Company Update - Moyes & Co. Technical Audit

Wednesday, December 20, 2017

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Bahamas Petroleum

20 December 2017

Bahamas Petroleum Company plc

("BPC" or the "Company")

Company Update - Moyes & Co. Technical Audit

Bahamas Petroleum Company plc, the oil and gas exploration company with significant prospective resources in licences in The Commonwealth of The Bahamas is pleased to provide the following update.


· External technical audit conducted by Moyes & Co ("Moyes") indicates aggregate mean volumetrics assessed for the key structures in BPC's southern licences is a STOIIP of 8.3 billion barrels, with an upside of up to 28 billion barrels STOIIP. Moyes independently calculated the probability of success ("PoS") factors for each of the major reservoirs assessed, the majority of which were calculated in the 25 - 35% range.

· Applying a recovery factor in the range of 20% - 40% to the Moyes STOIIP volumetrics would result in an unrisked Estimated Ultimate Recoverable ("EUR") in the range of 1.6 billion to 3.3 billion barrels (mean), and up to 11 billion barrels (upside).

· Outputs from the Moyes technical audit reconfirms BPC's belief that the minimum field size for an economic development is less than 0.2 billion barrels.

· Active cost management means Company forecasts existing cash reserves are sufficient to continue normal operations through 2018.

Simon Potter, Chief Executive Officer of Bahamas Petroleum Company, said:

"We are pleased to have received the results of the technical audit from Moyes & Co. The independent audit has validated our previous technical work, confirmed the scale of our own internal resource estimates, and provided new technical insight that further mitigates and reduces technical risk. We believe these positive findings will further assist us as we continue to move forward with our farm-out process over the coming months."

Technical Audit

In August 2017, in the context of BPC's ongoing farm-out process, the Company engaged external technical experts to conduct an independent audit of BPC's own assessment of the total petroleum system and drill prospects within its four southern licences, utilising the full range of the Company's exhaustive database.

This external technical audit was conducted by Moyes & Co ("Moyes"), a leading international petroleum industry consultancy (see The scope of Moyes work was an audit of existing data and BPC's interpretation thereof. The range of data provided to Moyes included the 2D and 3D interpreted seismic data sets and BPC's own evaluation of reservoirs and traps. Moyes then independently reviewed this considerable volume of technical data. Supplementing this work was a review by Moyes of various proprietary studies and published papers.

Moyes had previously prepared a Competent Person's Report ("CPR") utilising the legacy regional 2D and the then available data ahead of BPC's original listing in 2008. A subsequent CPR was prepared by Ryder Scott in 2011 benefitting further from the then newly acquired 2D in 2011 as well as the vast body of data accumulated in the intervening period. This most recent study by Moyes, as noted, accessed the complete seismic data base including the entire interpreted 3D data volume.

The key findings of this technical audit are as follows:

· Moyes work included independently calculating deterministically derived volumetrics for each of the main stacked reservoirs in the C-Fold structure and the entire length of the B-Fold structures. The aggregate mean volumetrics assessed by Moyes for these structures was a STOIIP of 8.3 billion barrels, with an upside of up to 28 billion barrels STOIIP. This corroborates the previous estimates and BPC's own internal estimations.

· In the course of reviewing the Company's data, Moyes identified strong amplitude conformance to structure at multiple levels in both the Fold-B and Fold-C structures, with interval velocity reductions within dip closure strongly suggestive of enhanced fracture porosity, further interpretation could also imply the presence of hydrocarbons in the pore spaces. Enhanced fracture porosity/permeability has always been believed by BPC given the brittle carbonate rock setting in heavily folded structures.

· Geophysical characteristics of this type are a key technical indicator generally used by the oil and gas industry to assess a prospect's exploration potential but are typically more difficult to image in carbonates. The ability of BPC to offer this interpretation to potential farm-out partners represents a further significant reduction in the exploration risk of the project.

· Using this information, Moyes independently calculated the probability of success ("PoS") factors for each of the stacked reservoirs assessed in their technical audit, the majority of which were calculated in the 25% - 35% range, though a few are risked at 12% - 15%. BPC believes that these PoS figures would be considered globally competitive when compared to other similar uncalibrated, frontier basins.

· Moyes has concluded that BPC's seismic horizons, mapping and primary fault interpretations are reasonable and acceptable.

Following on from these findings:

· To generate an unrisked Estimated Ultimate Recoverable ("EUR") volume, a recovery factor needs to be applied to STOIIP estimates. Recovery factors in carbonates vary considerably dependent on a number of factors, primarily diagenesis and fracturing, but are typically within a range from 20% - 50%.

· Employing the enhanced porosity/permeability model of reservoir quality supported by the Moyes audit, BPC considers the recovery factors for fields within its Southern Licences would be at the higher end of the range defined above, more consistent with the Ku Maloob Zoop field offshore Mexico as a global analogue where recovery factor exceeds 35%.

· Applying a recovery factor in the range of 20% - 40% to the STOIIP volumetrics calculated by Moyes would result in an unrisked EUR in the range of 1.6 billion to 3.3 billion barrels (mean), and up to 11 billion barrels (upside). In aggregate, these figures are less than BPC's own internal resource estimates, but are larger than those determined by Ryder Scott in 2011 for the same structures (as per the previously disclosed Ryder Scott CPR which is available via the website; as noted, the Ryder Scott CPR was completed without the benefit of the modern 3D seismic acquired and interpreted by BPC in 2011/2012.

· The probability of success (PoS) defined by Moyes (above) can be applied to unrisked EUR estimates to generate risked EUR figures.

As previously advised, given the current competitive rig market, estimated drilling costs, available up-to-date technical data and other relevant factors to an eventual field development (proximity to existing infrastructure, contractors and service suppliers etc.) BPC believes that the minimum field size for an economic development is less than 200 million barrels (versus the resource estimates measured in billions of barrels, as noted in the Moyes review), and that the project would thus offer robust profitability even in a comparatively lower oil price environment, well below that currently prevailing.

Financial Update

As at 30 November 2017 the Company had $2.6 million in total cash reserves. As a result of the continuation of previously advised cost cutting exercises, including ongoing deferral of 90 per cent of executive remuneration, together with the recent agreement by the other members of the board to match the percentage and terms applied to the executive's remuneration, effective 1 January 2018, the Company presently forecasts that existing cash reserves are sufficient to continue normal operations through 2018. The Company's strategy remains to complete a farm-in with a suitably qualified partner during this time, such farm-in to provide the funding necessary to undertake the drilling of an initial exploration well.


For further information, please contact:

Bahamas Petroleum Company plc

Simon Potter, Chief Executive Officer

Tel: +44 (0) 1624 647 882

Strand Hanson Limited - Nomad

Rory Murphy / James Spinney

Tel: +44 (0) 20 7409 3494

Shore Capital Stockbrokers Limited - Broker

Jerry Keen / Toby Gibbs

Tel: +44 (0) 207 408 4090


Billy Clegg / James Crothers

Tel: +44 (0) 20 3757 4983

Notes to editors:

It is noted that despite the Company's efforts and confidence in its ability to ultimately secure a farm-in or financing, no assurance can be provided that a farm-in or other financing will be concluded, or on what terms, or in what timeframe.

Bahamas Petroleum Company is an oil and gas exploration company with 100% owned offshore licences exclusively focused on The Commonwealth of The Bahamas. The Company has significant prospective resources, which have been de-risked through both extensive 2D and 3D seismic. The Company is intent on delivering safe and environmentally responsible exploration.

Qualified Person's Statement:

In accordance with the AIM Note for Mining and Oil and Gas Companies, Bahamas Petroleum Company discloses that Randolf Hiscock, Bahamas Petroleum Company Technical Lead is the qualified person who has reviewed the technical information contained in this document. He has a Masters in geology and is a member of the AAPG. He has over 35 years' experience in the oil and gas industry. Randolf Hiscock consents to the inclusion of the information in the form and context in which it appears.

This volumetrics in this release were prepared in accordance with the PRMS as issued by the Society of Petroleum Engineers.