Today Bahamas Petroleum announced that they had signed a confidential exclusivity agreement with an unnamed oil major, the overview of the deal will see BPC receive $250,000 p/m ($750,000 in aggregate) for three-months initial exclusivity whilst initial due diligence takes place, at which point the partner has an option to extend this period for an additional three months until a farmin or commercial terms are agreed. Bahamas Petroleum has been listed since 2007 having spent well over $100m on technical work, including an extensive 3D seismic program which presented a CPR showing billion barrels of oil potential within the BPC concessions.
The next natural step for the company has been to find a sufficiently sized partner to advance its exploration and development assets, in addition, to navigating the permitting process within the Commonwealth of the Bahamas. As the turbulence of a decade attempting to bring its hens home to roost would test the patience of a saint and its predominantly retail held shareholder base, we understand the announcement and steps today could well be seen as a chequered flag for the shares to continue soaring. Yet the existing risk is fulfilling all environmental requirements of the Bahamian government but also satisfying the license requirements to drill and develop the license area within the time frame set out (now deferred 2018). To date, the company has been clear about its existing financial needs, however, the agreement shows that the negotiations are adequately advanced for BPC to suspend any further discussions with other interested parties.
If a deal is concluded it could be worth further consideration as the current valuation, given the 3 million acre asset is rumored to hold a more desirable light oil, the shares look cheap, yet to caveat this, the business has to conclude a deal in order to progress through the next round of licencing demands. We assume that a relevant level of risk-reward when entering into any position here will stand you in good stead, the clock is ticking in revealing BPC next announcement into a commercial agreement or further horsetrading, TMS intends to follow the story.
The author was not remunerated to write this article nor do they hold shares