Highlights:

  • Workstreams substantially complete for drilling of the Saffron #2 appraisal well, with mobilisation of various services and equipment scheduled to commence in mid-April 2021, and the well expected to spud on or around 17 May 2021, with a 25-30 day expected drill duration.

  • Saffron #2 includes a production completion, allowing for immediate oil production rates of 200 - 300 bopd.

  • On completion of Saffron #2, a further five to nine production wells (the "Initial Program") are currently planned, to be drilled in H2 2021 as part of an overall field development of up to 30 wells. Assuming success of Saffron #2 and these further wells, the Board is projecting average daily production from the Initial Program of up to 1,000 - 1,500 bopd by the end of 2021, which could provide US$8 - 12 million of annual net incremental cashflows going forward at US$60 / bbl oil price.

  • Baseline Trinidad portfolio production stabilised at 450 - 500 bopd, with an additional 10 workover projects planned for Q2 2021.

BPC is a Caribbean and Atlantic margin focused oil and gas company, with a range of exploration, appraisal, development and production assets and licences, located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay. In Trinidad and Tobago, BPC has five (5) producing fields, two (2) appraisal / development projects and a prospective exploration portfolio in the South West Peninsula. In Suriname, BPC has on onshore appraisal / development project. BPC's exploration licence in each of Uruguay and The Bahamas are highly prospective and offer high-impact value exposure within the overall portfolio value.

BPC provided an update on its activities in Trinidad via a release.

Saffron Appraisal Drilling

According to BPC, the 2021 Trinidad drilling program will commence with the drilling of the Saffron #2 appraisal well, as a follow up to the successful Saffron #1 discovery well completed in March 2020. BPC has a 100% working interest in the Saffron discovery.

A number of workstreams have already been completed to enable this to occur, including a detailed well plan (benefitting significantly from the drilling results and learnings from drilling of Saffron #1), civil works to establish the well pad, purchase of all long-lead / major equipment items and commercial contracts ready to be executed for required well services. The Company has completed a detailed review and bidding process for a rig meeting its required technical specification and expects to shortly conclude a rig contract.

The well conductor is due to be installed during March and mobilisation of rig and associated equipment will commence mid-April 2021. The well is expected to spud on or around 17 May 2021.

As distinct from the Saffron #1 discovery well, the Saffron #2 appraisal well has been designed to include a production completion which will allow the well to produce oil, generate immediate sales revenues and provide for a swift assessment of the extent of full-field commerciality for the Saffron development. The well design for Saffron #2 is for a total depth of approximately 4500 ft and drilling is expected to take up to 25-30 days to complete. The budget for the Saffron #2 appraisal well, inclusive of completion, is approximately US$3 million (inclusive of up to US$0.5 million in contingencies).

On successful completion, the Saffron #2 appraisal well will be placed onto immediate production, with ready proximity to oil sales infrastructure. Expected production is projected in the range of 200 - 300 bopd. Based on a US$60 / bbl oil price, this would generate, from this well alone, incremental cashflows to BPC of US$1.8 - $2.6 million per annum, with a full well payback of 12-18 months and a ROI of in excess of 200%.

Contingent on Saffron #2 well success, an initial program of field development has been planned (the "Initial Program"), which would see a further five to nine production wells drilled during H2 2021 (subject to permitting, rig and capital availability), with field development drilling continuing thereafter, through 2022 and 2023. The current estimated overall field development would comprise up to 30 wells in total, with peak production projection of approximately 4,000 bopd. The Initial Program is projected to achieve an average daily production of 1,000 - 1,500 bopd by the end of 2021 which, based on a US$60/bbl oil price, would generate annual net incremental cashflows to BPC of US$8 - 12 million going forward. For context, the current full Saffron field development scenario would generate annual incremental cash flows for the Company in excess of US$25 million.

 

Production Activities

Production from the Company's active fields in Trinidad and Tobago has, through January and February 2021, regularly achieved rates in the 450 to 500 bopd range. This represents a stabilisation of natural production decline and, during February, resulted in a positive operating cashflows in Trinidad and Tobago.

At a US$60/bbl oil price, 500 bopd of stable production from these fields results in net annual operating cashflows to BPC of approximately US$3 million.

Stabilised production was realised despite activities being adversely impacted by a number of operational factors including (i) only the two Company-owned workover rigs are now active in the field (an extra non-Company owned rig was working in the last quarter of 2020), (ii) planned and unplanned power reliability issues with the grid electricity supply and (iii) operational challenges occasioned by the wet season in Trinidad and Tobago including increased well downtimes by falling debris, unstable well sites for rig loads and road conditions deterioration impacting access.

During the same period, the Company completed a series of incremental workover projects that have added an additional 50 bopd to the baseline production. These projects included both wellbore damage clean outs and addition of new oil zones. Following on from this success, 10 similar projects have been shortlisted and are scheduled for execution during Q2 2021.

Infill Drilling Project 

In recent months, the Company has undertaken a body of work to screen prospective infill drilling opportunities for new production wells in the existing producing fields. In total, over 40 potential locations were evaluated across the assets. As a result of this work the Company has identified up to four high potential drill sites which are considered to have a high chance of producing incremental volumes at a sufficient rate to offer excellent potential payback / IRR metrics.

Two of the potential infill drill-sites are in Eastern fields, and two in Western fields. Target depths range from between 2,500 - 3,500 ft, estimated well costs are in the range of US$1.2 - 1.5 million per well, with estimated productions rates in the range 50 - 100 bopd per well and ultimate recovery of 75,000 bbls per well. Subject to permitting and rig and capital availability, the Company intends to proceed with these infill drilling opportunities during H2 2021.

Automation Project

The Company and Weatherford have agreed to an extended trial of Weatherford's proven well automation systems during Q2 2021 on five wells across the Goudron and Inniss Trinity fields. The trial will automate the pumping units to optimise the production rates, allow real time monitoring and improved data collection for analysis across the entire production system. The trial will last for 60 days and the installation and associated costs will be borne by Weatherford. Following the completion of the trial, BPC has the option to acquire at low cost the installed equipment on any or all of the trial wells.

CO2 Project

The Inniss-Trinity CO2 project with partner, Predator Oil and Gas Holdings plc ("Predator"), continues to progress on plan with the recent re-completion of AT5x back to a well capable of CO2 injection. As per recent announcements by Predator, the continued injection at AT5x is awaiting final approval from the regulator. Shareholders should note that pre-injection desktop forecasts were in the range 243 - 547 bopd from the Herrera #2 sand.

South West Peninsula Exploration

The first phase of the of 3D seismic re-processing trials were completed by three companies in Q1 2021 and a preferred supplier for Phase 2 has been notified. Phase 2 consists of taking the best results from Phase 1, refining the re-process of the trial area, and extending it to the remainder of the seismic area. Phase 2 will commence in April 2021 and is anticipated to complete within 6 months. Results from Phase 2, along with existing data, will support the selection of future exploration drill targets.

Potential Prepay Facility

Given that the Company has existing production and will be undertaking work through the balance of 2021, specifically aimed at adding material levels of immediate incremental production, discussions have commenced with various parties in relation to a potential prepay facility whereby the Company would receive cash up-front to be repaid (along with a finance charge) against income from future production. Given the strength of the Company's projected production growth through the balance of 2021, several parties have indicated interest in providing such a facility, with negotiations and due diligence ongoing.

Business Development Opportunities

The Company's goal is to build profitable production and cashflow through 2021 and beyond, with a stated target of exiting 2021 with Trinidad and Tobago production, when consolidated with projected production from Suriname, in excess of 2,500 bopd.

As described above, the primary strategy to achieve this production goal is through sustaining existing production in Trinidad and Tobago, and then adding production through organic activity on the Company's existing assets - primarily drilling Saffron #2 (and thereafter a potential Saffron field development), and potential infill drilling activities in existing fields.

In addition, BPC continues to review inorganic growth opportunities and has identified certain potentially accretive production acquisitions in Trinidad and Tobago. The Company is presently undertaking technical and commercial due diligence in relation to several targets which will only be pursued if the returns on capital deployed to acquire any incremental production assets compare favourably to the returns of deployment of that capital on existing assets within the Company's portfolio. The Company will advise shareholders of any material developments in due course.

Simon Potter, CEO of BPC said, "Since we acquired our Trinidad and Tobago and Suriname licenses, the team have worked tirelessly to fully understand their significant potential. This has progressed such that we are now looking at multiple value drivers via appraisal, infill and well testing campaigns across our portfolio during 2021.

Our immediate focus turns to the upcoming drilling of the Saffron #2 appraisal well, which we anticipate beginning 17 May 2021. Saffron #2 will further our understanding of the field and, in a success case, can quickly be put into production at extremely low cost, potentially adding 200-300 bopd.

It is our intention that through these actions we can continue to increase production to more than 2,500 bopd across our portfolio which, with a conservative oil price estimate, can generate significant cash flow."