Bahamas Petroleum Company has secured a binding, zero-coupon, second ranking, unsecured convertible loan facility for up to £8 million (approximately US$10.5 million) from a substantial Bahamian-based institutional family-office investor.
Ninety per cent of the loan is available for cash draw down with the first tranche of the loan facility, which was secured today amounting to £2.43 million (approximately $3.2 million), which is unconditional and is immediately available. The balance of the loan facility is available to be drawn at the company’s election in four committed instalments.
This will be done through the course of drilling of the 100 per cent-owned and operated Perseverance #1 well, expected to spud in April 2020, targeting recoverable prospective resources of 0.7 – 1.4 billion barrels of oil. Bahamas Petroleum will continue to evaluate farm-in options as part of its overall risk mitigation strategy which could further expand its available funding resources, if appropriate.
“This measured approach means that we have now secured a funding package with considerably less overall dilution to shareholder equity than most commentators expected would be required.”– Bahamas Petroleum CEO, Simon Potter
Bahamas Petroleum CEO, Simon Potter reports that, “Today’s facility affords us greater overall funding availability and a high degree of financial flexibility so that we can respond as may be needed to real-time drilling results. We will see some immediate cash inflow to help manage the timing of cash-flow needs in advance of drilling (for example for long-lead/critical path items and advance credit payments required by service providers).”
Thereafter, the remaining funds have been committed and available if the company elects to draw on the facility as we progress through drilling. At the same time, Bahamas Petroleum will continue to consider several farm-in options, with a view to further strategically enhancing the overall financial and operating capacity of the company.
He says the company will continue to make rapid progress toward the drilling of Perseverance #1, its first exploration well in The Bahamas, which is expected to commence in April 2020. Since mid-2019 Bahamas Petroleum have progressively been implementing a coordinated funding strategy, with a view to ensuring that the company have access to the funding necessary for drilling, as and when it is needed.
“This measured approach means that we have now secured a funding package with considerably less overall dilution to shareholder equity than most commentators expected would be required,” Potter explains.
According to Bahamas Petroleum CEO, “Moreover, through this process we have consistently put the interests of our shareholders first – for example, in October 2019 we provided our existing shareholders with the first option to subscribe for additional shares at a substantial discount to the then prevailing (and the current) share price.”
Critically, with this Facility and the Conditional Convertible Loan Note is the fact that shareholders can take greater comfort that the well can be delivered if we were to ‘go it alone’, or if we were to choose to drill with a partner. As such the next few months will continue to be both a busy and exciting time for Bahamas Petroleum.