By: Staff writer
February 9, 2021
The Bahamas Petroleum Company (BPC) has found no oil in Bahamian waters and will now move on to the Southern Caribbean
BPC in a release sent to the media said about their drilling efforts in The Bahamas: “The Perseverance #1 well in The Bahamas has encountered hydrocarbons, successfully validated the structural model and the petroleum system, and drilled a majority of the potential reservoirs of interest, thus fulfilling the core technical objectives of the well.”
However, “Whilst the well encountered oil, indicated from LWD (Logging while drilling) tools, gas chromatography and mud logs, commercial volumes of oil have not been proven at this well location.”
Simon Potter, BPC’s chief executive officer said: “I am proud to say that after many years of diligent effort we did what we said we would do: BPC drilled the Perseverance #1 well safely and without incident, testing for the presence of hydrocarbons in the Southern Seas of The Bahamas. This was the very specific objective of the well – not a scientific or geologic experiment, but to seek hydrocarbons in commercial quantities.”
He went on to say that while their exploration did validate the existence of oil, it was just not commercially viable and that BPC will move on to other parts of the Caribbean, mainly Trinidad and Suriname.
BPC has four exploration licenses in The Bahamas, with three of the licenses covering he southern territorial waters of The Bahamas and the fourth that they call the “Miami license” is in the northern territorial waters.
The drilling exercise was met with resistance from local environmentalists who enlisted support from the US Congress, most notably with a letter from U.S. Representative for Florida’s 20th congressional district, Alcee Hastings. The letter, delivered in late December, was also signed by several other congresspersons.
The remainder of the release reads as follows:
Drilling Summary
The drilling of the Perseverance #1 exploration well in The Bahamas commenced on 20 December 2020 and continued through to 7 February 2021. Pre-drill, the well design allowed for a target depth of 4,800 meters across multiple potential reservoir horizons continuously through the Albian and Aptian aged stratigraphies, targeting P50 prospective oil resources of 0.77 billion barrels, with an upside of 1.44 billion barrels.
As of 6 February 2021, the well had reached a total depth of just over 3,900 meters. In reaching this depth, the well passed through multiple targeted reservoir sections in both the Albian and Upper and Mid Aptian horizons, which cumulatively accounted for approximately 70% of the total pre-drill prospective volume estimates.
In terms of the overall drill programme schedule, the Company was able to complete drilling and provide results within the 45-60 days estimate previously advised. Initially, well progress (rate of penetration – ROP) was hindered by extensive, very hard anhydrite seal lithologies, which caused significant vibration to the sensitive bottom hole assembly (BHA) and measuring/logging tools, and a mechanical obstruction in the hole at around 2,400 meters which required side-tracking around. However, these issues were ‘engineered out’ by the drilling team and in an aggregate sense these normal drilling issues were somewhat offset by efficiency gains, and in particular by higher rates of penetration achieved, in deeper target Aptian reservoir sections.
The information gleaned from the successful drilling of Perseverance #1 confirms that technical issues encountered during the drilling of historic offset wells (including extreme losses and very slow rate of penetration) which required several casing strings, can be overcome by the application of modern technologies and engineering design. This is particularly important in demonstrating that the costs of drilling to deeper target reservoirs, including the important Jurassic horizons and the Lower Cretaceous, deeper water reef build-ups seen within the Santaren Channel, may be commercially viable at currently prevailing oil prices.
Depth and thickness of reservoir sections encountered were generally as prognosed pre-drill, and reservoir porosity was likewise generally in line with pre-drill expectations (in the range of 10% – 20%).
Hydrocarbons were encountered at various horizons, indicated by elevated gas chromatography readings detected continually during drilling, generally increasing with depth and through the deeper Aptian reservoir column in particular. Oil was identified from high oil saturation values from logs in a number of reservoir sections thus verifying the existence of a working Lower Cretaceous petroleum system and reservoir quality sequences in the Aptian.
Given that the totality of the reservoir sections evaluated to 3,900 metres represented the majority (approximately 70%) of the total estimated prospective volumes, the lack of hydrocarbons in demonstrably commercial volumes led to the decision to TD the well at that point.
Next Steps
Over the coming weeks, BPC will be undertaking a detailed review of the technical data and results from the drilling of the Perseverance #1 well. These results will be presented to the Government of The Bahamas in accordance with the Company’s licence obligations.
A core focus of this review will be an assessment of the technical and value potential established by the drilling of Perseverance #1, and the definition of further activities that will maximise the Company’s ability to monetise and thus create value from its extensive acreage holding in The Bahamas.
The Company considers the results from Perseverance #1 – notably the confirmation of migrated oil within the Aptian reservoirs – will significantly reduce technical risk for any future/further exploration in this new frontier province. In particular, BPC considers that the results from Perseverance #1 may provide a strong technical basis for renewed farm-in discussions, with a view to future drilling at other target locations within BPC’s licence areas.
In parallel the Board, with the assistance of the Company’s advisers and brokers, will review the Company’s broader portfolio of operations and opportunities, to ensure its plans deliver maximum value for the foreseeable future. This review will focus on ensuring progress of the planned 2021 work program in both Trinidad and Suriname, and associated production growth, as well as the potential to deliver prospect/lead maturation in Uruguay from reprocessed seismic. The Company’s 2021 work programme in Trinidad and Tobago and Suriname is targeting exit production of c.2,500 bopd.
A shareholder information call will also be scheduled once this process is complete, and prior to that the Company will provide further updates as appropriate.
Funding
As at commencement of abandonment of Perseverance #1, the Company’s cash balance is $12.5 million. These funds held will be applied toward satisfying final payments relating to Perseverance #1 as the drilling programme is concluded, progressing the Company’s work programs in Trinidad and Tobago and Suriname over coming months, and general working capital purposes.
Completion of the Perseverance #1 well will trigger potential funding points under the Company’s existing funding facilities, specifically (i) the ability of the investors under the Company’s conditional fixed-conversion price senior secured convertible loan notes financing facility to subscribe for up £12 million of additional notes (pre fees and expenses), and (ii) the investor under the facility announced by the Company on 14 December 2020 (as amended) to exercise a call option (the “Call”) to subscribe for 187.5 million shares at 2p per share, which, if exercised, would see inflows of a further £3.75 million (pre fees and expenses). The Company will be discussing with both investors in the coming days and will advise shareholders accordingly of the outcome of those discussions.