By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamas-based oil explorer was yesterday forced to deny it plans to raise further equity financing from institutional investors as interest in its 2020 drilling plans continues to ramp up.

Bahamas Petroleum Company (BPC), in a statement to the markets, said that given its belief its share price “materially undervalues” its prospects for striking oil in Bahamian waters it had no intention of seeking further equity financing via private placement.

“The company has multiple funding options available to it to fund the exploration well intended to be drilled in the 2020 first half, which will provide shareholders with exploration exposure to risked resources between 0.4 and 1.2bn barrels of oil, and with a potential upside in the targeted structure that has been independently assessed at close to 4bn barrels of oil,” BPC said.

“The company has consistently stated that it will work in a co-ordinated way towards selection of a financing package that the board considers to be in the best interests of the company and its shareholders.” BPC, in its recent half-year results announcement, said some of the four additional financing offers it has received would cover the $20m-$25m costs of its first exploratory well by themselves.

And BPC’s recent annual general meeting (AGM) gave the go-ahead to a conditional agreement with Bizzell Capital Partners, an Australian-based oil and gas exploration financier, to provide a £10.25m convertible loan that can be switched into equity shares.

That sum, which translates into $12.5m, is equivalent to half the cost of the $25m initial exploration well and will help underpin BPC’s drilling should a joint venture partner not be sealed in time.

“In this context, in recent days the company has met with a number of potential institutional investors as it considers its funding strategy,” BPC confirmed yesterday.

“However, the Board considers that the current share price of the company materially undervalues the project, and thus raising equity by way of a private placing to institutional investors at or below the current share price would not compare favourably with other options presently being considered, and would thus not represent the best value proposition for the company’s shareholders.

“The company continues to actively evaluate a range of funding options, and active farm-in discussions continue. The company remains confident it will implement a suitable financing package which will provide access to funding as and when required for drilling and drilling-related activities, and which linked to the provision of a rig and access to integrated well services from a collaboration of major international companies will enable drilling to commence as intended in the 2020 first half.”

Simon Potter, BPC’s chief executive, recently told Tribune Business that BPC now had almost total certainty it will be able to finance drilling of its first exploratory well in waters several hundred miles south-west of Andros, near The Bahamas’ maritime boundary with Cuba.

“We’ve got a range of options for funding that is certainly going to deliver the $25m needed to deliver the well,” he said in a recent interview with this newspaper. “We’ve identified, given that we’ve locked in the pricing through the technical agreements we have, a $20-$25m range for the well. This isn’t a number plucked out of the air; it has considerable engineering gone into it.

“The pricing of rigs has come down considerably, and we’ve locked in the rig price per day,” he explained.” We can be fairly certain about costs. The rig is coming from the Gulf of Mexico, which is very close to The Bahamas, so in terms of pricing, logistics and transit time, that’s relatively minimal.”

Many Bahamians will likely be sceptical as to whether any oil exploration activities will take place, given the lengthy 12-year process BPC has been involved with, but the financial impact of Hurricane Dorian’s devastation will likely strengthen the calls that this nation has nothing to lose in determining whether commercial, recoverable quantities of oil are located within its waters.