Bahamas Petroleum Company Announces Saffron-2 - Rig Mobilization

Source: 5/6/2021, Location: South America

BPC, the Caribbean and Atlantic margin focused oil and gas company, with production, appraisal, development and onshore and offshore exploration assets across the region, is pleased to provide the following update on the upcoming drilling of the Saffron #2 well in Trinidad and Tobago.


- Rig mobilisation to the field will commence on 9th May 2021, targeting commencement of Saffron-2 drilling on or around 23 May 2021

- All equipment (including various re-usable items from Perseverance-1) have been mobilised to Trinidad, along with necessary contractor personnel

- Design of the Saffron-2 well includes a production completion, allowing for immediate oil production and sales on a successful well, with anticipated rates of 200 - 300 bopd, which it is estimated would provide more than US$1.8 million per annum of cashflow to the Company. Based on these pre-drill estimates, Saffron-2 would have a payback of 12-18 months and an ROI of in in excess of 200 per cent.

- Following a successful Saffron-2 well, a further five to nine production wells are currently planned to be drilled in H2 2021 as part of an overall field development of up to 30 wells

- These further five to nine wells are projected to deliver average daily production of up to 1,000 - 1,500 bopd, which it is estimated would provide US$8 million - $12 million of annual cashflows going forward (based on a US$60 / bbl oil price)

Saffron #2 - Operational Readiness

A number of workstreams have already been completed to enable drilling of the Saffron-2 well to progress. This includes:

- Ministry approval to drill

- Completion of a detailed well plan

- Civil works completed to establish the well pad

- Purchase of all long-lead / major equipment items

- Contracts entered into for all required well services and supplies, including with Schlumberger for cementing, wireline logging and drilling mud, with Weatherford for the liner hanger system, and with NOV for the drilling fluid handling system

- Installation of the well conductor

- Detailed HSE planning, including Covid-19 mitigation and response protocols

The Company can confirm that mobilisation of the drilling rig to the field is scheduled to commence on 9 May 2021, with rig-up activities to be completed on or around 17 May 2021. The rig - Well Service Rig #4 - is being supplier by Well Services Petroleum Company Ltd ("WSPC"), one of the oldest and largest onshore drilling companies in Trinidad. The rig was selected and contracted based on the experience of WSPC, and in particular their superior ability to handle drilling fluids. BPC has paid the initial mobilisation fee to WSPC, with no further fees payable until and unless the Saffron-2 well is spud. Spud is expected to occur on or around 23 May 2021, subject to successful completion of the current open offer and placing process, and subject to passage of the various resolutions that have been proposed at the Extraordinary General Meeting to be held on 17 May 2021.

Saffron # 2 - Well Potential

The intention is to place the Saffron-2 appraisal well onto immediate production, with ready proximity to oil sales infrastructure, and expected production is in the range of 200 - 300 bopd. Based on a US$60/bbl oil price, this would generate cashflows to BPC of US$1.8 million - US$2.6 million per annum, with a full well payback of 12-18 months and a ROI of in excess of 200 per cent.

Saffron - Full-field Potential

Contingent on Saffron-2 well success, an initial program of field development has been planned (the "Initial Program") which could see a further five to nine production wells drilled during H2 2021 (subject to permitting, rig availability and capital availability of $7 million to $12 million with the rest anticipated to be available from operational cashflow), with field development drilling continuing thereafter, through 2022 and 2023.

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 cashflows to BPC of US$8 million - US$12 million.

Thereafter, field development drilling would continue through 2022 and 2023. The current estimated overall field development would comprise up to 30 wells in total, with a peak production projection of approximately 4,000 bopd. The current full Saffron field development scenario would generate annual incremental cash flows for the Company in excess of US$25 million.

Eytan Uliel, CEO Designate of BPC, commented:

"I am pleased to advise that rig mobilisation has been confirmed for the drilling of the Saffron-2 well, all major contractors and suppliers are in place, and we are operationally ready such that drilling activity can commence around 23 May 2021."

"A successful Saffron-2 well will be a profitable well in and of itself, but more importantly will further our understanding of the Saffron field and enable us to plan for additional field evaluation and appraisal work, as well as to assess the optimal full-field development plan. In a success case, this well can be quickly brought into production, potentially adding 200-300 bopd of oil sales and $1.8 million or more of annual cashflow. A full-field Saffron development could see peak production of 4,000 bopd and around $25 million of annual cashflow - a material project by any measure, and one we are thus eager to get after."

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