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Bahamas Petroleum signs drill rig contract

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Oilfield Technology,

Bahamas Petroleum Co., has announced that, having postponed its Perseverance #1 drilling operation from 1H20 due to the Covid-19 pandemic, has entered into a definitive contract with Stena Drilling for provision of an offshore drilling rig as soon as 4Q20.

The agreement with Stena Drilling is for the provision of a sixth generation drilling rig, including integrated supply of a managed pressure drilling (MPD) unit. Bahamas Petroleum has said there is now a firm window for commencement of drilling between 15 December 2020 and 1 February 2021, consistent with licence obligations as extended by the Covid-19 force majeure event.

The estimated total cost of Perseverance #1 has been reduced by approximately 15% according to the company, based on the contracted rig rate and rates for other contracted services and equipment, reflecting changes to the global operating environment.

The Perseverance #1 well is targeting recoverable P50 oil resources of 0.77 billion bbl, with an upside of 1.44 billion bbl.

The optimal funding strategy and timing, including the farm-out process, being reassessed accordingly.

Simon Potter, CEO of Bahamas Petroleum, said:

"In March 2020, we were within weeks of commencing the drilling of our Perseverance #1 well when we were compelled to defer our planned drilling programme due to the impacts of the Covid-19 pandemic. Immediately we undertook a range of activities necessary to reschedule activity toward the end of 2020 and into the first quarter of 2021, consistent with our licence obligations (as extended for the declared force majeure event), by which time we expect the worst of the broad suite of impacts of the pandemic to be behind us. To this end we are pleased to announce that we have today entered into a rig contract with Stena Drilling, which provides a firm series of parameters on rig rate, provision of MPD, mobilisation and demobilisation costs, and defines a revised drilling window of 15 December 2020 to 1 February 2021."
This decision - to lock in a rig now, at an already favourable rig rate, rather than try and second guess what markets and availability will look like later in the year - speaks to our intent to ensure Perseverance #1 is drilled at the soonest opportunity, and provides the necessary certainty needed for operational planning. Acting decisively in this way is consistent with our single-minded focus on technical delivery. Importantly, the commercial parameters in the rig contract have allowed us to not only revise down significantly the anticipated well cost, but also clears the way to revisit our funding strategy with adequate time to ensure we have the funds available as and when we need them, on the best possible terms. I look forward to updating shareholders in the coming months as we continue making progress towards recommencing operations."

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