BPC: Update Presentation - April / May 2021 - cloudfront.net
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BPC: Update Presentation April / May 2021
Disclaimer This presentation (“Presentation”) has been prepared by Bahamas Petroleum Company plc (“BPC”) solely for purposes of providing introductory information on the Company and its projects. This Presentation should not be considered as the giving of investment advice by the Company or any persons, including to any of its shareholders, officers or advisers. If you are in any doubt about the contents of this Presentation or the action you should take, you should consult an independent adviser authorised to render such advice. This Presentation has not been independently verified and is subject to material updating, revision and further amendments without notice. The Presentation does not purport to contain all information that an investor in the Company or its projects may wish to receive for the purposes of assessment or valuation of that investment and is not intended to form the basis of any investment decision. While the information contained herein has been prepared in good faith, neither the Company nor its shareholders, directors, officers, agents, employees, or advisors give, has given or has authority to give, any representations or warranties (express or implied) as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns contained in this presentation, or in relation to the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any investor (all such information being referred to as “Information”). So far as permitted by law, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability in respect of, the accuracy, reliability or completeness of the Information or for any loss, howsoever arising from the use of this Presentation. In furnishing this Presentation, the Company does not undertake any obligation to provide any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent. This Presentation contains certain statements which may constitute forward-looking statements. All statements in this Presentation, other than statements of historical facts, that address future activities and events of developments that the Company expects, are forward-looking statements. Although the Company believes that the expectations reflected in these statements are based on reasonable assumptions, such statements are only predictions and are subject to inherent risks and uncertainties and changes in the underlying assumptions which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements. The Company will not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this Presentation, except as required by law or by any appropriate regulatory authority. Nothing in this Presentation or in documents referred to in it should be considered as a profit forecast. Past performance of the Company or its shares cannot be relied on as a guide to future performance. This Presentation does not constitute, or form part of or contain any offer or invitation to sell or issue, or any offer to subscribe for, underwrite or otherwise acquire, or dispose of, any securities in the Company in any jurisdiction and is directed at, and is only for distribution in the United Kingdom to persons reasonably believed to fall within Article 19 (Investment professionals) or Article 49 (High net worth companies, unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) or to whom this Presentation may otherwise lawfully be distributed. Neither this Presentation nor any part of or copy of it may be taken or transmitted, directly or indirectly, into the United States of America or Canada or distributed or re-distributed directly or indirectly, in the United States of America, its territories or possessions, or Canada, or to any resident thereof except in compliance with applicable securities laws. Any failure to comply with these restrictions may constitute a violation of applicable U.S. or Canadian securities laws. This Presentation and the information contained herein do not constitute an offer of securities for sale in the United States. By accepting this Presentation, the recipient represents and warrants that it is a person to whom this Presentation may be delivered or distributed without a violation of the laws of any relevant jurisdiction. This Presentation is not to be disclosed to any other person or used for any other purpose and any other person who receives this Presentation should not rely or act upon it. The delivery or distribution of this Presentation in or to persons in certain jurisdictions may be restricted by law and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. By attending a meeting where this Presentation is made or distributed, or by reading the Presentation slides, you agree to be bound by these provisions. BPC Update Presentation – April / May 2021 2
Agenda
1. Why invest now? An attractive value proposition
2. What to look out for in 2021? Post reset, an active period of work across the portfolio
3. What will 2021 success look like? Increasing production and thus cashflow = underlying value growth
4. The corporate ‘reset’? Positioning the company to restore and thereafter build value
3
Investment Proposition
Business overview
PRODUCTION & CASHFLOW ASSETS
Trinidad and Tobago – Saffron project & onshore
producing fields: growing production & cashflow
Suriname – onshore Weg Naar Zee project:
infrastructure-led sales and cashflow
EXPLORATION ASSETS
Trinidad and Tobago: onshore SWP – ‘on the doorstep’
The Bahamas: offshore longer-term upside
Uruguay: offshore low cost optionality
BPC Update Presentation – April / May 2021 5
Competitive ‘edge’
PRODUCING ASSETS ATTRACTIVE PORTFOLIO STRONG CAPABILITY
• Existing production and income • ‘Hopper’ of development, • Committed, experienced
that underpins value appraisal & growth options management team
• Scope to grow production from • Portfolio spreads risk and • Strong industry capabilities
existing producing assets and offers multiple routes to value
known discoveries • Transactional and operational
• Ability to retain exposure to track record
• Saffron: could add material high-impact exploration at low
production in
Route to value
BASELINE PRODUCTION EXPLORATION UPSIDE &
PRODUCTION & CASHFLOW GROWTH BUSINESS DEVELOPMENT DRIVEN GROWTH
PRODUCTION GROWTH ENGINE
Existing assets; known discoveries
SAFFRON-2 TRINIDAD SOUTH WEST PENINSULA EXPLORATION
BASELINE
MAINTENANCE WEG NAR ZEE APPRAISAL / EWT BAHAMAS AND URUGUAY OPTIONALITY
ACTIVITIES
INITIAL DEVELOPMENT WELLS BUSINESS DEVELOPMENT / ACQUISITIONS
450 – 500 bopd
~US$3M p.a. cash
CONSOLIDATION; 90MMBBL/D SECTOR;
INFILL PRODUCTION WELLS
OIL PRICE LEVERAGE; ENERGY TRANSITION
POTENTIAL: >4,000 BOPD
2021 2022 - 2024 Longer term
BPC Update Presentation – April / May 2021 7
Value proposition
Pro-forma value is fully underpinned by producing assets, with near-term upside
potential from drilling at Saffron and Weg Naar Zee over next 3-6 months
Oil ‘Supercycle’?
Brent crude (US$ / bbl)
NAV (US$m)
Market cap at open offer price
Note: Based on the average risked NAVs from Auctus Advisors (17 February 2021) and Investec (16 February 2021) research notes
BPC Update Presentation – April / May 2021 8
Work Program to Deliver Value
Saffron
• Saffron-1 well (March 20) resulted in a discovery Saffron core metrics (projections)
— Located in South West Peninsula of Trinidad Saffron-2
• Saffron-2 appraisal well May/June 2021, to assess field producibility • Production: 200-300 bopd
• Cost: $3m
— High CoS given drilling a known discovery, same location as Saffron-1
• CF: $1.8m - $2.6m p.a.
— Ready to spud around 23 May 2021 • ROI 200%+ | Payback < 2 years
— 30-day drilling timetable; production leads directly to sales
Initial phase post Saffron-2
• Successful Saffron-2 well will enable a full Saffron field development
• Wells: 5-9 additional in 2021
• Production: 1,000 – 1,500 bopd
• Gross capex: $15m - $20m
• CF: S$8 – 12m p.a.
Saffron field-life metrics (15-years)
• Production: 4,000 bopd (peak)
• Wells: Up to 30 wells | 11 mmbbl field
• Gross capex: up to $60m
• CF: $25m+ p.a. (first 5-year average)
• Total net CF: US$200m+
• ROI ~90% | PaybackWeg Naar Zee
• Weg Naar Zee (WNZ) PSC in Suriname secured in 2019 WNZ core metrics (projections)
— 70 historic wells; modest 2D seismic coverage; up to 24 mmbbls
STOIIP identified in 10 pools (c. half in a single pool) WNZ Initial Phase
• Production: 100 bopd
• WNZ well and EWT scheduled for July 2021, to establish producibility
• Cost: appraisal well and EWT - $0.75m |
— Operations support from Trinidad 4 additional production wells post EWT -$2m
— Production leads directly to refinery sales in proximity • CF: US$1m pa
• ROI 100%+ | Payback < 3 years
• A successful well will enable a broader development
WNZ field-life metrics (~20-year)
• Production: 900 – 1,000 bopd (peak)
• Wells: up to 50 wells | 3.5 mmbbl 3C
resource
• Gross capex: up to US$15m
• CF: US$2.5m+ p.a. (first 5-year average)
• Total net CF: US$35m+
• ROI ~70% | PaybackOrganic production growth
Disciplined technical work is being applied across the Trinidad portfolio in pursuit of production growth
Sustaining and growing existing baseline production New production from ‘ready to go’ projects in known,
• Remediation of existing wells discovered fields
• Incremental production from existing wells • Seeking to mature two new field developments within
existing producing fields
• New infill wells
• Remodel existing wells; assess pressure compartments
• Automation - Weatherford/BPC automation trial
• New wells to access undrained resource
• Projects - CO2 injection in AT5X
Number Production Cost
(#) (bopd) ($k)
Well remediations Up to 10 Up to 30 per well 10-50 each
Additional perforations 5+ Up to 20 per well 25-50 each
Infill drilling locations 10+ 50+ per well 1,500 per well
South
Erin
BPC Update Presentation – April / May 2021 12Exploration
TRINIDAD BAHAMAS URUGUAY
• ‘On the doorstep’ • Post Perseverance-1, seeking farm-in • Low-cost optionality
• Significant prospect inventory to work with • Licence renewal • Farm-in potential
• 9 Saffron ‘lookalikes’ identified; c.230 mmbbl • P1 validated a competent seal, good reservoir quality, • Play analogous to offshore Guyana and
prospect inventory charge & the structural model; working petroleum Suriname. Existing wells and data
system points to hydrocarbon potential remaining in
• Targeting potential new fields capable of each • US$800,000 commitment over 4 years initial
independent, untested play systems and structures
producing at least 2,000 bopd term. No drilling obligation
• Confirm prospect validity and mature to drillable • Focus shifted to high graded Jurassic subsalt • ANCAP mapped Early Cretaceous alluvial
status (lacustrine) fan (Lenteja) prospect, estimated
• Integrate P1 data, refresh prospect inventory, renew
licences and farm-out process based on Jurassic play resource volume (EUR P50) = 1.4 bnboe
BPC Update Presentation – April / May 2021 13Activity summary
1H 2H
2021 2022
2021
Licences (activity)
SWP (Saffron appraisal)
SWP (Saffron development)
Goudron (Production enhancement / water injection)
Inniss-Trinity (CO2 pilot)
Trinidad Exploration (3D reprocessing)
Weg Naar Zee (Extended well test)
Weg Naar Zee (Development wells)
T&T production fields (Development / infill wells)
Bahamas (Farmout , licence renewal)
Bahamas (Exploration – drill or drop)
OFF-1 (Early stage exploration / seismic reprocessing)
NOTE: 2021 / 2022 indicative schedule subject to change and further operational announcements by the Company Onshore drilling Milestones
BPC Update Presentation – April / May 2021 14Focus on production and cashflow growth
Strategic focus is to add production, oil sales and cashflow from existing producing fields and known discoveries
Production Cashflow Capital costs
(projected) (potential pa) (estimates)
Current Trinidad production 450 -500 bopd $3m+ -
Incremental production programs 100 bopd $0.9m ~$1m
Infill drilling programs 200 – 400 bopd $1.8m – $3.6m Up to $6m
In a success case, total potential
Saffron (Trinidad)
capex requirement through balance
• Saffron-2 (May / June 2021) 200 – 300 bopd $1.8m – $2.6m $3m of 2021 is in range of $20m - $25m,
with cash flows generated from early
• Saffron phase 1 development wells reinvested into / funding
1,000+ bopd $8m – $12m $15m - $20m
(H2, 2021) drilling of subsequent wells
• Saffron full-field development
4,000+ bopd $25m+ Up to $60m
(2022 onwards, 2-3 years)
WNZ (Suriname)
• WNZ initial phase (H2, 2021) 100 bopd $1m ~$2.7m
• WNZ full-field development
900+ bopd $2.5m+ Up to $15m
(2022 onwards)
Note: cash flow estimates presented are based on US$60 / bbl oil price
BPC Update Presentation – April / May 2021 15ESG
Active commitment to implementing an aligned ESG operating and reporting Company Core ESG Values
framework, consistent with and guided by Global Reporting Initiative (GRI)
Sector Standards for Oil & Gas
Accountability
KEY 2021 PLANS and FOCUS
ü Trinidad: STOW (Safe To Work) 2-year Accreditation Efficiency Transparency &
Governance
Engagement
Climate
Communities
ü Suriname: NIMOS approval for EWT Change &
Energy
ü Bahamas: Ministry and DEPP EA approval and successful Perseverance #1
monitoring ESG
• Define impact reduction and continuous improvement targets Environment & Employment
Biodiversity
• Engagement and buy-in of staff to values and metrics Health &
No Harm Safety Inclusion
• Promote company-wide diversity
Zero
• Skills and competency development delivered through training, on-the-job Incidents
experience and opportunities
• First comprehensive ESG report in 2021
BPC Update Presentation – April / May 2021 16The Corporate Reset
The corporate reset
FOCUS SHIFT CHANGE OF NAME CAPITAL RESET RECAPITALISATION TRANSITION
PRODUCTION & CHALLENGER ENERGY 1:10 SHARE c. $10 MILLION OPEN CHANGES TO BOARD
CASHFLOW GROWTH GROUP PLC CONSOLIDATION OFFER (AND POTENTIAL & MANAGEMENT
SHORTFALL PLACING)
REFRESHED SHARE COST REDUCTION
ISSUANCE AUTHORITY CONVERTIBLE NOTE PROGRAM
RESTUCTURE
Rationale:
Rationale: Rationale:
• Focus on low-risk cash Rationale: Rationale:
• Reflects the portfolio • Investable share price
flow generation • Fresh capital needed • Natural process of
nature of the business with less volatility
• Complemented by • Shareholders first corporate transition
going forward • Ability to respond
longer term high • Simplify balance sheet • Consistent with corporate
impact exploration quickly and flexibly to • Preserve funding refocus
capital needs and sources
corporate opportunities
Subject to shareholder approval – EGM 17 May 2021
BPC Update Presentation – April / May 2021 18‘Resetting’ the capital base
Undertaking a ~$10m open offer to fund organic drilling opportunities in pursuit of significant production growth
THE OPEN OFFER PRO-FORMA CAPITAL STRUCTURE
• £6.9 million open offer Shares outstanding (post-consolidation) 789m
• Price of 0.35 p / share (pre-consolidation) Pro-forma market capitalisation at open offer price £28m
• Price of 3.5p / share post-consolidation) Base funds available balance of 20211 c. £16m
• 1 new share for every 2.46 shares held Base funds required balance of 20212 c. £16m
• 1.967 billion shares new shares under full take-up Convertible notes outstanding: 8p conversion price £2.5m
• Enables all qualifying existing shareholders the first opportunity Conditional convertible notes (not issued): 8p conversion price £10.0m
to participate in the Company's future
• Company intends for any shares not taken up in the open offer
1. Assuming open offer proceeds, cash at hand, expected proceeds of convertible notes due May
to be placed with institutional investors at the same price 2021, and expected surplus cash from production – does not include potential incremental
funding sources and any additional convertible notes drawdown
• Subsequent 1:10 share consolidation 2. Represents Saffron-2, Suriname well and EWT, corporate costs, and assumes cost cutting
initiative reduces costs by 20% - 30%, and that settling all final remaining costs of Perseverance-1
requires US$14m of cash in aggregate – does not include success case development of Saffron or
Suriname
BPC Update Presentation – April / May 2021 19Conclusion
A simple value equation
CURRENT EQUITY VALUE VALUE GROWTH PORTFOLIO VALUE
Existing production assets Spreads the risk
Everything else is ‘upside’
underpin current equity value Offers multiple routes to value
‘Hopper’ of development, appraisal &
onshore/offshore growth options
1.3 mmboe 24.7 mmboe
2P net reserves 3C net resources 13 licences
4 countries
80 producing
2 production tests 230 unrisked mmbbls onshore
wells
2 further discoveries >1 bnbbls potential offshore
BPC Update Presentation – April / May 2021 21Concluding remarks
1 BPC has been revalued post Perseverance-1 result such that current PRODUCTION & CASHFLOW ASSETS
share price is now underpinned by value of production assets alone
• Production growth and exploration success are upside Trinidad and Tobago – Saffron project & onshore
producing fields: growing production & cashflow
Suriname – onshore Weg Naar Zee project:
2 Clear focus & plan on growing production and cashflow infrastructure-led sales& cashflow
• Saffron-2 well in May/June is the next material value driver
• Multiple other avenues to achieve production growth across portfolio EXPLORATION ASSETS
Trinidad: onshore SWP – ‘on our doorstep’
3 ‘Reset’ underway to put company in position to deliver The Bahamas: offshore longer-term upside
• Regional champion – the only full cycle E&P player in the region
Uruguay: offshore low cost optionality
• Committed / aligned management team with sector / regional expertise
BPC Update Presentation – April / May 2021 22Thank you
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