(Offshore Energy, 22.Nov.2019) — Bahamas Petroleum Company (BPC) has finalized an agreement with Baker Hughes for the provision of equipment for its first exploration well in The Bahamas in 2020. However, the company is still working to secure the financing and finalize a rig contract with Seadrill.
In August 2019, following extensive technical discussions and mutual due diligence, BPC received proposals (including pricing) for a range of well-related equipment, including wellheads and tubulars, for the intended drilling 2020 campaign.
At that time, BPC issued a notice of award to Baker Hughes for provision of that equipment, as a precursor step to a detailed contract as is customary in the industry.
BPC informed on Wednesday, November 20 that, following a further period of negotiation and collaborative work, BPC had entered into a Master Services Agreement (MSA) with Baker Hughes for the provision of specified equipment.
Further, and pursuant to the MSA entered into, BPC has now also placed a first purchase order with Baker Hughes, for a wellhead set, a contingency well head set, and 36″ conductor casing.
The wellhead set is being manufactured to order for BPC’s intended well, and delivery is expected in a timeframe consistent with the current drilling schedule.
Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, said: “Finalizing the Master Service Agreement with Baker Hughes has enabled us to reach a long-awaited and significant milestone for our company: placing an order for the wellheads that have been made to order for our exploration well in The Bahamas. In ordering these high value, critical path, long-lead items, along with the other multiple work streams ongoing, management is taking demonstrative steps to ensure we remain on track for drilling to commence as per our previously announced drill schedule.”
One-well obligation & funding
Earlier this year, BPC received an extension for its offshore blocks in the Caribbean country until the end of 2020. With the extension came an obligation to drill an exploration well at its 4 commercially co-joined offshore licenses Bain, Cooper, Donaldson, and Eneas sitting at water depths of around 500 meters (1500 feet).
BPC has been for some time now unsuccessfully trying to secure a farm-in partner for its offshore acreage, to help fund the obligatory exploration well. This has driven the company to seek alternative options.
In September 2019, BPC reduced its previous estimate for the well cost from the range of $25 million to $30 million to $20 million to $25 million.
In October 2019, BPC announced a proposed a £7 million open offer at a price of 2 pence per share to enable all existing shareholders to participate in the company’s next fundraising.
In addition, the company said it had developed a drilling schedule to target an initial exploration well in the first half of 2020.
Following a framework agreement with Seadrill from August, BPC in October said it had sent notice to Seadrill nominating rig delivery date, and expected well spud, for late 1Q 2020. The rig contract remains to be entered into and is subject to Seadrill’s board approval process for contract commitment.
BPC also said in October that the farm-out agreement was the company’s preferred funding option, with a number of parties engaged in ongoing discussions.
The company stated at the time: “It remains the company’s preference to secure funding through this structure, albeit the company’s attitude to potential farm-in terms in ongoing negotiations will necessarily reflect the funding status of the initial well at the time a farm-out is successfully concluded (if at all).”
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