TIDMBPC
RNS Number : 3083Q
Bahamas Petroleum Company PLC
18 October 2019
NEITHER THIS ANNOUNCEMENT NOR ANY PART OF IT CONSTITUTES AN
OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY,
SUBSCRIBE OR ACQUIRE ANY SECURITIES IN ANY JURISDICTION IN WHICH
ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL AND THE
INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, SOUTH AFRICA OR
ANY JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
18 October 2019
Bahamas Petroleum Company plc
("Bahamas Petroleum" or the "Company")
Posting of Open Offer Circular to Shareholders
Bahamas Petroleum Company plc, the oil and gas exploration
company with significant prospective resources in licences in The
Commonwealth of The Bahamas announces that, further to its
announcement of 10 October 2019, a circular (the "Circular") in
relation to the Open Offer to shareholders will today be sent to
all shareholders.
The Open Offer circular is also available to download from the
Company website, www.bpcplc.com.
Pursuant to the Open Offer, all qualifying shareholders are
being offered the ability to subscribe for 1 new share in the
Company for each 5 shares held on the record date (being 16 October
2019), at a price of 2 pence per share. A total of 338,543,819 new
shares in the Company will be offered for subscription under the
Open Offer, and if fully taken up, will raise a total of
approximately GBP6.8 million (approximately $8.5 million) with
proceeds applied toward the cost of drilling an initial exploration
well in The Bahamas in 2020. Shareholders who take up their entire
entitlement will be eligible, via an excess application facility,
to request to subscribe for additional shares in the Open Offer, if
and only to the extent the Open Offer is not already fully
subscribed.
In the event that not all of the shares offered in the Open
Offer are subscribed for by shareholders, the Company's broker,
Shore Capital, will seek to place any unsubscribed shares (at the
same price) (the "Placing"). Shore Capital has agreed that to the
extent any remaining shortfall is not fully placed, Shore Capital
will participate in the Placing to the point that the Open Offer is
fully subscribed or to a maximum of US$1 million. In addition,
Management of the Company (collectively) has indicated an intention
to subscribe GBP250,000 in the Placing.
Simon Potter, Chief Executive Officer of Bahamas Petroleum
Company, said:
"We are delighted to make the open offer to our existing
shareholders and, reflecting the potential interest shown from
institutional investors, will be making any shares not taken up
available in the Placing, as part of a funding package for our
planned drilling activities on our highly prospective licences. A
significant operational phase is now getting underway, where we
will be working towards receipt of a rig from Seadrill in late Q1
2020. This is an exciting time for the Company, and we look forward
to updating shareholders on the results of the open offer process,
as well as other operational updates in due course."
For the information of shareholders, key dates as set out in the
Open Offer circular are as follows:
Record Date for entitlement under the Close of business on
Open Offer 16 October 2019
Announcement of the Open Offer 7.00 a.m. on 18 October
2019
--------------------------
Ex-entitlement date of the Open Offer 8.00 a.m. on 18 October
2019
--------------------------
Publication and Posting of the Circular, 18 October 2019
and in respect of Qualifying non-CREST
Shareholders, the Application Form
--------------------------
Open Offer Entitlements and Excess 8.00 a.m. on 21 October
Open Offer Entitlements credited to 2019
stock accounts in CREST of Qualifying
CREST Shareholders
--------------------------
Latest recommended time and date for 4.30 p.m. on 28 October
requested withdrawal of Open Offer 2019
Entitlements and Excess CREST Open
Offer Entitlements from CREST
--------------------------
Latest time and date for depositing 3.00 p.m. on 29 October
Open Offer Entitlements and Excess 2019
CREST Open Offer Entitlements in CREST
--------------------------
Latest time and date for splitting 3.00 p.m. on 30 October
Application Forms (to satisfy bona 2019
fide market claims)
--------------------------
Latest time and date for receipt of 11.00 a.m. on 1 November
Application Forms and payment in full 2019
under the Open Offer and settlement
of relevant CREST instructions (as
appropriate)
--------------------------
Company will seek to place any Open 4 November 2019
Offer Shares not applied for under
the Open Offer with investors
--------------------------
Announcement of the result of the Open 07:00 on 5 November
Offer and the Placing 2019
--------------------------
Admission and dealings in the New Ordinary 8.00 a.m. on 6 November
Shares (including the Open Offer Shares) 2019
expected to commence on AIM
--------------------------
Where applicable, expected date for As soon as practicable
CREST accounts to be credited in respect after 8.00 a.m. on 6
of Open Offer Shares in uncertificated November 2019
form
--------------------------
Where applicable, expected date for No later than 13 November
dispatch of definitive share certificates 2019
for Open Offer Shares in certificated
form
--------------------------
Key extracts from the Circular are set out as follows below and
definitions used therewith have the meanings ascribed to them in
the Circular.
For further information, please contact:
Bahamas Petroleum Company plc Tel: +44 (0) 1624
Simon Potter, Chief Executive Officer 647 882
Strand Hanson Limited - Nomad Tel: +44 (0) 20
Rory Murphy / James Spinney 7409 3494
Shore Capital Stockbrokers Limited Tel: +44 (0) 207
Jerry Keen / Toby Gibbs 408 4090
CAMARCO Tel: +44 (0) 20
Billy Clegg / James Crothers 3757 4983
www.bpcplc.com
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Introduction and Background to and Reasons for the Open
Offer
The Company is pleased to present the Open Offer to
shareholders, providing all shareholders with an opportunity to
participate in the Company's next fundraising.
The Company has a clear and unambiguous obligation under its
licences to drill an initial exploration well in The Bahamas during
2020. Discharge of this obligation will then allow the Company to
enter the next exploration period, running for a further three
years, and, in the event of commerciality, seek a 30-year
production lease that would allow for commercial development of any
discovered reserves.
Over the last six months the Company has revised its drilling
costs estimates to incorporate contracted pricing from service and
equipment providers, and also to reflect a well design and drilling
philosophy that will comply with the requirements of the Company's
licences whilst at the same time enable a full evaluation of the
target structures. The Company currently estimates a cost to meet
its drilling objectives in the range of US$20 million - US$25
million (the ultimate amount of expenditure being dependent to a
large extent on the pace of drilling - the rate of penetration or
"ROP" - and the final drilled depth to which the Company's well
reaches).
The Company maintains a lean and efficient overhead burn rate,
and currently has sufficient cash available to meet general working
capital needs through to H2 2020. Over and above these general
working capital needs, it is necessary for the Company to form a
degree of certainty as to the availability and timing of funding
for drilling costs, primarily in order to enable the Company to
nominate, confirm and proceed to a definitive contract for the rig,
and to ensure other aspects required to commence drilling, such as
procurement of long-lead items, provisioning and ancillary
equipment. However, the bulk of the Company's expected cash
outflows, and thus the Company's actual need for funding
availability (outside of working capital), will generally only
arise shortly before and during the course of actual drilling (thus
well into Q1 2020).
Accordingly, the Company is seeking to approach its funding
needs in a measured fashion, with a view to ensuring the funding
needed by the Company for the initial exploration well is available
as and when it is needed, on the best possible terms, and in a way
that strikes an appropriate balance of several competing factors,
including:
ensuring the Company has a high degree of visibility in relation
to potential funding, so as to lock-in access to a rig to enable
drilling activities to proceed even if a farm-out is not
secured;
matching the inflow of funding (and costs associated with that
funding) to the timing of when that funding is actually needed,
especially given that, whilst a degree of funding certainty is
required at the present time, the majority of cash outflow will
only occur when activities associated with drilling commence in
late Q1 2020;
minimising the overall cost to the Company of its funding, and
the potential dilutive impact of the overall funding package to
existing Shareholders;
preserving the Company's ability to continue to pursue a
farm-out, if the terms offered by a potential farm-out partner are
attractive; and
providing a mechanism whereby all existing Shareholders of the
Company can participate in the next phase of the Company's
progress, on terms equal to any participating institutional
investors.
It is in this context that the Board has determined to proceed,
in first instance, with a GBP6,770,876 (approximately US$8.5
million) open offer (the "Open Offer") to existing Shareholders at
a price of 2 pence per share, such that all Qualifying Shareholders
will be able to participate in the next stage of the Company's
progress, with any entitlements not taken up by qualifying
shareholders sought to be placed with institutional investors.
Qualifying Shareholders may subscribe for Open Offer Shares on
the basis of 1 Open Offer Share for every 5 Existing Ordinary
Shares held on the Record Date. Shareholders subscribing for their
full entitlement under the Open Offer may also request additional
Open Offer Shares through the Excess Application Facility.
Under the Prospectus Rules, the maximum allowable amount that
may be raised without the requirement for a prospectus is EUR8
million, which at current exchange rates equates to approximately
GBP7 million. In order to accommodate an open offer of this amount,
and based on the current number of shares in issue (being
1,692,719,096 Ordinary Shares) the lowest applicable ratio
involving whole numbers is 1 new Ordinary Share for every 5
Ordinary Shares held.
Assuming full take-up under the Open Offer, the issue of the
Open Offer Shares will raise gross proceeds of up to GBP6,770,876
for the Company. The New Ordinary Shares to be issued pursuant to
the Open Offer are to be admitted to trading on AIM at the time of
Admission, which is expected to take place on 6 November 2019.
The Company has appointed its broker, Shore Capital, to use
reasonable endeavours to place any Ordinary Shares not taken up
under the Open Offer with institutional investors at the same price
as the Open Offer. Shore Capital has agreed that to the extent any
remaining shortfall is not fully placed, Shore Capital will
participate in the Placing to the point that the Open Offer is
fully subscribed or to a maximum of US$1 million.
In addition to the Open Offer, the Company is at the same time
progressing a broader funding strategy with a view to securing the
funding required for the initial exploration well. To this end, the
Company has also recently entered into the Convertible Notes
Subscription Agreement for the previously announced and approved
GBP10.25 million (approximately US$13.0 million) conditional
convertible notes which, subject to all conditions precedent in the
Convertible Notes Subscription Agreement being met or waived and
the Convertible Notes being fully subscribed, would provide the
Company with access to over half the estimated costs associated
with drilling one well under the Drilling Plan.
In aggregate, therefore, the Open Offer (if fully subscribed or
taken up under the Excess Application Facility or if the
entitlements not taken up are placed with institutional investors)
and the proceeds of the Conditional Convertible Notes (if all
conditions of the Convertible Note Subscription Agreement are
satisfied or waived and the Convertible Notes are fully subscribed
), would raise an aggregate amount of approximately US$21.5
million, which exceeds the lower-end estimates for the total well
cost.
The Company also continues in its endeavours to secure a
farm-out partner as a core part of its overall funding strategy. As
previously announced, the Company's farm-out process is ongoing,
with a number of parties engaged in ongoing discussions, due
diligence and/or commercial interaction. It remains the Company's
preference to secure funding through this structure, albeit the
Company's attitude to potential farm-in terms in ongoing
negotiations will necessarily reflect the funding status of the
initial well at the time a farm-out is successfully concluded (if
at all).
The Company notes that even if the full GBP6.77 million is
raised via the Open Offer (and all conditions of the Convertible
Note Subscription Agreement are satisfied or waived and the
Convertible Notes are fully subscribed) the Company's farm-out
process would nonetheless continue, albeit in that context
concluding a farm-out would likely provide funds in excess of what
would be required to complete the initial well, thereby potentially
facilitating further exploration activity on the licences including
that of an additional well.
In the event that the full GBP6.77 million is not raised via the
Open Offer and subsequent Placing and/or the Conditional
Convertible Note was not able to be drawn down in full then the
funds raised via the Open Offer will be used to fund general
working capital.
Business Background
The Company's business is focused and single purpose: we have
five licences for hydrocarbon exploration covering approximately
16,000 km2 (4 million acres) in the territorial waters of The
Bahamas. The Company has four exploration licences in the southern
territorial waters of The Bahamas, referred to as Bain, Cooper,
Donaldson, Eneas (these four licences together referred to as the
"Southern Licences") and a fifth, the Miami licence, in the
northern territorial waters of The Bahamas. The main licences of
interest and focus are the Southern Licences.
All licences are held through wholly owned subsidiaries of the
Company, and were awarded on 26 April 2007 for an initial
exploration period of three years, with up to three further
exploration periods possible, subject to renewal elections,
nominally every three years. Subsequently, the Company received a
number of extensions of the initial three-year exploration term of
each of the Southern Licences, such that the second exploration
term for the Southern Licences commenced on the 8 June 2015.
On entering this second term for the Southern Licences, the
Company was obliged to commence activity by April 2018 on an
initial exploration well, with equipment capable of drilling to a
depth of at least 18,000 feet (the "Drilling Plan"). This date was
extended by agreement with the Government on various occasions,
most recently in February of 2019, where the second term licence
period was extended such that currently the Company's work
obligation is clear and unambiguous: to commence an initial
exploration well on the Southern Licences by the end of 2020. The
Company is currently in discussions with the Government regarding
licence fee obligations payable for the period ended 31 December
2020.
The Southern Licences are commercially co-joined, meaning that
the drilling of an initial exploration well on one of the Southern
Licences will satisfy the work obligation in respect of all of the
Southern Licences. Everything we are doing as a Company, is in the
single-minded pursuit of drilling an initial exploration well in
the Southern Licences, in a safe and responsible manner, within the
timeframe that is consistent with our obligations under the
licences.
At the conclusion of the second term for the Southern Licences,
the licences may be extended for two further exploration periods of
up to three years each on approval of the Government (which, if BPC
has met its licence obligations, may not be unreasonably withheld).
At the time of extension, BPC will be required to relinquish 50% of
the Southern Licence area, which obligation BPC considers may be
satisfied almost entirely by relinquishment of areas in shallower
waters over the Grand Bahamas Bank, which are of lesser technical
interest to BPC at this time.
On entry into a third exploration period, the minimum work
obligation will be to commence the drilling of a new exploration
well, essentially every two years, following the completion of the
initial exploration well. At any time during this period the
Company may apply for a production lease in respect of all or part
of the area covered by the Southern Licences subject to submission
and agreement of a development plan. As with the exploration period
extensions, if BPC has met its licence obligations the grant of a
production lease cannot be unreasonably withheld. Any such
production lease would give the Company the right to produce
petroleum from that production area for a term of 30 years (and
with a renewal right on application thereafter).
In addition to the Southern Licences, in 2012 the Company made
applications to the Government for a further five licences in the
Cay Sal region of The Bahamas, on-trend from the existing Southern
Licences, but in 2015 consolidated these applications from five to
three. For these three revised applications, approval remains
pending.
In respect of the Miami licence the Company remains in
discussions with the Government concerning the nature and extent of
any future obligations associated with entering into a second
exploration term, should the Company so wish.
Technical Work To Date
The Company was awarded its licences in 2007. Once awarded, the
Company sought to collect all available historical, geological and
geophysical data from oil exploration projects in The Bahamas. This
led to a three-year international search and purchase of historical
materials from various oil companies, universities and research
institutions. As a result, the Company developed an extensive
database including well cores, logs, rock samples and thin sections
(from three of the five deep oil exploration wells previously
drilled in The Bahamas), approximately 8,000 line kilometres of
regional 2D seismic data (of varying quality), and magnetic and
gravity data. This data was evaluated using a combination of modern
technologies and interpretative techniques, providing encouragement
to invest in the acquisition of new data (seismic and further
studies), so as to better define the petroleum system elements and
the resource potential within the Company's licences.
In 2010, the Company recorded the first modern offshore seismic
survey in the southern Bahamas since the 1980s. Interpretation of
this 2D seismic acquisition programme confirmed the presence of
several large structures, providing the basis for an independent
Competent Person's Report ("CPR") completed by Ryder Scott in July
2011. The CPR included the Bain, Cooper and Donaldson licensed
areas, highlighting the existence of multiple fold and fault
structures and an estimated mean 2 - 3 billion barrels unrisked
recoverable oil resources from several different stacked reservoir
intervals (with a high case of 7 billion barrels unrisked
recoverable oil resources).
Subsequently, in 2011, the Company completed a 3D seismic survey
of 3,076 km(2) within the Southern Licence area using the latest
CGG BroadSeis acquisition technology. This 3D seismic survey firmed
up the previously identified structures mapped from the 2D seismic
survey, confirming the petroleum resource potential in The Bahamas
within multiple, large-scale structural prospects. The high quality
of the 3D seismic and extensive other data allowed for several
integrated studies by various consulting companies and university
departments, so as to continue to reduce the prospect uncertainty.
This work included seismic stratigraphy to determine facies
classification and distribution, seismic attribute analysis, basin
modelling and regional structural reconstruction to determine the
timing of crucial petroleum system events such as trap formation
and hydrocarbon generation and migration.
An optimal well location was chosen on the crest of the most
prospective structure. In 2012 the Company completed a Front-End
Engineering Design ("FEED") study for the well design, being
consistent with discharging the licence obligation to drill an
exploratory well targeting the shallowest prospective horizons and
with drilling equipment capable of reaching depths of at least
18,000 feet. To all intents and purposes this meant that, having
completed a significant amount of preparatory work, the Company
regarded the prospect as 'drill-ready'. However various 'above
ground' issues (as detailed further in Section 4 Regulatory
Backdrop, below) resulted in a delay to the implementation of these
plans.
During the period of this delay, the Company invested
considerable additional efforts into a range of technical work
focused on the Southern Licences. This work further established the
presence and robustness of the petroleum systems, and assessed and
sought to mitigate individually source rock interval and maturity,
trap formation, oil migration, reservoir and seal risks. This work
included analysis of fluid inclusion and oils collected from the
region, determining multiple pulses of oil migration from differing
source rock intervals, all determined to be in the oil window; an
analysis of seal facies and distribution linked to vertical seismic
anomalies to determine trap / seal integrity across the prospective
structures; seismic inversion to aid determination of
reservoir-seal pairs; and, a detailed seismic interpretation to
test fault independent closure thus mitigating trap risk. Much of
this work has been tested and validated through the farm-in process
with a wide range of industry majors and large independents.
As a result of this and earlier work BPC determined that the
Southern Licences contained considerable oil potential, and in 2017
the Company engaged Moyes & Co, an international petroleum
industry consultancy, as external technical experts to conduct an
independent audit of BPC's own assessment of the total petroleum
system and prospect portfolio utilising the full range of the
Company's exhaustive database. The key findings were as
follows:
-- Stock Tank Oil Initially In Place ("STOIIP") assessed for the
prospect structures as 8.4 billion barrels, with an upside of up to
28 billion barrels;
-- 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);
and,
-- Moyes & Co. independently calculated the probability of
success ("PoS") factors for each of the stacked reservoirs
assessed, the majority of which were calculated in the 25 - 35%
range.
Based on several field developmental studies BPC believes that
the minimum field size for an economic development of this nature
is less than 200 million barrels (versus the resource estimates
measured in billions of barrels, as noted in the independent Moyes
& Co review), and that the project therefore offers robust
commerciality even in a series of credible downside scenarios.
Combining all of the technical work and interpretation, the
Company was able to build on earlier well design efforts to develop
a range of potential well locations and well plan options, based
upon in-depth reviews of wells previously drilled in The Bahamas. A
particular issue affecting historical exploration well drilling
performance was the slow rate of penetration ("ROP") of the drill
bit. Studies were initiated taking account of recent technology and
drilling philosophy developments, whilst also adopting and
implementing global standards and best practices. The results of
these studies suggested that significant improvements could be made
to ROP, thus substantially reducing the predicted time it would
take to drill any chosen well. Based on these studies, BPC
estimated that an exploration well to a depth of up to 6,500 meters
(21,500 feet) would take between 40 and 60 days to drill and
assess. Further, well cost updates have incorporated the
substantial reduction in global rig rates and availability, to
arrive at the current well cost estimates (refer to Section 5, Well
Location, Historical Cost Estimates and Funding Strategy,
below).
The Company has, to date, expended in excess of US$100 million,
much of it in relation to the above summarised technical work
(including data acquisition, interpretation and studies). In
aggregate, the Company believes this technical work has established
a project with:
-- stacked play systems from Late Jurassic syn-rift clastics, to
Cretaceous shallow water carbonates with reefal geometries and
shallower slope talus debris fields, in structures and
stratigraphies mapped from 3D - totaling over 20,000 feet of
stratigraphic column;
-- three and four-way dip closed structures mapped at over 70
kilometres along strike length, with gross column heights up to
1,000m and areal extent 400km(2) ;
-- the prospect of a world-scale, multi-billion barrel petroleum
resource, similar in scale and size to resources encountered in
more well-known petroleum producing regions, and highly analogous
to the Iranian Zagros mountains and the Mexican Salinas basins both
producing from fold and thrust exploration plays, with the likely
source rock charging the Company structures being the same age and
type as the Bossier-Smackover petroleum system that charges the
deep-water fields in the Eastern US Gulf of Mexico and nearby Cuba;
and
-- a significant reduction in estimated well cost when compared
to prior estimates, attributable to current rig rates, an
anticipated improvement in ROP (principally associated with
technical advances in drill bit technology) and lower estimated
logistical and support costs.
Regulatory Backdrop
In 2012, the Government initiated a process to replace The
Bahamas' existing laws and regulation for the petroleum industry
(which then dated to the 1970s) with a new set of laws and
regulations, in particular to include modern safety and
environmental regulations consistent with global standards and best
practices around the world. Such modernised regulations were,
following a three-and-a-half-year process, finally promulgated in
July 2016, following enactment of the updated Petroleum Act in
March of the same year. These regulations for the first time
include the concept of Environmental Authorisation ("EA") as a part
of the commencement of well activities, which require the
submission of both an Environmental Impact Assessment ("EIA") and
an Environmental Management Plan ("EMP") together.
In 2012 the Company had already submitted an EIA to the
Government via the Bahamas Environment, Science and Technology
Commission (the "BEST Commission"). That EIA determined the most
likely impacts any exploration activities may have on the
environment within the country and sought to illustrate mitigating
actions the Company could take to address any potential
environmental risks. The EIA was reviewed and accepted by the
Government at that time.
In April 2018, in accordance with these new regulatory
requirements, the Company also submitted to the Government its EMP,
which includes amongst other things an H(2) S plan, an Oil Spill
Contingency Plan and an Emergency Response Plan, incorporating
desktop simulations of a worst-case discharge scenario, which has
become mandatory in other jurisdictions in the region, to underpin
effective response plans.
BPC's EA, including its EMP, was reviewed by energy consultants
Black & Veatch ("B&V") as external consultant advisers to
BEST, who have submitted an initial report on their assessment to
the Government. B&V's methodology and mode of analysis
consisted primarily of a "gap analysis", in which B&V sought to
identify any gaps in the EA / EMP documentation provided by BPC
against any applicable laws, regulations and applied international
standards.
Encouragingly, in the context of the volume of materials
submitted by BPC, B&V identified only a relatively small number
of gaps, with the majority of the gaps identified relating to rig
specific information or site specific information which was either
unavailable or insufficiently detailed at the time of the initial
submission of BPC's EIA, EMP and thus overall EA.
The Company's signing of a Framework Agreement for the provision
of a sixth generation drilling rig (and subsequent "Go-Firm"
election), along with the issue of Notices of Award for provision
of key well services and equipment to Halliburton and BakerHughes
GE means that, with the cooperation of these service and equipment
providers, BPC is now in a position to provide all additional
outstanding documentation and data, and BPC considers that gaps
identified by B&V can be readily closed in the coming
months.
The final substantive piece of data remaining to be collected as
part of the EA process is an Environmental Baseline Survey ("EBS").
This survey seeks to determine the environmental baseline
conditions (biological, chemical, physical) at the proposed
drilling location by providing measures of the environment against
which any effects from future operations may be compared. This
includes collection of samples (at a range of water depths and
distances from the proposed drill site) to characterise
macroinfauna, document physicochemical conditions and characterise
the water column. A photographic survey would be used to
characterise the seafloor substrates and associated biological
communities. By its very nature EBS data is typically collected
closer to the time of field activities commencing so as to provide
a relevant data point for later comparison. Terms of reference
defining the scope of the EBS have been prepared and submitted to
BEST for their review, prior to this work commencing.
As noted, the Government agency tasked with working with BPC on
the EA process is the BEST Commission. BEST has appointed B&V
as expert consultant to BEST / Government for this purpose.
Likewise, BPC has made, and will continue to make, a number of
important appointments of international environmental consultants,
to ensure that the environmental planning and associated permitting
process is conducted in accordance with global best practice.
To-date, these include:
-- the appointment of Acorn International ("Acorn"), a leading
international environmental advisor, to work with the Company and
liaise with B&V / BEST in finalising the relevant EMP
documentation,
-- the appointment of marine environmental consulting firm, CSA
Ocean Sciences to establish the terms of reference for and
thereafter (once agreed) undertake the EBS, which as noted is a
required component of the EMP documentation, and
-- in anticipation of future operations, BPC has applied for and
been accepted for membership of Oil Spill Response Limited, the
largest international industry-funded cooperative which exists to
respond to oil spills wherever in the world they may occur, by
providing preparedness, response and intervention services and
equipment.
BPC is also in the process of engaging a number of other
third-party consultants to conduct both field-based environmental
work necessary for completion of the EMP, and desktop studies to
identify and provide the necessary data to cover additional
potential well locations, which would provide the Company with a
degree of optionality should ongoing technical work identify more
optimal well locations or the availability of funding permit a
multi-well drilling strategy (and consistent with the capacity
under the rig framework agreement to consider a two well
exploration campaign).
A timeline has been developed jointly by BPC, BEST and
Government representatives that would see work necessary for the
EMP process completed by end 2019 / early 2020, so as to enable
initial drilling activities to commence as planned in late Q1
2020.
Well Location, Historical Cost Estimates and Funding
Strategy
The current proposed location of the first exploration well on
the Southern Licences is in the Cooper - Donaldson licence area,
within the 3D seismic acquisition area and approximately 100 miles
from Andros Island and 15 miles from the Cuban border.
The ultimate well cost will be related to the amount of time
drilling actually takes and a function of the spread rate, which
includes both a rig rate (a day-rate for the use of a rig) and all
associated support costs plus consumables. In 2012, at the peak of
the rig market, and based on then-prevailing conditions in the
global oil market, the Company had originally estimated an
exploratory well cost of the type required to discharge the licence
obligation to be approximately US$120 million. More recently (in
2016) the cost was re-estimated by the Company to be in the range
of US$60 million to US$80 million, such reduction being largely as
a result of reduced rig rates.
BPC now estimates the total cost of an initial exploration well
(including mobilisation and demobilisation) to be in the range of
US$20 million to US$25 million, and up to approximately US$40
million to US$45 million in aggregate (depending on depth drilled)
should the Company elect to pursue a concurrent two well
exploration campaign. This is a significant reduction from prior
estimates, principally attributable to the rate at which the rig
will be provided (as per the Framework Agreement between BPC and
Seadrill), as well as the expected improvement in ROP based upon
the technical advances in drill bit technology, and the ability to
source a rig out of the Gulf of Mexico resulting in lower estimated
logistical and support costs.
For several years, the Company has been engaged in a process to
secure the financing required to undertake this drilling. It has
been, and remains, the Company's primary strategy to secure such
financing via a "farm-in", whereby another entity (ideally, but not
necessarily, a major or large independent international oil and gas
company) will acquire an interest in the Southern Licences, and in
exchange will pay for all or a substantial part of the cost of
drilling, and also potentially reimburse the Company a proportion
of the past costs incurred by the Company on those Southern
Licences. This is a fairly typical structure for financing in the
oil and gas industry, and would directly dilute the Company's
interest in the asset (i.e.: the percentage of the Southern
Licences owned by the Company) and thus effectively dilute the
shareholders interest by the equivalent amount. A common feature of
a farm-in transaction is that operatorship of the drilling
programme and the asset (and hence control) is passed to the
incoming partner, depending on the operating capabilities of the
incoming farminee.
A considerable number of suitable partners have engaged with the
Company on the farm-in process, including undertaking technical and
commercial due diligence and entering into negotiations, and some
of these discussions remain ongoing. On this basis, the Company had
hoped to have secured a farm-in on acceptable terms with a suitable
partner by this stage. However, the process of securing a farm-in
partner has taken much longer than anticipated, and has not as yet
produced a successful outcome.
The Company is now embarking on a course to undertake drilling
of the initial exploration well during the first half of 2020, with
or without a farm-in. Whilst there has been no success to date in
securing a farm-in partner, BPC's licence obligation to drill a
well in 2020 is immutable. Moreover, the Board's view is that
drilling as soon as practicable remains the most efficient route to
generating shareholder value, and the current state of the global
rig market and the resulting substantially reduced well cost
estimate (both highlighted above) means it is now more feasible for
the Company to consider undertaking the well on its own. The
package of critical supply and service contracts (as described in
Section 6 below) and the finance arrangements being put in place
comprise a coordinated approach to how we propose to do this.
Our objective is simple: to drill an initial exploration well
during 2020 consistent with our existing licence obligations, and
to retain the greatest possible interest in the Southern Licences
(whether at the asset or the equity level). To do this we are
seeking to put in place the full range of technical delivery
services and equipment required, and to enhance our financial
capacity such that we can proceed to drilling.
Critical Supply and Service Contracts
To enable the Company to commence drilling activity in a timely
manner during 2020, as required by the licence obligations on the
Southern Licences, a number of critical tasks must be addressed in
advance. These include completion of detailed well planning and
design work, securing access to a rig and provision of required
integrated well services, procurement of long-lead time items,
finalising the logistical plan along with associated supply base
location and set-up, finalising pricing for other critical
equipment and services, and completion of all necessary permitting
processes. Many of these tasks cannot be adequately completed
without first knowing the specifications of the specific rig and
equipment that will be used to undertake the work, and having full
access to rig specific and site-specific information.
To this end, the Company has reached agreement (subject to
contract) with a number of leading global equipment and service
providers, fundamental to the delivery of a successful exploration
well on time and within a prescribed budget. Central to that
delivery is access to a suitable rig within the necessary
timeframe, along with associated drilling equipment and supplies
(including, for example, a bottom-hole assembly and drilling and
logging services). In summary, these agreements are:
-- Rig Provider: In August 2019 the Company entered into a
Framework Agreement with Seadrill, one of the world's largest
offshore drill rig companies, for the provision of a
sixth-generation drilling rig during the first half of 2020, with
delivery from the rig's current working location in the nearby Gulf
of Mexico. The Framework Agreement provides clarity and certainty
around potential access to a suitable rig, in the timeframe
required, and fixes the price for the rig (in accordance with
industry practice, quoted as a day-rate in US dollars per day).
Critically, with the benefit of the Framework Agreement in place,
BPC (along with Seadrill's input and support) has been able to move
towards finalising detailed logistical and design work, ensure
compatible equipment and supplies are available and scheduled, and
to complete the associated permitting processes in good time for an
orderly commencement of drilling.
Further, the Framework Agreement required BPC, on or before 11
October 2019 (or such later date as the parties may mutually agree)
to notify Seadrill that it wishes to "Go-Firm". Given the Board's
assessment of the greater certainty and progress made in relation
to funding, the Company on 10 October 2019 advised Seadrill that it
wishes to go-firm on the drilling rig. Accordingly, the Company
notified Seadrill of its desire to secure a rig for delivery by
late Q1 2020. The Company and Seadrill are presently working to
finalise the long-form Rig Contract, confirm the rig selection, and
agree the critical drilling plan dates. It should be noted that the
governing document in relation to provision of the drill rig will
be the Rig Contract, which remains to be entered into and is
subject to Seadrill's Board approval process for contract
commitment. For the avoidance of doubt, the election for the
drilling rig and the "Go-Firm" notice does not obligate BPC to
incur any costs - in general terms, drilling costs will be incurred
pursuant to the Rig Contract, and the vast majority of those costs
will not start to be incurred until such time as the mobilisation
of the drilling rig (that is, until Q1 2020).
-- Integrated Well Service Provider: At the same time, and
following a process of extensive discussion and mutual due
diligence, the Company has been able to secure the services (and
agree prices for those services) of an integrated well services
provider, Halliburton, a leading provider of integrated well
services to the global oil and gas industry. Under this
appointment, Halliburton will provide a range of essential well
equipment, tools and services for the Drilling Plan. The Company
has also appointed BakerHughes GE, another leading international
service provider to the oil industry, as provider for wellheads and
tubulars. The involvement of Halliburton and BakerHughes GE at a
sufficiently early stage also allows for their participation in
final well design, so as to further assure successful achievement
of the objectives for the drilling of the well. The Company issued
a Notice of Award to each of Halliburton and BakerHughes GE as part
of this process, which notices were accepted, as a precursor to the
parties concluding the necessary long-form documentation. Given the
Board's assessment of the greater certainty and progress made in
relation to funding, the Company has commenced the process of
finalisation and entry into such long form documentation ("Call Off
Contracts"), containing terms and conditions customary in the
industry, whilst including the technical specifications and pricing
already established in the Notices of Award.
Conditional Convertible Notes
On 21 August 2019 the Company announced that it had entered into
a conditional agreement for GBP10.25 million (approximately US$13.0
million) convertible loan notes. Subsequently, the entry into this
conditional agreement was approved by shareholders of the Company
at the General Meeting held on 17 September 2019.
Further to that approval, the Company has now entered into a
subscription agreement (the "Convertible Note Subscription
Agreement") in relation to this convertible loan note investment,
with the key terms and conditions of this Convertible Note
Subscription Agreement summarised below.
Counterparty
The Convertible Note Subscription Agreement is entered into with
the Subscribers, being Australian-domiciled investment firms acting
on behalf of interests associated with Mr. Stephen Bizzell and Mr.
Mark Carnegie.
Mr. Bizzell and Mr. Carnegie each have a track record of
successful investment in a number of early-stage oil and gas
exploration businesses around the world. Investment funds
associated with Mr. Carnegie and Mr. Bizzell were also variously
early-stage investors in Arrow Energy Limited and Dart Energy
Limited, Australian-listed companies at which both the Company's
Chief Executive Mr. Simon Potter and the Company's Commercial
Director previously worked. Arrow Energy Limited was successfully
acquired by a consortium of Shell and PetroChina in 2011, and Dart
Energy Limited was acquired by AIM-listed iGas Energy Plc in
2014.
Convertible Note Subscription Agreement Key terms
Key terms of the Convertible Note Subscription Agreement are as
follows:
-- Amount: GBP10.25 million (approximately US$13.0 million,
being approximately half the upper end of the estimated range for
the cost of the initial exploration well)
-- Use of funds: Well finance and general strategic purposes
-- Form of investment: Convertible loan notes ("Conditional Convertible Notes")
-- Note Subscribers: Initially Bizzell Capital Partners Pty Ltd
(as to 50% of the Conditional Convertible Notes) and MH Carnegie
& Co Pty Ltd (as to 50% of the Conditional Convertible Notes)
(the "Subscribers"). However, The Convertible Note Subscription
Agreement contemplates that the Subscribers may assign their
Conditional Convertible Notes such that there may ultimately be
multiple note holders, who will be represented by a noteholder
trustee under the terms of a noteholder trust deed yet to be
entered into between the Company and the noteholder trustee
-- Term: 3 years
-- Coupon: 12% per annum, payable annually in arrears; the
Company can elect to capitalise interest accrued on the Conditional
Convertible Notes
-- Priority: On a return of capital (by way of liquidation or
otherwise) the Conditional Convertible Notes will rank senior to
all ordinary shares on issue to the extent of the principal plus
unpaid interest
-- Security: the Conditional Convertible Notes will be secured
by an appropriate first ranking security to be granted over all the
assets and undertakings of BPC, and will rank senior to all other
debt of BPC, and which security will be cross-guaranteed on a
secured basis by all members of the Company's group
-- Conversion: A holder of Conditional Convertible Notes may at
any time prior to maturity elect to convert the Conditional
Convertible Notes (principal plus any accrued interest) into fully
paid ordinary shares in BPC
-- Conversion Price: Given the pricing established for the Open
Offer, the conversion price of the Conditional Convertible Notes is
now set at 2.5 pence per share
-- Early Redemption: A holder of Conditional Convertible Notes
will be entitled to redeem the Conditional Convertible Notes at a
110% premium to face value if, as at 31 December 2020, employment
and executive retention arrangements between nominated key
executives and the Company are on terms that are not satisfactory
to the Subscribers. The Company may not redeem the Convertible
Notes early, unless agreed with the Subscribers
-- Dividends: No dividends may be declared or paid whilst the
Conditional Convertible Notes are on issue
-- Subscription Deadline: Subject to satisfaction of all
conditions precedent as described below, the Subscribers must
subscribe for the Conditional Convertible Notes by no later than 15
February 2020; a Subscriber may also elect to subscribe for the
Conditional Convertible Notes all or in part earlier than this date
but no sooner than 30 November 2019
-- Conditions to Completion: Completion of the subscription for
the Conditional Convertible Notes by the Subscribers will be
subject to a number of conditions first being met or satisfied or
otherwise waived. These conditions are:
o Any approvals, consents, waivers, exemptions or declarations
that are required by law, or by any Government Agency, to implement
the transactions contemplated by the Convertible Note Subscription
Agreement are granted, given, made or obtained on an unconditional
basis
o The Company entering into binding contracts with reputable
international companies so as to enable the Company (to the
satisfaction of each Subscriber, acting reasonably) to conduct the
intended drilling of the initial exploration well at the estimated
cost of that drilling, being:
-- A contract for provision of a drilling rig with a reputable
international rig company, on terms satisfactory to each
Subscriber, providing access to the appropriate drilling rig at an
acceptable cost, as needed for the task of conducting the drilling;
and
-- A contract for integrated well services for the drilling with
a reputable international service company, on terms satisfactory to
each Subscriber, providing access to the appropriate services
needed for the task of conducting the drilling
o The Subscribers being satisfied that the Company has
sufficient funds in cash (but not including committed cash or cash
subject to refund obligations) which, when aggregated with the
subscription amount of the Conditional Convertible Notes, would be
sufficient to fund the cost of the intended drilling operation in
full and the operating costs of the Company until the end of June
2021
o A convertible note trust deed being entered into between the
Company and the convertible note trustee, on terms acceptable to
the Subscribers
o Appropriate security documents being entered into between the
Company and the Subscribers and any other relevant parties, on
terms acceptable to the Subscribers;
o The Company securing all necessary permits and approvals for
the intended drilling operations from the Government of The
Bahamas, including all necessary environmental permits, and the
Company reaching agreement with the Government of The Bahamas and
making payment in relation to licence fees payable for the
remaining licence period to 31 December 2020, on terms satisfactory
to the Subscribers
o Each Subscriber obtaining all approvals (including of its
investment committee) and satisfying all procedures it considers
necessary in relation to the transactions contemplated by this
agreement
o Employment and executive retention arrangements between key
executives nominated by the Subscribers and the Company being
entered into or amended on terms satisfactory to each Subscriber
(acting reasonably); and
o No breaches of warranty or material adverse events have
occurred
-- Under the terms of the conditional agreement entered into on
21 August 2019, and repeated now in the Convertible Note
Subscription Agreement, the Subscribers will be paid fees as
follows:
o An establishment fee of 3% of the subscribed amount, which the
Subscribers may elect to deduct from the relevant subscribed
amount
o Options to subscribe for 25,000,000 ordinary shares in BPC
with an exercise price of 2 pence per share, exercisable at any
time within the four-year period from their date of issue (the
"Convertible First Tranche Options")
o On subscription of the Conditional Convertible Notes, two
further tranches of options to subscribe for ordinary shares in
BPC, of 12,500,000 options per tranche, the first with an exercise
price of 2.5 pence per Ordinary Share and the second with an
exercise price of 3 pence per Ordinary Share, exercisable at any
time within the four year period from the date of their issue (the
"Convertible Second & Third Tranche Options"). The number of
these options to be ultimately granted will depend on the amounts
subscribed for. In the event that the full amount of the
Conditional Convertible Notes is not subscribed for then the number
of such options will be pro-rated down accordingly
-- Board Rights: Effective from subscription of the Conditional
Convertible Notes (i.e. only once Convertible Note funds are
advanced to BPC) and until such time as the Conditional Convertible
Notes are redeemed, the Subscribers will have the right to appoint
a maximum of two (2) directors to the Board of BPC (but, for so
long as both Simon Potter and Eytan Uliel are members of the Board,
the right of appointment shall be reduced to only one (1)).
Attention is drawn to the fact that, as detailed above,
availability of funds from the Convertible Note Subscription
Agreement remains conditional on a number of conditions first
having been satisfied. To the extent the conditions are not
satisfied there is a risk that the Company will not be able to
receive the funding contemplated in the Convertible Note
Subscription Agreement, unless those conditions are waived by the
Subscribers. However, given that a number of the conditions are
necessary prerequisites to drilling commencing, and given that
funds are not actually required until closer to the time that
drilling commences, the Directors are confident that the conditions
precedent can be satisfied in a timely manner such that funding
under the Convertible Note Subscription Agreement will be available
when required. Please see "Part II Risk Factors" below for further
information.
Use of Proceeds
The Company will use the net proceeds of the Open Offer,
together with the proceeds of the Conditional Convertible Note to
commence the drilling and all associated activities, operations and
actions of the initial exploration well in 2020.
The Company continues to pursue a farm-out as part of its
funding strategy, and has received proposals for, and continues to
develop and assess a number of other financing options. A decision
to enact any of these other financing proposals will be taken, if
required, based on the outcome of the farm-out process, and once
the Open Offer process has been concluded.
To the extent that a farm-out is successfully concluded on terms
acceptable to the Company, the amount of capital available to the
Company would likely materially increase, and would be additive to
the funds raised through the Open Offer and Convertible Note
Subscription Agreement, as detailed in the Circular. Such funding
could be applied towards all or a considerable portion of the costs
in respect of the intended drilling, or alternatively proceeds from
any farm-out could be applied to a broader work programme than the
current single well the Company intends to drill in 2020.
In circumstances where suitable funds are not raised via the
Open Offer (if the Open Offer raises less than the equivalent of
approximately US$7 million and the placing of the Open Offer
Shortfall as described above is unsuccessful in raising the
balance), or where the conditions precedent set out in the
Convertible Note Subscription Agreement are not satisfied (or
waived), or if a farm-out is not secured, the Company would likely
not have sufficient cash to complete the drilling of the planned
initial exploration well in H1 2020. In such circumstances the
Company would look to secure funding by way of alternative sources.
There can be no assurance, however, that the Company would be
successful in securing any such alternative funding. Excluding any
costs relating to the planned initial exploration well in H1 2020,
the Company currently has sufficient cash available to meet general
working capital needs through to H2 2020. In such a scenario, any
amounts raised under the Open Offer and Placing will be applied to
general working capital. Please see "Part II Risk Factors" below
for further information.
Funding and Dilutive Impact
The dilutive and funding impact of the Open Offer and the
Convertible Note Subscription Agreement needs to be understood in
conjunction with each other, and seen in the context of a broad and
balanced approach to the Company's funding needs and objectives.
Specifically:
-- At the Company's AGM on 17 September 2019 shareholders passed
a number of special resolutions designed to provide the Board with
the flexibility to enter into a range of possible funding
arrangements to secure the capital required for the initial
exploration well. This included the temporary authority to issue up
to 1.8 billion new Ordinary Shares without consideration of the
pre-emption rights of the existing shareholders of the Company.
-- Under the Open Offer, the Company will be offering to all
shareholders the equal ability to subscribe for up to GBP6,770,876
in the capital of the Company at a price of 2 pence per share. The
amount of the Open Offer has been set to avoid any requirement to
issue a Prospectus under the Prospectus Rules.
o To the extent that the Open Offer is taken up in full, the
Company will receive GBP6,770,876 in additional funding, and will
issue a further 338,543,819 Ordinary Shares;
o To the extent that the Open Offer is taken up only 50% (and
the shortfall remains unsubscribed and/or unplaced), the Company
will receive approximately GBP3.4 million in additional funding,
and will issue a further 169,271,909 Ordinary Shares; and
o To the extent that the Open Offer is not taken up at all (and
the shortfall remains unsubscribed and/or unplaced), the Company
will receive nil in additional funding, and will issue no further
Ordinary Shares.
-- Given the issue price established for the Open Offer (being 2
pence per share), the terms of the Conditional Convertible Notes
(as previously announced and approved by shareholders) determine
that the conversion price will be set at a 25% premium to the Open
Offer Price, being 2.5 pence per share.
o Thus, assuming (i) all conditions precedent in the Convertible
Note Subscription Agreement are either satisfied or otherwise
waived by the Subscriber and the Conditional Convertible Notes are
fully subscribed, (ii) 3 full years of interest is capitalised into
the debt principal and not paid in cash, and (iii) all principal
and capitalised interest is fully converted, the Conditional
Convertible Notes would result in the issue of approximately 560
million Ordinary Shares in the capital of the Company to the
noteholders, and the Company will receive GBP10.25 million in
funding.
-- When considered in aggregate, the Open Offer (if fully taken
up) and the proceeds of the Convertible Note Subscription Agreement
(assuming all conditions precedent in the Convertible Note
Subscription Agreement are either satisfied or otherwise waived by
the Subscribers and the Conditional Convertible Notes are fully
subscribed, and assuming further that interest is capitalised and
all principal and capitalised interest is ultimately converted)
would result in approximately 896 million new Ordinary Shares being
issued, and total funding inflows over the next 6 months of
approximately GBP17 million (approximately US$21.5 million), which
would be an amount which exceeds the lower-end estimates for the
total well cost for the drilling of the initial exploration
well.
Shareholders should note however that there remains a high
degree of uncertainty in relation to both the Open Offer and
Conditional Convertible Notes, given that ultimate quantum of
funding to be received from both is dependent on the occurrence of
future events outside of the control of the Company.
Specifically:
-- Funding from the Convertible Note Subscription Agreement
remains subject to certain conditions precedent as set out in that
agreement first being satisfied on or prior to 15 February 2020
(unless said conditions are waived by the Subscribers) - these have
been detailed above,
-- the amount raised under the Open Offer will depend on the
extent to which Shareholders take up the offer and/or the extent to
which any shortfall thereunder is taken up under the Excess
Application Facility or, if not taken up, subsequently placed,
and
-- the Company continues to work on securing a farm-out, which
if successful could likely materially increase the amount of
capital available to the Company, which could offset all or a
considerable portion of the costs in respect of the intended
drilling or alternatively provide funds in excess of that required
to complete the initial well, thereby potentially facilitating
further exploration activity on the licences including that of an
additional well.
In circumstances where suitable funds are not raised via the
Open Offer (that is, if the Open Offer and Excess Application
Facility raises less than approximately US$7 million and the
placing of the Open Offer Shortfall as described above is
unsuccessful in raising the balance), or where the conditions
precedent set out in the Convertible Note Subscription Agreement
are not satisfied (or waived by the Subscribers), or if a farm-out
is not secured, the Company would likely not have sufficient cash
to complete the drilling of the planned initial exploration well in
H1 2020. In such circumstances the Company would look to secure
funding by way of alternative sources. There can be no assurance,
however, that the Company would be successful in securing any such
alternative funding. Excluding any costs relating to the planned
initial exploration well in H1 2020, the Company currently has
sufficient cash available to meet general working capital needs
through to H2 2020.
Details of the Open Offer
Open Offer Structure
The Open Offer provides an opportunity for all Qualifying
Shareholders to participate in the fundraising by acquiring Open
Offer Shares pro rata to their current holdings of Existing
Ordinary Shares with the option for subscribing for more pursuant
to the Excess Application Facility subject to scaling back (see
10.3 below).
Principal terms of the Open Offer
Subject to the fulfilment of the conditions set out below and in
Part IV of the Circular, Qualifying Shareholders are being given
the opportunity to subscribe for the Open Offer Shares at a price
of 2 pence per Open Offer Share, pro rata to their holdings of
Existing Ordinary Shares on the Record Date on the basis of:
1 Open Offer Share for every 5 Existing Ordinary Shares
Qualifying Shareholders are also being given the opportunity,
provided that they take up their Open Offer Entitlement in full, to
apply for Excess Shares through the Excess Application
Facility.
Assuming full take-up under the Open Offer, the issue of the
Open Offer Shares will raise gross proceeds of GBP6,770,876 for the
Company.
The Open Offer Shares will, upon issue, rank pari passu with the
Existing Ordinary Shares.
Fractions of Open Offer Shares will not be allotted. Each
Qualifying Shareholder's entitlement under the Open Offer will be
rounded down to the nearest whole number.
Qualifying Shareholders with holdings of Existing Ordinary
Shares in both certificated and uncertificated form will be treated
as having separate holdings for the purpose of calculating the Open
Offer Entitlements.
If the Open Offer is not fully taken up by Qualifying
Shareholders, the Company has appointed Shore Capital to use
reasonable endeavours to place any Open Offer Shares that have not
been subscribed with institutional investors at the Issue Price.
Shore Capital has agreed that to the extent any remaining shortfall
is not fully placed, Shore Capital will participate in the Placing
to the point that the Open Offer is fully subscribed or to a
maximum of US$1 million.
Excess Application Facility
The Excess Application Facility will enable Qualifying
Shareholders, provided that they take up their Open Offer
Entitlement in full, to apply for Excess Open Offer Entitlements.
Qualifying non-CREST Shareholders who wish to apply to acquire more
than their Open Offer Entitlement should complete the relevant
sections on the Application Form. Qualifying CREST Shareholders
will have Excess CREST Open Offer Entitlements credited to their
stock account in CREST. Applications for Excess Open Offer
Entitlements will be satisfied only and to the extent that
corresponding applications by other Qualifying Shareholders are not
made or are made for less than their Open Offer Entitlements. If
applications under the Excess Application Facility are received for
more than the total number of Open Offer Shares available following
take-up of Open Offer Entitlements, such applications will be
scaled back pro rata to the number of Excess Shares applied for by
Qualifying Shareholders under the Excess Application Facility.
Application will be made for the Open Offer Entitlements and
Excess Open Offer Entitlements in respect of Qualifying CREST
Shareholders to be admitted to CREST. It is expected that such Open
Offer Entitlements and Excess Open Offer Entitlements will be
admitted to CREST at 8.00 a.m. on 21 October 2019. Such Open Offer
Entitlements and Excess Open Offer Entitlements will also be
enabled for settlement in CREST at 8.00 a.m. on 21 October 2019.
Applications through the means of the CREST system may only be made
by the Qualifying Shareholder originally entitled or by a person
entitled by virtue of a bona fide market claim.
Qualifying non-CREST Shareholders will have received an
Application Form with the Circular which sets out their entitlement
to Open Offer Shares as shown by the number of Open Offer
Entitlements allocated to them. Qualifying CREST Shareholders will
receive a credit to their appropriate stock accounts in CREST in
respect of their Open Offer Entitlements on 21 October 2019.
Shareholders should note that the Open Offer is not a rights
issue. Qualifying CREST Shareholders should note that although the
Open Offer Entitlements and Excess Open Offer Entitlements will be
admitted to CREST and be enabled for settlement, applications in
respect of entitlements under the Open Offer may only be made by
the Qualifying Shareholder originally entitled or by a person
entitled by virtue of a bona fide market claim. Qualifying
non-CREST Shareholders should note that the Application Form is not
a negotiable document and cannot be traded. Qualifying Shareholders
should be aware that in the Open Offer, unlike in a rights issue,
any Open Offer Shares not applied for will not be sold in the
market or placed for the benefit of Qualifying Shareholders who do
not apply under the Open Offer. If applications are made for less
than all of the Open Offer Shares available, then the lower number
of Open Offer Shares will be issued.
Further information on the Open Offer and the terms and
conditions on which it is made, including the procedure for
application and payment, are set out in Part IV of the
Circular.
For Qualifying non-CREST Shareholders, completed Application
Forms, accompanied by full payment, should be returned by post or
by hand (during normal business hours only) to Link Asset Services,
Corporate Actions, The Registry, 34 Beckenham Road, Beckenham,
Kent, BR3 4TU so as to arrive as soon as possible and in any event
so as to be received no later than 11.00 a.m. on 1 November 2019.
For Qualifying CREST Shareholders, the relevant CREST instructions
must have been settled as explained in the Circular by no later
than 11.00 a.m. on 1 November 2019.
Other information relating to the Open Offer
The Open Offer is conditional upon, inter alia, Admission of the
Open Offer Shares becoming effective by no later than 8.00 a.m. on
6 November 2019 (or such later date as the Company may determine,
being not later than 8.00 a.m. on 20 November 2019). Accordingly,
if the conditions to the Open Offer are not satisfied or waived
(where capable of waiver), the Open Offer will not proceed and the
Open Offer Shares will not be issued and all monies received by the
Receiving Agent will be returned to the Applicants (at the
Applicant's risk and without interest) as soon as possible, but
within 14 days thereafter. Any Open Offer Entitlements admitted to
CREST will thereafter be disabled.
The Open Offer Shares will be issued free of all liens, charges
and encumbrances and will, when issued and fully paid, rank pari
passu in all respects with the Open Offer Shares, including the
right to receive all dividends and other distributions declared,
made or paid after the date of their issue.
Application will be made to the London Stock Exchange for the
Open Offer Shares to be admitted to trading on AIM. It is expected
that Admission will become effective on 6 November 2019 and that
dealings for normal settlement in the Open Offer Shares will
commence at 8.00 a.m. on 6 November 2019.
Action to be taken
Qualifying non-CREST Shareholders
If you are a Qualifying non-CREST Shareholder, you will have
received an Application Form which gives details of your maximum
entitlement under the Open Offer (as shown by the number of Open
Offer Entitlements allocated to you). If you wish to apply for Open
Offer Shares under the Open Offer (whether in respect of your Open
Offer Entitlement or both your Open Offer Entitlement and any
Excess Open Offer Entitlements), you should complete the
accompanying Application Form in accordance with the procedure for
application set out in paragraph 4.1 of Part IV of the Circular and
on the Application Form itself.
Qualifying CREST Shareholders
If you are a Qualifying CREST Shareholder and do not hold any
Ordinary Shares in certificated form, no Application Form
accompanies the Circular and you will receive a credit to your
appropriate stock account in CREST in respect of the Open Offer
Entitlements representing your maximum entitlement under the Open
Offer except (subject to certain exceptions) if you are an Overseas
Shareholder who has a registered address in, or is a resident in or
a citizen of an Excluded Territory. Applications by Qualifying
CREST Shareholders for Excess Open Offer Entitlements in excess of
their Open Offer Entitlements should be made in accordance with the
procedures set out in paragraph 4.2 of Part IV of the Circular,
unless you are an Overseas Shareholder in which event, applications
should be made in accordance with the procedures set out in
paragraph 6 of Part IV of the Circular.
The latest time for applications under the Open Offer to be
received is 11.00 a.m. on 1 November 2019. The procedure for
application and payment depends on whether, at the time at which
application and payment is made, you have an Application Form in
respect of your entitlement under the Open Offer or have Open Offer
Entitlements credited to your stock account in CREST in respect of
such entitlement. The procedures for application and payment are
set out in Part IV of the Circular.
Qualifying CREST Shareholders who are CREST sponsored members
should refer to their CREST sponsors regarding the action to be
taken in connection with the Circular and the Open Offer.
Overseas Shareholders
Information for Overseas Shareholders who have registered
addresses outside the United Kingdom or who are citizens or
residents of countries other than the United Kingdom appears in
paragraph 6 of Part IV of the Circular, which sets out the
restrictions applicable to such persons. If you are an Overseas
Shareholder, it is important that you read that part of the
Circular.
Additional Information
Your attention is drawn to the additional information set out in
Parts II to V (inclusive) of the Circular.
Director and Management Participation
Directors and members of the Company's senior management have
confirmed their intention to participate for their pro rata
entitlement in the Open Offer. Additionally, management
(collectively) has indicated an intention to subscribe GBP250,000
in the Open Offer Shortfall (if available).
RISK FACTORS
An investment in the Open Offer Shares is highly speculative and
involves a high degree of risk due to the nature of the Company
position and the sector in which it operates, namely, exploration
for hydrocarbons. Before making any investment decision,
prospective investors should carefully consider all the information
contained in the Circular including, in particular, the risk
factors described below and should form their own views. In
addition to the usual risks associated with an investment in a
hydrocarbon exploration business, the Directors believe that, in
particular and in no order of priority, the following risk factors
should be considered. Other factors relate principally to an
investment in the Open Offer Shares. It should be noted that this
list is not exhaustive and that other risk factors may apply.
Additional risks and uncertainties not currently known to the
Directors, or that the Directors currently deem immaterial, may
also have an adverse effect on the Group's business, financial
condition and results of operations.
An investment in the Company may not be suitable for all
recipients of the Circular. Investors are advised to consult an
independent financial adviser authorised under the FSMA who
specialises in advising on the acquisition of shares and other
securities before making a decision to invest.
Risks related to the oil and gas industry
Exploration, development and production and general operational
risks
There can be no guarantee that any hydrocarbons will be
discovered in commercial quantities or developed to profitable
production. If discovered, developing a hydrocarbon production
field may require significant investment to build the requisite
operating facilities, drilling of production wells along with
implementation of advanced technologies for the extraction and
exploitation of hydrocarbons with complex properties. These may
result in uncertainties about the amount of future investment
necessary, operating costs and additional expenses which might be
incurred as compared with the initial budget. In addition,
hydrocarbon deposits may not ultimately contain economically
recoverable volumes of resources and even if they do, delays in the
construction and commissioning of production projects or other
technical difficulties may result in any projected target dates for
production being delayed or further capital expenditure being
required.
The exploration for and development of oil and gas resources is
speculative and involves a high degree of technical risk. In
particular, the operations of the Company may be disrupted by a
variety of risks and hazards which are beyond the control of the
Company, including environmental hazards, industrial accidents,
occupational and health hazards, technical failures, labour
disputes, earthquakes, unusual or unexpected geological formations,
flooding, earthquake and extended interruptions due to inclement or
hazardous weather conditions (including hurricanes), explosions and
other accidents. These risks and hazards could also result in
damage to, or destruction of wells or production facilities,
personal injury, environmental damage, business interruption,
monetary losses and possible legal liability.
Delays in the construction and commissioning of projects or
other technical difficulties may result in the Company's current or
future projected target dates for production being delayed or
further or additional capital expenditure being required. If the
Company fails to meet its work and/or expenditure obligations, the
rights granted therein may be forfeited, which could jeopardise its
ability to continue operations.
Oil Price
Oil and gas companies' earnings, investment and development
decisions and strategy are heavily affected by fluctuations in
international oil prices. Both oil and gas are commodities, and as
such, tend to see larger fluctuations in price than more stable
investments such as stocks and bonds. There are several major
influences on oil prices but most importantly the interplay of
supply and demand. While oil demand tends to be slow moving, mainly
driven by economic growth and to some extent climate policies, the
prospects of future oil supply are highly uncertain - not least
considering persistent political instability in exporting countries
and the uncertainty regarding the discovery of new reserves. As a
result of such uncertainties, oil prices could undergo further
(increasingly) drastic fluctuations in the future which could
impact the Group's projects and adversely affect the feasibility
and profitability of any of its projects and therefore have an
adverse effect on the Group's business, financial condition,
results of operations and prospects or even decisions to
invest.
Increase in drilling costs
The oil and gas industry historically has experienced periods of
rapid cost increases. Increases in the cost of exploration and
development would affect the Company's ability to invest in
prospects and to purchase or hire equipment, supplies and
services.
Availability of Drilling Equipment and Access
Oil and natural gas exploration and development activities are
dependent on the availability of drilling rigs and other equipment
and services is affected by the level and location of drilling
activity around the world. An increase in drilling operations may
reduce the availability of equipment and services to the Company.
The reduced availability of equipment and services may delay its
ability to exploit reserves and adversely affect the Company's
operations and profitability.
Third party contractors and providers of capital equipment can
be scarce
The Group may contract or lease services and capital equipment
from third party providers. Such equipment and services can be
scarce and may not be readily available at the times and places
required. In addition, costs of third-party services, and equipment
may increase significantly over time. Scarcity of equipment and
services and increased prices may in particular result from any
significant increase in exploration and development activities on a
region by region basis which might be driven by high demand for oil
and gas. The unavailability and high costs of such services and
equipment could result in a delay or restriction in the Group's
projects and adversely affect the feasibility and profitability of
such projects and therefore have an adverse effect on the Group's
business, financial condition, results of operations and
prospects.
Estimation of reserves, resources and production profiles
The estimation of oil and gas reserves and resources and their
anticipated production profiles involves subjective judgements and
determinations based on available geological, technical,
contractual and economic information. They are not exact
determinations. In addition, these judgments may change based on
new information from production or drilling activities or changes
in economic factors, as well as from developments such as
acquisitions and dispositions, new discoveries and extensions of
existing fields and the application of improved recovery
techniques.
Risks related to the Group
Dependence on key personnel
In common with other services and businesses in this industry
sector, the Company's business is dependent on retaining the
services of a number of key personnel of the appropriate calibre as
the business develops. The success of the Company is, and will
continue to be significantly dependent on the expertise and
experience of the Directors and senior management. The loss of one
or more of these key personnel could have a material adverse effect
on the Company.
No profit to date
BPC has incurred losses since its inception and it is therefore
not possible to evaluate the prospects of the Company based on past
performance. Since the Company intends to continue investing in the
exploration licence areas, it is anticipated that the Company will
continue to make losses for the immediate future. There can be no
certainty that the Company will achieve or sustain profitability or
achieve or sustain positive cash flow from its activities in the
future.
Significant competition
The Company's competitors include major and independent oil and
gas companies. The oil and gas business is highly competitive in
the search for and acquisition of reserves and in the gathering and
marketing of oil and gas production and in the recruitment and
employment of qualified personnel. Some of the Company's
competitors have significantly greater financial, technical and
other resources than it and are able to devote greater resources to
the development of their businesses. If the Company is unable
successfully to compete, its business will suffer.
Limited diversification
The Company's business currently is focused and single-purpose -
all five of its licences for hydrocarbon exploration are situated
in the territorial waters of The Bahamas.
Climate
The climate in The Bahamas is subtropical to tropical. There is
a hurricane season from approximately July to November with parts
of The Bahamas having suffered severe hurricane damage in recent
years. Storms and storm damage could limit the Company's ability to
conduct exploration, development and production activities.
Licence fees
In relation to licence fees, BPC remains to finalise fees for
the balance of the 2nd exploration period with the Bahamian
Government. A number of these licence compliance costs are
variable, and depending on a number of factors, some of which are
presently unknowable, such as work to be done, time taken to do
that work, and negotiations. BPC expects the costs to 31 December
2020 to be US$1.03m. However, depending on a variety of factors,
these costs could be as low as US$700,000, and as high as US$2
million. To the extent these costs are higher than presently
expected, other costs areas can and will be reduced
accordingly.
Health, Safety, Environment and Security ("HSES")
The Group's operated ventures means that the HSES risks cover a
wide spectrum. These risks include major activity safety incidents;
failure to comply with approved policies; effects of natural
disasters (including hurricanes) and pandemics; social unrest;
civil war and terrorism; exposure to general operational hazards;
personal health and safety; and crime. The consequences of such
risks materialising can be injuries, loss of life, environmental
harm and disruption to business activities. Depending on cause and
severity, the materialisation of such risks may affect the Group's
reputation, operational performance and financial position.
In addition, failure by the Group to comply with applicable
legal requirements or recognised international standards may give
rise to significant liabilities. HSES laws and regulations may over
time become more complex and stringent or the subject of
increasingly strict interpretation or enforcement. The terms of
licences include requirements to comply with prevailing HSES
regulatory requirements which may change over time. The obtaining
of exploration, development or production licences and permits may
become more difficult or be the subject of delay by reason of
governmental, regional or local environmental consultation,
approvals or other considerations or requirements. These factors
may lead to delayed or reduced exploration, development or
production activity as well as to increased costs.
Environmental risk and insurance coverage
There are significant exploration and operating risks associated
with drilling oil and gas wells, including potential blowouts,
cratering, sour gas releases, uncontrollable flows of oil, natural
gas or well fluids, adverse weather conditions, and fire, all of
which can result in accidental spills, leakages or discharges of
harmful liquids and toxic gases. The occurrence of any of these
incidents can result in substantial losses to the Group due to
injury or loss of life, damage to or destruction of the Company's
oil and gas wells, pollution or other environmental damage. Damages
occurring as a result of such risks can give rise to claims against
the Company or a member of its Group and can result in the
Company's targets for drilling or production being delayed or
halted.
Although the Company will exercise all due care and attention in
the conduct of its business and will maintain what it believes to
be customary insurance coverage for companies engaged in similar
operations, the Company cannot guarantee it is not fully insured
against all risk in its business. The occurrence of a significant
event against which the Company is not fully insured could have a
material adverse effect on its operations and financial
performance. In addition, in the future some or all of the
Company's insurance coverage may become unavailable or
prohibitively expensive.
Funding Risk
The Company currently estimates the cost of meeting its drilling
objectives to be in the range of US$20 million - US$25 million (the
ultimate amount of expenditure dependent to a large extent on the
pace of drilling - the rate of penetration or "ROP" - and the final
drilled depth to which the Company's well reaches). There is a risk
that the drilling costs may be more than anticipated and further
funds may have to be raised in order to meet drilling objectives.
At present, the Company has insufficient cash resources to finance
its planned drilling activity and so will be required to source the
funding necessary to meet these estimated drilling costs. The
Company is seeking to develop a funding plan that does so in a
measured way. As part of this plan, the Open Offer (and Placing)
and the Conditional Convertible Notes, if fully subscribed to and
drawn down, would result in total funding of approximately GBP17
million (approximately US$21.5 million) which it is estimated would
be sufficient to enable the Company to meet its drilling objectives
at the lower end of the estimated range, this being the shallower
target horizons.
However there remains a degree of conditionality to the proposed
financing package which is dependent on the occurrence of future
events outside of the control of the Company, which represents a
material risk. Specifically:
-- Funding from the Convertible Note Subscription Agreement
remains subject to certain conditions precedent as set out in that
agreement first being satisfied on or prior to 15 February 2020
(unless said conditions are waived by the noteholders) - see below
for further details,
-- the amount raised under the Open Offer will depend on the
extent to which Shareholders take up their entitlements under the
Open Offer and/or the extent to which any shortfall thereunder is
taken up under the Excess Application Facility or, if not taken up,
or subsequently placed, and
-- the Company continues to work on securing a farm-out, which
if successful could materially increase the amount of capital
available to the Company, which could offset all or a considerable
portion of the costs in respect of the intended drilling or
alternatively provide funds in excess of that required to complete
the initial well, thereby potentially facilitating further
exploration activity on the licences including that of an
additional well.
In circumstances where suitable funds are not raised via the
Open Offer (that is, if the Open Offer raises less than
approximately US$7 million and the placement of the Open Offer
Shortfall as described above is unsuccessful in raising the
balance), or where the conditions precedent set out in the
Convertible Note Subscription Agreement are not satisfied (or
waived by the Subscribers), or if a farm-out is not secured, the
Company would not have sufficient cash to complete the drilling of
the planned initial exploration well in H1 2020. In such
circumstances the Company would look to secure funding by way of
alternative sources. There can be no assurance, however, that the
Company would be successful in securing any such alternative
funding, and in such circumstances any funds raised in the Open
Offer and Placing would be applied to general working capital.
Excluding any costs relating to the planned initial exploration
well in H1 2020, the Company currently has sufficient cash
available to meet general working capital needs through to H2
2020.
Convertible Note Subscription Agreement
The Convertible Loan Subscription Agreement entered into on 10
October 2019 for the provision of up to GBP10.25 million
(approximately $13.0 million) in well finance contains a number of
conditions precedent which must either be satisfied prior to 15
February 2020 or waived by the Subscribers in order for the advance
of any funding being provided to the Company. The conditions
precedent are:
-- Any approvals, consents, waivers, exemptions or declarations
that are required by law, or by any Government Agency, to implement
the transactions contemplated by the Convertible Note Subscription
Agreement are granted, given, made or obtained on an unconditional
basis
-- The Company entering into binding contracts with reputable
international companies so as to enable the Company (to the
satisfaction of each Subscriber, acting reasonably) to conduct the
intended drilling of the initial exploration well at the estimated
cost of that drilling, being:
o A contract for provision of a drilling rig with a reputable
international rig company, on terms satisfactory to each
Subscriber, providing access to the appropriate drilling rig at an
acceptable cost, as needed for the task of conducting the drilling;
and
o A contract for integrated well services for the drilling with
a reputable international service company, on terms satisfactory to
each Subscriber, providing access to the appropriate services
needed for the task of conducting the drilling;
-- The Subscribers being satisfied that the Company has
sufficient funds in cash (but not including committed cash or cash
subject to refund obligations) which, when aggregated with the
subscription amount of the Conditional Convertible Notes, would be
sufficient to fund the cost of the intended drilling operation in
full and the operating costs of the Company until the end of June
2021;
-- A convertible note trust deed being entered into between the
Company and the convertible note trustee, on terms acceptable to
the Subscribers;
-- Appropriate security documents being entered into between the
Company and the Subscribers and any other relevant parties, on
terms acceptable to the Subscribers;
-- The Company securing all necessary permits and approvals for
the intended drilling operations from the Government of The
Bahamas, including all necessary environmental permits, and the
Company reaching agreement with the Government of The Bahamas and
making payment in relation to licence fees payable for the
remaining licence period to 31 December 2020, on terms satisfactory
to the Subscribers;
-- Each Subscriber obtaining all approvals (including of its
investment committee) and satisfying all procedures it considers
necessary in relation to the transactions contemplated by this
agreement;
-- Employment and executive retention arrangements between key
executives nominated by the Subscribers and the Company being
entered into or amended on terms satisfactory to each Subscriber
(acting reasonably); and
-- No breaches of warranty or material adverse events have occurred.
If the above conditions are not satisfied in accordance with the
Agreement prior to 15 February 2020, or if are not otherwise waived
by the Subscribers, there is a risk that the Conditional
Convertible Notes will not become available for drawdown by the
Company.
Requirements for permits and licences
The operations of the Company require licences, permits and in
some cases assignments or renewals of existing licences and permits
from various governmental authorities. Governmental approvals,
licences and permits are subject to the discretion of the
applicable governments or governmental offices and are outside the
control of the Company. The Company's ability to obtain, sustain,
renew or assign such licences and permits on acceptable terms is
therefore subject to the discretion of the applicable governments
as well as changes in regulations and policies. A failure to
obtain, sustain, renew or assign these where needed could result in
the dilution or forfeiture of interests held by the Company which
could have a material adverse effect on the Group's business,
financial condition, results of operations and prospects.
In particular, on entering the second term for the Southern
Licences, the Company was obliged to commence activity by April
2018 on an initial exploration well, with equipment capable of
drilling to a depth of at least 18,000 feet (the "Drilling Plan").
This date was extended by agreement with the Government on various
occasions, most recently in February of 2019, where the second term
licence period was extended such that currently the Company's work
obligation is clear and unambiguous: to commence an initial
exploration well on the Southern Licences by the end of 2020. If
the Company is not able to meet this obligation, and is unable to
obtain a further extension of this obligation by the Government of
The Bahamas, the Southern Licences will expire without an
entitlement of the Company to renew.
Working Capital
The Company may need to raise additional funds in the future in
order to develop further its development programmes and growth
initiatives. Additional equity financing may be dilutive to
Shareholders and could contain rights and preferences superior to
those of the Open Offer Shares. Debt financing may involve
restrictions on the Company's financing and operating activities.
In either case, additional financing may not be available to the
Company on acceptable terms. If the Company is unable to raise
additional funds as needed, the scope of its operations may be
reduced and or its interest in concessions diluted or expired and,
as a result, the Company may be unable to fulfil its long-term
expansion programme.
Foreign currency exchange rates
As an international operator, the Company's business
transactions may not be denominated in the same currencies. To the
extent that the Company's business transactions are not denominated
in the same currency, the Company is exposed to foreign currency
exchange rate risk. In addition, holders of the Ordinary Shares are
subject to foreign currency exchange rate risk to the extent that
its business transactions are denominated in currencies other than
the US dollar. Fluctuations in foreign currency exchange rates may
adversely affect the Company's profitability. At this time, the
Company does not plan actively to hedge its foreign currency
exchange rate risk.
Taxation
The Company is exposed to taxation in both the Isle of Man and
The Bahamas. However, the taxation regime applicable in both the
Isle of Man and The Bahamas may change in the future with a
consequent potential adverse impact on the after--tax profits
available to the Company following any such changes.
Risks relating to the Open Offer Shares
There may be volatility in the price of the Open Offer
Shares
The Issue Price may not be indicative of the market price for
the Open Offer Shares following Admission. The market price of the
Open Offer Shares could be volatile and subject to significant
fluctuations due to a variety of factors, including changes in
sentiment in the market regarding the Company, the sector or
equities generally, any regulatory changes affecting the Group's
operations, variations in the Group's operating results and/or
business developments of the Group and/or its competitors, the
operating and share price performance of other companies in the
industries and markets in which the Group operates, news reports
relating to trends in the Group's markets or the wider economy and
the publication of research analysts' reports regarding the Company
or the sector generally.
To the extent that Shareholders do not take up the Open Offer
Shares under the Open Offer, their proportionate ownership and
voting interest in the Company will be reduced and the percentage
that their Existing Ordinary Shares represents of the Enlarged
Share Capital will be reduced accordingly. Subject to certain
exceptions, Shareholders in the United States and other Excluded
Territories will not be able to participate in the Open Offer.
Pre-emptive rights may not be available for US and other non-UK
holders of Ordinary Shares
In the case of an increase in the share capital of the Company
for cash, the Shareholders are generally entitled to pre-emption
rights pursuant to the Act unless such rights are waived by a
special resolution of the Shareholders at a general meeting, or in
certain circumstances stated in the Articles, and such an issue
could dilute the interests of the Shareholders. To the extent that
pre-emptive rights are applicable, US and certain other non-UK
holders of Ordinary Shares may not be able to exercise pre-emptive
rights for their shares unless the Company decides to comply with
applicable local laws and regulations and, in the case of US
holders, unless a registration statement under the US Securities
Act is effective with respect to those rights or an exemption from
the registration requirements thereunder is available. The Open
Offer Shares to be issued will not be registered under the US
Securities Act. Qualifying Shareholders who have a registered
address, or who are resident in, or who are citizens of, countries
other than the United Kingdom should consult their professional
advisers about whether they require any governmental or other
consents or need to observe any other formalities to enable them to
take up their Open Offer Entitlements or acquire Open Offer
Shares.
Other risk factors
The Existing Ordinary Shares are traded on AIM rather than the
main market of the London Stock Exchange. An investment in shares
traded on AIM may carry a higher risk than an investment in shares
listed on the Official List of the UK Listing Authority and traded
on the main market of the London Stock Exchange.
Investors should be aware that the value of the Open Offer
Shares may be volatile and may go down as well as up and investors
may therefore not recover their original investment, especially as
the market in the Open Offer Shares on AIM may have limited
liquidity.
The market price of the Open Offer Shares may not reflect the
underlying value of the Company's net assets. The price at which
investors may dispose of their shares in the Company may be
influenced by a number of factors, some of which may pertain to the
Company, and others of which are extraneous. Investors may realise
less than the original amount invested.
The risks above do not necessarily comprise all those faced by
the Company and are not intended to be presented in any assumed
order of priority.
The investment offered in the Circular may not be suitable for
all of its recipients. Investors are accordingly advised to consult
an investment adviser, who is authorised under the FSMA and who or
which specialises in investments of this kind before making a
decision to invest.
OPEN OFFER STATISTICS
Issue Price 2 pence
Number of Existing Ordinary Shares in issue
as at the Record Date 1,692,719,096
---------------------
Basis of Open Offer 1 Open Offer Share
for every
5 Existing Ordinary
Shares
---------------------
Number of Open Offer Shares* up to 338,543,819
---------------------
Open Offer Shares as a percentage of the 16.67 per cent.
Enlarged Share Capital*
---------------------
Gross proceeds of the Open Offer* GBP6,770,876
---------------------
Market capitalisation on Admission at the GBP40.63 million
Issue Price*
---------------------
Open Offer Basic Entitlements ISIN IM00BHR3YB95
---------------------
Open Offer Excess Entitlements ISIN IM00BHR3Y970
---------------------
*Assuming full take-up under the Open Offer
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
CIRGGGWCUUPBGRM
(END) Dow Jones Newswires
October 18, 2019 02:00 ET (06:00 GMT)
Challenger Energy (LSE:CEG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Challenger Energy (LSE:CEG)
Historical Stock Chart
From Apr 2023 to Apr 2024
