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Bahamas Petroleum and Columbus Energy Resources set to merge

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Oilfield Technology,

The boards of directors of Bahamas Petroleum Co. (BPC) and Columbus Energy Resources have reached agreement on the terms of a recommended all-share merger, which would see BPC acquire Columbus for approximately £25 million.

The two companies' boards believe that a combination of Columbus and BPC will create a Caribbean and Atlantic margin-focused oil and gas 'champion', with assets that range across the full spectrum of oil and gas activities, from exploration, appraisal and development to production.

The combined Group will have access to offshore exploration in The Bahamas with drilling expected to take place within the next nine months, material onshore exploration, appraisal and development projects in Trinidad, a material onshore appraisal and development project in Suriname, and longer-term exploration prospects of scale in Uruguay. All of this will be underpinned by existing production onshore Trinidad, which BPC believes can be materially increased at low cost.

Moreover, the boards believe the combined Group will have the footprint, technical capabilities and scale to further grow and consolidate and deploy its combined expertise in the Caribbean and more broadly in oil and gas projects around the Atlantic margin, and in so doing, attract increased interest from investors/shareholders.

The proposed merger requires the approval of the shareholders of the two companies.

Simon Potter, CEO of BPC, said: "Today's announcement sees the maturing of our company into an Atlantic margin focused, full-cycle exploration and production company with multiple opportunities over the next 12 - 24 months for generating shareholder value across an asset base covering The Bahamas, Trinidad, Suriname and Uruguay.

In one bold step we have given ourselves a production base in Trinidad from which to generate cash, and the opportunity to leverage a range of low-cost developments via workovers, reactivations and new wells targeting shallow reservoirs, along with a range of further options for organic growth and exploration prospects. We also have low-cost appraisal of existing discoveries in the South West Peninsula of Trinidad to look forward to, and further infrastructure-led exploration at Weg Naar Zee in Suriname.

It is important to note that the forward work programme is largely discretionary, and therefore operational sequencing can be varied to optimise the use of available resources.

This enhanced asset base in Trinidad, Suriname and Uruguay is entirely complementary to, and in no way detracts from, our determined focus on our existing exploration base asset in The Bahamas, where we will see the build-up to drilling of the Perseverance #1 well in late 2020 / early 2021 - targeting P50 prospective oil resources of 0.77 billion bbl (with an upside of 1.44 billion bbl). A rig contract has already been signed for the drilling of this well, long-lead and critical path items have already been purchased, and globally renowned service companies are ready to work with us to ensure the safe and responsible completion of the well."

Leo Koot, Executive Chairman of Columbus, said: "Today we start a new and exciting chapter for Columbus Energy Resources plc and its shareholders. Following a period of intense due diligence and negotiation, we are delighted and pleased to have received a firm intention to make an offer from Bahamas Petroleum Company plc (BPC) to merge our two companies. The merger is ideal in terms of asset overlap and will create a combined company that is stronger than the sum of its two parts.

Columbus Shareholders will gain access to the high-impact Perseverance #1 exploration well in The Bahamas, which we expect will be drilled in 4Q20/1Q21. If successful, Perseverance #1 will transform the company as it has a P50 prospective oil resource of 0.77 billion bbl, with an upside of 1.44 billion bbl. It is rare for a relatively small oil & gas company to have access to a prospective resource of this size.

In return, BPC gain access to our existing production base in Trinidad and our strong appraisal / development portfolio (namely in the South West Peninsula in Trinidad and the Weg Naar Zee Block in Suriname). Importantly, BPC brings a strengthened balance sheet to the combined group, and I believe the combined entity will be able to progress faster in unlocking the value of our appraisal and development assets.

The combined group will create a larger, more diversified oil and gas champion for the Caribbean and South America, with assets that range across the full spectrum of oil and gas activities, from exploration through appraisal and development to production.

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