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MITIGATING RISKS: READY FOR THE DRILL BIT
SIMON POTTER PAUL GUCWA BEN PROFFITT CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER COMPANY SECRETARY
15 June 2012
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Overview
Forging Relationships
Sustainable Processes
Ready Technically
Summary
COMPANY
3
Investment Highlights
Multiple play-types with scale potential – proven Cuba fold belt/thrust sheet plays
– drilling now
CPR highlights multiple billion barrel prospects (only Cretaceous level assessed)
average CoS 25%
Fiscal terms provide upside returns – management team with strong track record
of value creation
Value realisation by material participation through funded well execution
Technical
3D interpretation;
DHI work ongoing
Political
Election Process;
revised/refreshed
mandate
Licence status
Remaining issues
Commercial
Well funded
BDR Listing
Aggressively pursuing
farmout plans
Negotiations ongoing
Environmental
EIA submitted;
Public Consultation
Oil Spill Management
Plan; EMP
Revised regulatory
environment
Anticipated BPC well location
Announced August spud
Repsol P&A
✜ Petronas currently drilling
✜ Anticipated well locations
✜ ✜
✜
✜
Regional Setting
• Region has discovered nearly 100
billion bbl oil and 500 tcf gas
• Nearly 4mm acres under license
equivalent to 672 OCS lease blocks
• Geology considerably different than
U.S. Gulf of Mexico
4
Commercial Context
COMMERCIAL
Legal
• Politically stable; parliamentary democracy
• English heritage legal system and structure
Costs
• Proximity to service providers from US GoM
• Freeport status
FISCAL
Fiscal terms structured around sliding scale
production-based royalties (up to 25%)
No income/corporation tax in Bahamas
No capital gains tax on transactions
Holding cost based on cost/acre paid annually
North Sea Scale Comparison
5
LEVERAGING TECHNOLOGY
Modern seismic
Well execution
6
Company Overview
Significant Shareholders (>3%) as at 31 May 2012
˃ TD Waterhouse
˃ Barclays Wealth
˃ Hargreaves Lansdown Asset Management
˃ JM Finn & Co
˃ Halifax Share Dealing
˃ Selftrade
˃ Standard Life Investments
˃ Fidelity Worldwide Investment
˃ Majedie Asset Management
Share Capital
Shares in Issue 1,230,479,096
Authorised Shares 5,000,000,000
American Depository Receipt Program (Depository
: Bank of New York Mellon)
Bahamian Depository Receipt Program
(Depository: Royal Fidelity)
Tax Resident in the Isle of Man and Bahamas
˃ 80% UK, 15% Europe, 5% R0W
˃ Retail 60%
Existing register
* Share price and Market Cap as at 13 June 2012 ** Based on figure disclosed in 2011 Annual Report
GBP USD
Price* 0.0785 0.1217
52 Week High 0.1900 0.2959
52 Week Low 0.0539 0.0840
Market Cap (mm) 96.6 150.0
Cash and Cash Equivalents
(mm)** 22.9 35.5
Enterprise Value (mm) 73.3 114.5
7
2011 Financial Statements Highlights
Capitalised Cost of Assets US$m
Acquisition and Rental of Licences (2007 – 2011) 1.8
Analysis of Old Data Logs Acquired Pre 2009 2.8
2D Seismic (2010 and Early 2011) 2.0
3D Seismic (2011) 29.4
Other Technical programs (2011) 2.9
Total 38.9
Funding US$m
Pre and Post IPO Funds Raised to 2010 34.1
Placing of 243,100,000 Ordinary Shares (Net of Costs) in 2011 70.2
Total Funds Raised From Inception 104.3
Cash US$m
Available Cash 35.0
Restricted Cash 0.5
Total Cash 35.5
8
2012 Funding – Sources and Uses
Current sources US$m
Cash as at 1/1/12 35.0
Cash Raise -
TOTAL SOURCES 1 35.0
1 Additional sources expected from farm in
Sources Uses (Estimated – calendar year 2012)
Operating expenditures US$m
2D Seismic 1.5
3D Seismic Processing 6.5
Other Technical Projects 1.0
Technical staffing/Consulting 1 0.5
Licence Related Costs 1.3
2012 Non-recurring costs 2 0.5
Sub-Total 11.3
Corporate Costs 2012 5.0
TOTAL USES 16.3
1 Including preparation for drilling
2 Personnel, BISX Listing and Legal costs
Note: BPC is debt free
˃ Farm-in negotiations underway; expect
to occur by June/July 2012
˃ Drilling program to be funded from new
sources (Farm-in vs Placing)
˃ Resultant net cash balance end 2012
assuming estimated uses ~US$19 million
before any new sources
˃ Approximate Annual Fixed Overhead of
$3.5 million going forward
˃ Licence expenditure obligations
met/exceeded
9
Stock Performance – 2012 to date
2012
Oversold in 2011
Increased risk appetite
Election Impact
Coverage
Speculative buy
Latest target 23p
Risked Upside 400p
Catalysts
Mandate
External verification
Drilling line of sight
Overview
Forging Relationships
Sustainable Processes
Ready Technically
Summary
COMPANY
11
Forging Relationships
Local Ownership
Licence-to-Operate
Leveraging activity
Ongoing Operations
Focus of Operations
Directors
BDR BISX Listing
Decision Making
Embed in the
Communities
Election
Renewal
Referendum
Mandate
Farmout
Commercial-in-
Confidence
Terms Highlighted
Dataroom Closed
Ongoing Negotiations
12
Licences Status and Commitments
Rule of Law
Petroleum Act 1971; Regulations 1978
Four 3-year exploration periods
Production licence 20 years
‘Moratorium’
Applications pending
First Period
Expenditure
US$750,000
US$600,000
‘Drill or Drop’
Extended for 2 years
Maritime Agreement
Second Period
Licence ‘shall’ be
renewed
Compliance with
Act, Regulations and
Obligations
Commence well by
end of first year
Third Period
Licence renewal at
GG discretion not
unreasonably
withheld
50% relinquishment
Well drilled every 2
years
Expenditure and
Rentals
Fourth Period
Well drilled every 2
years
Expenditure and
Rentals
Overview
Forging Relationships
Sustainable Processes
Ready Technically
Summary
COMPANY
14
Environmental Context
External consultation
Cross border cooperation
Risk profile
EIA
Submitted October
BEST dialogue
complete January
Public consultation
EMP
OSMP
Well location and
rig specific
Cuba
CCA
Regulations
Statute
Law
Enabling Regulations
International Standards and Codes
% of oil released making shoreline, remainder either
evaporated or biodegraded
2,556 individual spills lasting 60 days tracked for 90 days;
no intervention
Environment: Oil Transport Simulation
15
Location Surface
15 mbopd
Seabed 10 mbopd
Seabed 20 mbopd
Eastern US 0.05 0.03 0.02
Southeast
Florida 0.09 0.04 0.03
Florida Keys 0.04 0.02 0.01
Western
Bahamas 0.07 0.14 0.29
Eastern
Bahamas 0.16 0.12 0.11
Northern Cuba 46.44 34.98 27.26
Bahamian MPA’s 0.00 0.00 0.00
Total 46.9 35.3 27.7
• simulated release site
Sophisticated model incorporating ocean currents, wind and oil properties
An uncontained, GoM-type spill - very minor landfall impact on Bahamas
Trans border planning and response will be important
Ocean State Bathymetry
Overview
Forging Relationships
Sustainable Processes
Ready Technically
Summary
COMPANY
17
TOPICS
Regional Setting
– Geologic history of The Bahamas records the evolution from a rifted margin to a
foreland basin
Cuba Drilling Update
– 6 wells scheduled to be drilled offshore Cuba
– Repsol has P&A’d first well, this result is not a negative for our prospects
– Zarubezhneft location may be relevant to our program
– Petronas currently drilling
Bahamas Petroleum 3D Processing and Interpretation
– Fast track interpretation proceeding
– Seismic facies and seismic lithology assisting in well planning and prospect evaluation
– Initial PSDM volume delivered
Preparation for Drilling
– The Government is working to put regulations in place to oversee activities
– Bahamas Petroleum is aligning itself to ‘best practices’ jurisdictions of Norway, UK and
the US as we prepare to drill
– All parties are committed to responsible exploration and preserving the environment for
future generations
Anticipated BPC well location
Announced August spud
Repsol P&A
✜ Petronas currently drilling
✜ Anticipated well locations
✜ ✜
✜
✜
Cuba Drilling Plans – Activity Heating Up
• Region has discovered nearly 100
billion bbl oil and 500 tcf gas
• Nearly 4mm acres under license
equivalent to 672 OCS lease blocks
• Geology considerably different than
U.S. Gulf of Mexico
18
19
Tectonic History
20
Key Bahamas Events Through End Cretaceous
Source Rocks
Modified from Olsen, 2011
21
Late Jurassic Climate and Plate Positions
Olsen, 2011
Late Cretaceous and Early Tertiary Compression
Middle Oligocene to Miocene (25-22Myrs)
Cuban Marginal area Southern Bahamas area
Cuban arc
Late Cretaceous Paleocene?
Proto-Caribbean oceanic crust
Forbulge
Regional uplift Platform exposure
Transitional to continental crust
Paleocene Early Eocene?
Forbulge
Flexural drowning
Bahamas
Platform folding
North Cuba
Early Eocene Middle Eocene?
Middle Eocene Pliocene-Pleistocene
Masaferro (1997)
Late Cret.- Paleocene (70-50Myrs)
Early to Middle Eocene (45-40Myrs)
Middle Eocene to Late Oligocene (40-30Myrs)
22
23
Cuban Overthrust and Foredeep
Section Location (West)
Section Location (East)
15,000’
24
➜ Cretaceous reef/platform imaging is significantly improved. Better imaging of the deeper section
➜ Pronounced dip to the south-west; thicker Jurassic (source); opens migration pathway to beneath
Cuban ramp; increased potential fetch area
➜ Records the evolution from hypersaline basin to platform basin morphology
Platform Margin Bahamian Foreland
Cuban Border Nassau Trend A Fold B Fold C
Top Cretaceous Structure
25
26
10 Kms
Fold B
Fold C
Trend A
Top Cretaceous Structure
Top Vertical closure
Area
Fold B 700m 750m 423 km2 (104,526 acres)
Fold C 950m 350m 63 km2
(15,814 acres)
Top Vertical closure
Area
27
Fold B
Fold C
Trend A
Top Albian Structure
10 Kms
28
Top Aptian Structure
29
10 Kms
Fold B
Fold C
Trend A
Top Aptian Structure
Top Vertical closure
Area
Fold B 2400m 1400m 288 km2
(71,166 acres)
Fold C 3250m 750m 63 km2 (15,814 acres)
Top Vertical closure
Area
30
Trend A Fold B
UK platform, reef & slope
Tertiary pelagics U Albian karst
U Albian starved basin
mudstones
U Albian Platform L Albian Ramp
U/L Aptian Ramp
LK/JR Anhydrite - porous Dolomite
SW NENE
UK - pelagics
Seismic Facies
LKUJr Anhydrite -Dolomite
LK/Ujr Anhydrite?
NE
Callovian
Tertiary Pelagics
Upper Cretaceous Pelagics
Est 22,500 sstvd
31
SW
3D line Through Fold B Potential Well Location
N
Inverted acoustic impedance
High acoustic impedance
intervals related to
anhydrite
Low acoustic impedance
intervals related to more
porous carbonates
Top Tertiary
Near top Cretaceous
Top Albian
Top Aptian
Base Aptian
Top Jurassic
low
high
N
32
Inverted VpVs ratio
Low Vp/Vs intervals related
to porous, hydrocarbon
saturated carbonates
High Vp/Vs possibly related
to mudstone or condensed
section
Top Tertiary
Near top Cretaceous
Top Albian
Top Aptian
Base Aptian
Top Jurassic
low
high
N
33
Rock types and seismic data
Top Tertiary
Near top Cretaceous
Top Albian
Top Aptian
Base Aptian
Top Jurassic
Unclassified carbonate
Mudstone
Less porous carbonate
More porous carbonate
Anhydrite
N
34
35
Initial PSDM (top) shows better definition, detail and higher frequency.
Expect improvement, especially in deeper section as processing progresses.
Initial PSDM volume
Cuban Border Nassau Trend A Fold B Fold C
36
Key Technical Risks
Scale: CPR highlights multiple billion barrel prospects (only Cretaceous level
assessed)
Average CoS 25% with Reservoir component least risk
3D Interpretation reinforces scale of Folds B and C
Closure at Cretaceous ~400 km2 with ~300 km2 preserved at the Aptian level
Vertical column range 750 – 1,500 m
On-strike closure ~75 km
Source
3D interpretation;
deeper, thicker
Larger fetch area
beneath Cuban
thrust
Regional Drilling
Migration
3D interpretation;
simpler
Faulting sole-out in
Jurassic
Seal
DS well identifies
multiple Anhydrites
4-way dip closure
does not rely on
fault seal
Reservoir
DS well identifies
over 20 separate
reservoir sequences
Individual reservoir
units over 200’ thick
Overview
Forging Relationships
Sustainable Processes
Ready Technically
Summary
COMPANY
SSEISMIC
4Q13 3Q13 2Q13 1Q13 4Q12 3Q12 1Q12 4Q11 3Q11 2Q12 3 Years
Corporate Objectives
• A well executed to 2,000’ into Jurassic source.
• Shallower objectives as justified commercially.
• Facilitate the drilling of a well.
• Address funding, environment and permissions.
• Delay not in the interests of shareholders but realisable.
SEISMIC
2Q11
ENVIRONMENT
DRILLING
2D
3D
EMP
FEED
Long Lead
Farm-in
BDR COMMERCIAL
Long Lead
Acquired Fast track Interpretation
Potential well sites 3D PSDM Interpretation
Sites Defined
Farm-in
Consultation
Consultation?
Spill Study
Multi-beam
Renewal Obligation
Submitted
Clean Caribbean & Americas
Spill Plan
Cuba
Timeline: Company Planning
Potential well sites
Enabling Regulations
38
Registered Office:
Bahamas Petroleum Company plc
IOMA House
Hope Street
Douglas
Isle of Man, IM1 1AP
Tel: +44 (0) 1624 647883
Email [email protected]
