Oil price, BPC, Empyrean. And finally…

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WTI $61.43 +8c, Brent $65.40 +8c, Diff -$3.97 u/c, NG $2.75 +6c, UKNG 52.15p -1.1p

Oil price

Hardly any change in the oil price yesterday, very little has changed this week but in India the Covid figures are increasing at a frightening rate with no signs yet of any fightback. As has been the case for a little while the economic stats are showing good signs particularly in the US where specifically the labour data is very positive.

Bahamas Petroleum

A lengthy announcement from BPC this morning in which the company announce a proposed Open Offer and Placing as well as a change of name, share consolidation, changes to the board and management as well as sundry share and convertible facilities. This is intended to ‘lay the foundations for building shareholder value elsewhere across its expanded portfolio, predominately by increasing production, and hence cashflow, from operations in Trinidad and Tobago and Suriname’.

So, how does leave the plans for the upcoming year or so looking like? Firstly the Saffron # 2 appraisal/production well is to be drilled in May or June this year at a cost of some $3m and will hopefully deliver 200-300 bopd which generates cashflows of $1.8-2.6m pa which opens up the full-field development projected at 1,000-1,500 bopd with cashflows of $8-12m and a peak production of circa. 4,000 bopd.

In Suriname the appraisal and EWT at Weg Naar Zee is planned for drilling in July at a cost of some $0.7m aiming for c.100 bopd and cashflows of $1m p.a. with the longer plans for $2.5m p.a.

Then there is ongoing production maintenance and enhancement work in Trinidad and Tobago, from five producing fields with current production averaging in the range of 450 – 500 bopd, currently generating annual cashflows to BPC of approximately US$3 million per annum, and with the potential for cashflow growth from enhanced production levels and/or increased oil prices.

In addition there is work to be done with low-cost continuation of exploration activities, including maturation of exploration targets in Trinidad, a process for farming out the Company’s principal licences in The Bahamas (alongside renewal of those licences), and initial technical work in relation to the Company’s licence in Uruguay (and consideration of potential farm-out options in relation to that licence)

Cost cutting initiative commenced across the Company, with a view to reducing the Company’s ongoing cost of operations by at least 20% – 30%.

So, to the financial restructuring of the company, which will be done through a  proposed £6.9 million open offer to Qualifying Shareholders of approximately 1.967 billion shares at a price of 0.35 pence per share on a 1 new share for every 2.46 shares held basis, to enable all qualifying existing shareholders the first opportunity to participate in the Company’s future, with the Company intending for any shares not taken up in the Open Offer to be placed with institutional investors at the same price.

The circular for the Open Offer will be posted by 24th April , EGM to be convened for 17th May to seek approval for a number of items which include, changing the company name to Challenger Energy Group, consolidating the shares on a 1:10 basis and refreshing the share issuance authority and ratifying the convertible changes.

Next up are a bunch of changes at board level this is to include Eytan Uliel, the Company’s Commercial Director, to become Chief Executive Officer, Simon Potter is to transition to a Non-Executive director role effective 20 May 2021; Non-Executive directors Mr Adrian Collins and Mr Ross McDonald to step down  from the Board and Mr Stephen Bizzell to join the Board as a Non-Executive director.

Bill Schrader, Chairman of BPC, said:

“The Company is focussed on restoration, renewal and refreshment. In this context, the Company’s forward business strategy for the coming 12-18 months has been firmly set, on significantly increasing oil production and thus cashflow from our assets in Trinidad and Tobago and Suriname, which the Board considers to be the most effective manner in which to restore value and create a foundation for future value growth. In support of this strategy, the Company is calling an Extraordinary General Meeting, to put before shareholders a series of actions with a view to ‘resetting’ the Company and its capital structure, along with a recapitalisation of the Company and a cost reduction initiative.

 

At the same time, as a part of a natural renewal process and in adherence with best practices for corporate governance, changes are being implemented to the Company’s board and management. I would like to welcome both Eytan Uliel and Stephen Bizzell on their prospective appointments to the Board, as respectively CEO and non-executive director. Shareholders will already be familiar with the contribution of Eytan to the organisation over the last seven years, and Stephen is highly credentialled in the industry, having successfully assisted many similar companies with significant capital raisings and transformational corporate transactions, as well as having actively supported the funding of this Company for the past two years. Simon Potter stays with us as a non-executive director, where his skills and experience remain available to the organisation.  I would like to thank both Ross McDonald and Adrian Collins, who will be leaving the Board, for their valued contributions, over respectively the last nine and ten years. Finally, a huge expression of appreciation for the work undertaken by Ben Proffitt over the last twelve years in support of both the Board as Company Secretary and to the Company as Finance Director – we wish him luck as he embarks on the next stage of his career.

 

Taken together, the steps being announced today represent what the Board considers to be a coordinated approach to charting a viable and value-restorative future course for the Company. We thank shareholders for their ongoing support, and we look forward to providing updates as to our progress over the coming months.”

 

Eytan Uliel, CEO designate, said:

“Our Company has a diverse full-cycle portfolio of production, development and exploration assets. The work program for 2021 and beyond is busy, and contains many value triggers. The re-set proposed today will enable us to get after that value, through building production and cashflow. I am excited by the prospect of leading Challenger Energy Group, and I look forward to engaging with all our stakeholders over the coming months.”

There is clearly much going on at BPC in almost every department, the farm-out of P#1 and  renewal as well as exploration and production drilling in Trinidad, assessing Suriname, refinancing and changing the name and the board will make for a definitive upcoming year or so. There is little doubt that Challenger under Eytan Uliel will be one to watch as all this unfolds.

Empyrean Energy

Empyrean has provided the following update on its planning for drilling the Jade prospect on Block 29/11, offshore China, having been very quiet for some time there is much going on. 

 The Company has commenced comprehensive planning for the drilling of the Jade prospect in order to ensure a safe and secure drilling campaign and has awarded a contract with AGR’s team in Australia to assist with well planning and engineering.

 AGR is owned by Oslo Stock Exchange listed Akastor ASA (a subsidiary of AKER group companies), and is an independent consultancy delivering well engineering, drilling project management and reservoir management as well as consultant manpower and software solutions to the energy industry. AGR has managed 545+ well projects across 6 continents with 3,700+ consultants placed in 100 locations. AGR’s subsurface team members have an average of 20+ years’ industry experience

The AGR team has been tasked to consider a number of well design options after comprehensive analysis of offset wells, concluding with a recommendation for well design.  The recommended well design will be progressed to a detailed well design, including a time and cost estimate, utilising AGR’s proprietary probabilistic time and cost software, P1™.  The software application will allow AGR to quantify and demonstrate the various risks specific to each operation, providing Empyrean with further insight into the well planning. Empyrean will then use this important work, in the first instance,  to assist with the assessment of quotes for drilling the Jade prospect.

 It is anticipated that AGR’s initial work on well design will be completed in the coming weeks and further updates will be provided to shareholders in due course.

Empyrean CEO, Tom Kelly stated

“We are excited about commencing comprehensive planning for drilling our first well in China. Drilling the world class Jade prospect will herald a new phase in the history of the Company as we become an operator of an exciting drilling campaign. Jade will be our first well drilled and is one of three large conventional oil targets next door to a billion barrel oilfield within the energy hungry Chinese market. We have selected AGR for the well design and engineering project as they have a long and comprehensive experience across 6 continents with industry specialists that have a long history of subsurface expertise.”

 I noted yesterday that I had been waiting on Tom Kelly for a chat and that had been held up somewhat, now we know why and I am looking forward to speaking to him next week with any luck. I have been a strong supporter of EME for many years and whilst some of the polish has worn down a bit there is still much excitement and of course massive upside. I will write more after my chat with Tom. 

And finally…

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