FAQ’s

How many licences does Bahamas Petroleum Company have? And, does Bahamas Petroleum Company have any pending applications?

The Company’s business currently is focused on five licences for hydrocarbon exploration covering approximately 16,000 km² (4 million acres). 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. Bahamas Petroleum Company has made three, 100% equity applications named Zapata, Islamorada and Andros.

How did the existing licences and the pending applications get their names?

Upon making the licences application, Bahamas Petroleum Company was required to define the applied for area of blocks and to give that area a name; the Government then decides when awarding the licences whether they accept the proposed name(s) or whether they wish for the Company to change them. After the Government confirms and accepts the names they are typed into the actual licence agreement along with all other fiscal terms and obligations.

Is there any significance to the names of the licences and applications?

The names of the licences and applications hold no significance. The names of the four Southern licences run alphabetically and reflect ‘traditional’ Bahamian family names rather than pertaining to any particular person, or persons related to the oil industry or Bahamas Petroleum Company.

What are the main components of the Maritime Agreement and how does it affect Bahamas Petroleum Company?

The agreement delimiting the maritime boundaries of The Bahamas and Cuba was signed on 3 October, 2011, by the Deputy Prime Minister and Minister of Foreign Affairs Brent Symonette. This agreement defines the dividing line between the two countries and the limits of territorial waters. Further, it defines the exclusive economic zones and continental shelves between the two nations which then also allows for cooperation in the management of living and non-living marine resources in the area. The agreement delivers on the Government assurances to protect not only the Bahamian borders but also the extent of the granted exploration licences. This affords Bahamas Petroleum Company certainty as it relates to the limits and extent of its currently held exploration licences.

What are the Act(s) governing petroleum activities in The Bahamas? What do they allow?

Bahamas Petroleum Company four southern licences, namely, Bain, Cooper Donaldson and Eneas, remains to be governed by The Petroleum Act (‘the Act’) 1971 Chp 219 and the Petroleum Regulations 1978 Chp 219.The Petroleum Act (‘the Act’) 1971 Chp 219, governs Petroleum exploration, making provisions for the granting of Permits, Licences and Leases. Additionally, the Act covers the level of Royalties and granting of all rights required by a licensee or lessee in order that petroleum may be searched for, bored for, gotten, stored, treated, converted, or carried away. The Act is further refined by the Petroleum Regulations 1978 Chp 219; which goes beyond simply defining the term of the licence to actually detailing the procedures and obligations for the licence and/or lease. For instance, where the Act speaks only to Petroleum exploration; the Regulations specifically deal with the Term and Renewal of Licences, Expenditure and Pooling of Expenditure as well as Abandonment, Completion and Suspension of wells; etc.

In 2016, that Bahamas Government recently introduced four new pieces of legislation to modernize and regulate the Petroleum Industry in the Bahamas.The Petroleum Act 2016, the Petroleum Regulations 2016, the Petroleum (Health and Safety) Regulations 2016 and the Petroleum (Environmental Protection and Pollution Control) Regulation 2016 were all passed by Parliament and became law. Though the Company four southern licences have been grandfathered to the old Petroleum Legislation; Bahamas Petroleum Company exploration project and operations will not be disadvantaged. The Company has been advised that where the provisions of the old legislation are disadvantages or silent on matters of importance to the project development and success, the Minister will rely on the updated provisions of the Petroleum Act 2016 and the Petroleum Regulations 2016.

Additionally, the new regulations that will govern exploration of Petroleum in the Bahamas are the Petroleum (Health and Safety) Regulations 2016 and the Petroleum (Offshore Environmental Protection and Pollution Control) Regulations 2016. The H&S Regulations address matters of health and safety in the operation of facilities for petroleum exploration and extraction in The Bahamas. The H&S Regulations also address different health and safety requirements and reflects best international standards and practice for the safe operations of petroleum facilities. Further, the OEPPC Regulations provides rules for offshore installations related to the monitoring and prevention of pollution and or damage to the marine environment, the Bahamas and surrounding areas.

When were the current Licences awarded? And, what are the key terms and obligations?

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 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 this goal: 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.

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).