The Bahamas Petroleum Company (BPC) has begun negotiations with major oil and gas companies in an effort to secure financing for an exploratory well.
The disclosure, included in a presentation to shareholders, details how "farm-in negotiations" are underway and expected to continue into July. A "farm-in" may serve as an operational and equity partner for BPC. While it is unknown what negotiations have taken place, oil and gas giants Shell, Exxon or British Petroleum, for example, could fit the bill and provide considerable backing and expertise.
In May, Guardian Business reported how BPC enlisted Applied Drilling Technology (ADT) to help carry out the exploratory well. ADT, a subsidiary of Transocean, is a service provider that is simply contracted for the work.
Indeed, recent negotiations with a financing partner indicate that BPC is still full steam ahead on its plans to spud an exploratory well next year.
Simon Potter, the CEO of BPC, did not return requests for comment before press time.
The presentation, held in London late last week, goes on to detail how the drilling program will be funded from new sources, such as the farm-in and a "placing".
A placing implies that BPC could offer another initial public offering (IPO) and release more shares into the London Stock Exchange.
The presentation injected a measure of confidence into investors on Friday. BPC shares rose 4.19 percent for the day, ending at 7.71 pence per share. The latest target, according to the report, is 23 pence per share, with a "risked upside" of a whopping 400 pence.
At present, 80 percent of the investors in BPC are from the UK, 15 percent from Europe, and five percent other. Retail investors make up 60 percent of the total register.
While the mood among investors remains upbeat, the political situation in The Bahamas remains one of the biggest sources of concern. Just prior to the election, the former government suspended BPC's exploratory licenses, and the new administration is noncommittal on the issue.
According to the recent presentation to investors, BPC states that: "license 'shall' be renewed" (with quotes over the word "shall"). It also notes that it plans to commence a well "by end of first year", which opens the door for a revised schedule.
BPC had previously committed to spudding a well no later than April 2013.
"The government is working to put regulations in place to oversee activities," the presentation stated. Meanwhile, BPC said it is aligning itself with "best practices" seen in Norway, the UK and the US "as we prepare to drill".
Earlier this month, Kenred Dorsett, the minister of the environment, insisted that the government is still undecided on the issue of oil drilling. He also backtracked on whether a referendum would take place.
"We do believe that the Bahamian people ought to be consulted, Whether it goes the extent of a referendum, that will have to be determined based on the costs. That is a matter for the Cabinet to decide on," he said.
Dorsett has not elaborated on what other public consultation would be available.
The company's financial statements reveal BPC spent a total of $38.9 million in 2011. Detailed 3D seismic testing took up the lion's share at $29.4 million.
Total cash came in at $35.5 million, and it reported total funding raised from IPOs and original shares of $104.3 million.

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