friday, said many potential joint venture partners had "undertaken substantial technical and commercial due diligence" on seismic and other seabed data indicating the likelihood of finding commercial quantities of oil in Bahamian waters.

"We have continued to progress our efforts to secure a partner, despite the European summer holidays in August and the considerable disruptions to regional business activity caused by Hurricanes Harvey (which largely affected Houston) and Irma (affecting most of the Caribbean)," BPC told shareholders.

"This has included executing several new Non-Disclosure Agreements with parties interested in reviewing the investment opportunity, five new parties undertaking or scheduling due diligence visits to assess the company's technical database, and commencement of dialogue with various industry intermediaries to broaden the scope and reach of the company's efforts."

BPC continued: "At the same time, discussions have continued with those parties that had already undertaken substantial technical and commercial due diligence......, our hope being to progress one or more party to the next stage of the process (non-binding term sheets) in the next couple of months."

Securing a joint venture partner is now critical to BPC's efforts to move its exploration efforts forward, and Mr Potter told Tribune Business that recent industry developments - globally and regionally - had provided new hope.

Apart from global oil prices stabilising at a level the industry has become accustomed to, Mr Potter said there had also been exploration success via recent discoveries in Guyana and West Africa.

He added that this, together with recent successful exploration licensing rounds, especially in the Mexican Gulf, had renewed exploration enthusiasm worldwide and, particularly, in the Caribbean.

"What it's done is create quite an interest around the broader Caribbean region, so certainly that broader region of which we're part is quite buoyant from an exploration standpoint," Mr Potter said.

BPC's half-year results statement was not slow to emphasise the potential benefits of a successful oil discovery to the Bahamian government's fiscal position, given the potential royalties and other payments that would become due.

"The immediate focus of the new government is to address a number of urgent issues facing the nation," BPC said. "A current year fiscal deficit of over $600 million; $7 billion in existing government debt (rated at junk level by two out of the three major rating agencies); increasing levels of wealth inequality; ballooning fuel prices; and the exposure of infrastructure to weather damage, as highlighted recently by the devastating impact of hurricane Irma across the Caribbean.

Over the last few months the company has met with representatives of the new administration, our goal being to ensure that the company's activities - and the significant potential economic and social benefits the company's project offers to the Bahamas - are fully understood and supported. Developing a successful oil and gas industry remains a tenet of energy policy for the new government, and we believe that the positive economic impact our project could have is well appreciated."

Mr Potter reiterated to Tribune Business: "In the event of success, we could make a considerable difference to the economy of the Bahamas." He added that BPC was "encouraged by the nature of the talks" held with the Minnis administration to-date.

BPC has been speaking to specialist investment banks to broaden the range of potential joint venture partners, as well as engaged external expects to perform an audit of its data to verify - and add credibility to - its estimates of recoverable commercial oil quantities in the Bahamas.

The company raised an additional $3.5 million in cash, via a share placement, in June-July 2017 to ensure it has the necessary financial resources to cover operations for the next 12 months.

"The operating loss for the period to 30 June, 2017, was down 23 per cent on the comparative six-month period, and 14 per cent on the prior year result (on an annualised basis)," BPC said.

"This result, combined with the 16 per cent reduction in employee benefit expense compared with the prior interim period, demonstrates the effects of continued cost restraint at all levels of the business."