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EXPLORING SAFELY AND RESPONSIBLY:SAFEGUARDING THE ENVIRONMENT
June 2013: FISHING COMMUNITIES
ROBERTA QUANTENVIRONMENTAL SCIENTIST
SIMON POTTERCHIEF EXECUTIVE OFFICER
Disclaimer
This presentation (“Presentation”) has been prepared by Bahamas Petroleum Company plc(the “Company”) solely for its use at informational meetings with its shareholders and is beingdelivered for information purposes only to a limited number of persons. This Presentationshould not be considered as the giving of investment advice by the Company or any of itsshareholders, officers or advisers. If you are in any doubt about the contents of thisPresentation or the action you should take, you should consult an independent adviserauthorised 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 tocontain all information that a member of the Company may wish receive for purposes ofassessment or valuation of his respective investment and is not intended to form the basis ofany investment decision.
While the information contained herein has been prepared in good faith, neither the Companynor its shareholders, directors, officers, agents, employees, or advisors give, has given or hasauthority to give, any representations or warranties (express or implied) as to the achievementor reasonableness of future projections, management targets, estimates, prospects or returnscontained in this presentation, or in relation to, the accuracy, reliability or completeness ofthe information in this Presentation, or any revision thereof, or of any other written or oralinformation made or to be made available to any shareholder of the Company (all suchinformation being referred to as “Information”).
The Presentation is not an offer or invitation by the Company, its shareholders, directors,officers, agents, employees, or advisors to purchase, acquire or sell securities or assets, norany form of commitment, legal obligation or recommendation by either the Company, itsshareholders, directors, officers, agents, employees, or advisors.
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address future activities and events of developments that the Company expects, are forward-looking statements. Although the Company believes that the expectations reflected in thesestatements are based on reasonable assumptions, such statements are only predictions andare subject to inherent risks and uncertainties and changes in the underlying assumptionswhich could cause actual values, results, performance or achievements to differ materiallyfrom those expressed, implied or projected in any forward-looking statements. Factors thatcould cause actual results to differ materially from those in forward-looking statementsinclude market prices, continued availability of capital and financing, and general economic,market or business conditions. Investors are cautioned that any such statements are notguarantees of future performance and that actual results or developments may differmaterially from those projected in forward-looking statements.
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This Presentation does not constitute, or form part of or contain any offer or invitation to sellor issue, or any offer to subscribe for, underwrite or otherwise acquire, or dispose of, anysecurities in the Company in any jurisdiction and is directed at, and is only for distribution toexisting shareholders of the Company. Neither this Presentation nor any part of or copy of itmay be taken or transmitted, directly or indirectly, into the United States of America orCanada 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 withapplicable securities laws. Any failure to comply with these restrictions may constitute aviolation of applicable U.S. or Canadian securities laws. This Presentation and the informationcontained herein do not constitute an offer of securities for sale in the United States. Byaccepting this Presentation, the recipient represents and warrants that it is a person to whomthis Presentation may be delivered or distributed without a violation of the laws of anyrelevant jurisdiction. This Presentation is not to be disclosed to any other person or used forany other purpose and any other person who receives this Presentation should not rely or actupon it.
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Oil Exploration Mitigation of Major Associated Risks
Potential Benefits of Successful Oil Exploration
Summary
3
Exploration: Where Are We Looking?
Concept born: 2005• Prospectivity
• Technology
• Oil Prices and Costs
• Fiscal and Legislative stability
Licences to explore: 2007
Listed London: 2008 (AIM: BPC)
Owned by the shareholders
Nassau office and staff
Distance from Shoreline• Nassau 168 miles, Andros 80 miles
• Cuba: 25 miles
• GoM closer to Grand Bahama
Anticipated BPC location
Commenced December
Previously drilled wells
★★
4
Exploration: The Basic Exploration Questions
Source
Reservoir
Structure
Seal
Where to drill?
Oil Generation
Migration
Time/Space
Enduring
Shared reward?
5
Exploration: What has been found with $50 million spent
DepthDepth
ClosureArea
Fold B700m~75kms423 km2
(104,526 acres)
Fold C950m~25 kms63 km2
(15,814 acres)
~10 Kms
High to Low
Competent PersonsReport
• Concluded multiple billionbarrel potential
• Residual source risk• Can only be reduced by
drilling
Oil Exploration
Mitigation of Major Associated Risks Potential Benefits of Successful Oil Exploration
Summary
Preparation: Perseverance #1
7
PreventiveMeasures
Qualified Management Team Qualified International Operator 12 Months of Well Planning Blow-out Prevention
MitigationMeasures
ResponseMeasures
Environmental Impact Assessment Environmental Management Plan Safety Management Plan Member of Tier III Oil Response
Organization
Oil Spill Response Plan Activate Oil Spill Response Limited
– Ability to immediately mobilize vessels,aircraft, containment equipment andskimming equipment
Top Hat, Capping Stack
LicenseRequirement
CompletedIn Production
Preparation: Well Plan
Drilling rig with upgraded andadvanced safety mechanisms
Water depth at location: 1,500 feet
Planned well depth: 22,500 feet
1 year to plan, 120 days to drill
Anticipated well cost: $120 million
3D seismic data to safely plan well
8
N
Major ShippingLanes
Atlantic OceanAbaco
GrandBahama
Eleuthera
Cat Is.
San Salvador
Rum Cay
Samana CayCrooked Is.
Long Is.
Andros
Exuma
Exuma Cays
Cuba
Cay Sal
GreatBahamaBank
NewProvidence
BPC ExplorationWell
Zarubezhneftdrilled Q1 2013
Wells drilled inCuba 2012
Anticipated welllocations for 2013
Storages
Oilfields
Oil Pipeline
Gas Pipeline
Martin MesaField Jarahueca Field
MotemboField
Central BasinFields (4)
Boca de JarucoFields (5)
Pto. Escondido YumuriFields (2)
SantaCruz
VaraderoFields (7)
Refineries
Terminals
Cayo Coco 10 563 ft (3,200m)
Cay Sal IV-1
Joides 101
Joides 100
Joides 99
Long Is. - 1
Andros - 1
GT. Isaacs
Coastal State -1
Doubloon Saxon -1
Joides 98WilliamsHistoric
Boreholes
Preparation: Current Oil and Gas Activity !!!
US Gulf Bahamas
Rock Type Sandstone &Shales
Carbonates
Rate ofSediment-ation
Rapid20,000’ < 10million years
Slow20,000’ ~ 200million years
Compaction High Low
Pore Pressure Abnormal – High Normal
Preparation: Freeport BORCO terminal
TANKER SIZES:Medium Range tanker 25,000–45,000 tonsLR1 (Large Range 1) 45,000–80,000 tonsLR2 (Large Range 2) 80,000–160,000 tonsVery Large Crude Carrier 160,000–320,000 tonsUltra Large Crude Carrier 320,000–550,000 tons
FREEPORT
11
Preparation: Incident Prevention and Risk Mitigation
MAR
POL
73/7
8
COLO
REG
’s
OPR
C
The
Mer
chan
tSh
ippi
ng (O
ilPo
llutio
n) A
ct
Baha
mas
Oil
Spill
Cont
inge
ncy
Plan
Tier
III
Resp
onde
r
Inte
rnat
iona
llyAp
prov
edSO
PEP
Plan
s
Enha
nced
Petr
oleu
mRe
gula
tions
Cuba production andtranshipment
√ √ √ √√
Cuba exploration √ √ √ √ √International OilTransport
√ √ √√
√ √√
Transhipment toBORCO/SRP
√ √ √ √ √ √ √
Domestic oil transport √ √ √ √ √ √ √Oil Exploration √ √ √ √ √ √ √
Revised standards and equipment – post GoM
Source: Helix WellContainment Group
Top Hat
Capping Stack
Blow Out Preventer(BOP)
Source:ajiacomix.wordpress.com
Source: Helix WellContainment Group
Upgraded, modernised domestic regulations and standards
√
Preparation: Environmental Impact Assessment and BEST Approval
Scope:• Exploration drilling activities at Bain,
Cooper, Donaldson, and Eneas offshoreblocks
• Incorporate best practices fromNorway, the US (GoM), and the UK
• International standards and codes
Key Findings:• No sensitive environments in
immediate vicinity of first proposeddrill site
• Low/normal pressure reservoirsreduce probability of a incidents
• Identified impacts are deemednormal/acceptable
Outcome:• BPC to progress with Environmental
Management Plan (EMP) - currentlyunderway 12
BPCWell
Gulf of MexicoWell
Preparation: Potential Impacts to be Monitored and Mitigated
13
Equipment Specifications. Efficient technology
Fishing and Shipping monitoring and communications
Minimisation of noise, observers
Minimum Discharge, maceration, compliance
No hazardous discharge – retained, stored, exported
Equipment Maintenance
Compliance with regulations, standards and code
Blow-out Preventer. OSRL, Helix contracts
Oil Spill Contingency Plan
Air Emissions
Vessel Movement
Marine Mammals
Waste Streams
Fluid Usage
General Risks
Blow-out
* 2,556 individual spills lasting 60 daystracked for 90 days; no intervention
Preparation: Oil Spill Movement Simulation
14• simulated release site
Sophisticated model incorporating ocean currents, prevailing winds,seafloor (bathymetry) and oil properties
Modeled worst case scenario, very low probability event: an uncontainedMacondo-type spill *
Ocean State Bathymetry
Model Conclusion: very littleoil would reach Bahamianshorelines due to prevailingenvironmental conditions
Model results are being usedto pre-plan potential cleanupresponse activities in theunlikely event of a spill
Proactive BPC outreach toCuban authorities onemergency preparedness
21
Preparation: Environmental Management Plan
Health, Safety and EnvironmentalManagement
Environmental Sensitivity Maps
Emergency Response Plan Oil Spill Contingency Plan Waste Management Plan Health and Safety Plan
Oil Spill Contingency Plan Environmental Sensitivity Maps Response Equipment Transportation – Personnel &
Equipment Safety measures in the event of
natural disasters Clean-up mechanisms Incident Command Structure (ICS) Resource Protection Measures
Preparation: Environmental Sensitivity Index (ESI) Maps
Oil Exploration
Mitigation of Major Associated Risks
Potential Benefits of Successful Oil Exploration
Summary
18
Affordable/Sustainable: Potential Development and Returns
Projected revenue assumes1 billion bbls developed at$80/bbl oil price
BahamasGovernmentRevenue:$20 Billion
BPC Return onInvestment:$20 Billion
Exploration andDevelopment Costs: $40
Billion
Phase
~ 5 – 10+years
~ 1 year ~ 1 – 3years
~ 3 – 6 years ~ 20 – 40years
Seismic &GeologicStudies
ExploratoryDrilling
AppraisalDrilling
DevelopmentPlanning &
Construction
Developmentand
Production
BPC
$50 million $60 – 160million
$400 –600
million
$30 – 40 billion USD
Gov.
$0 $0 $0 $0 ~ $20 billionrevenue
Completed In Progress Estimated Typical CostsBased upon Exploration Success
Dividing the Pie
No financial risk,No cost to Government
Cost
Note: These numbers are basedon estimates that couldchange as the result ofexploration drilling.Does not include cost ofcapital to shareholders.
➔ Royalty payments: Long termsource of revenues
➔ Diversification of the economy
➔ Supply contracts
➔ Cheaper Fuel and Power
➔ Premium on Marine Vessels
Sustainable: Regional Oil Development and Fisheries Coexist
Gulf of Mexico: $662 million Brazil: $419.1 million Colombia: $64.4 million Cuba: $2.4 million The Bahamas: $93.8 million Trinidad and Tobago: $10 million Belize: $16.2 million Recently Barbados and Portugal
19
Annual revenue from fisheries incountries with offshore petroleumexploration and production
*2003 Worldmark Encyclopedia of Nations, Gulf ofMexico data – National Marine Fisheries Service 2007
Oil Exploration
Potential Benefits of Successful Oil Exploration
Mitigation of Major Associated Risks
Summary
21
Key Points
Exploration is still required
• Successful exploration well will notbe produced – but suspended orabandoned
Risk are manageable• Not GoM, very different conditions
• New oil & gas regulations –international best practices
• “Oil spill” modeling: “MotherNature” protecting The Bahamas
Considerable marine support activity
• Jobs creation; directly andindirectly in new or expandedindustry sector
Physical presence• Creation of Marine Protected Area
• Presence deters poachers, attractsmarine life
• Safe Haven; fast rescue facilities
22
bpcplc.com
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