Bahamas Petroleum Company (BPC) is set to merge with fellow London-listed junior Columbus Energy Resources, aiming to transform the combined company from single-country focus into an "Atlantic margin-focused, full-cycle exploration and production company".

BPC and Columbus reached an agreement on the terms of a recommended all-share merger by way of a share for share exchange offer to be made by BPC for Columbus.

The merger values Columbus at approximately £25.1 million (US$30 million).

The deal will transform BPC from a company holding assets offshore The Bahamas and expand its portfolio to include onshore assets in Trinidad & Tobago and Suriname.

In addition, BPC expanded its exploration footprint as Uruguay awarded the OFF-1 licence covering a high-potential but early stage area off the Atlantic coast with an estimated resource potential of 1 billion barrels of oil equivalent.

The company noted the presence of multiple exploration plays in relatively shallow waters across the new licence, which spans some 15,000 square kilometres.

Merging with Columbus

In Trinidad & Tobago, Columbus has five producing fields, two appraisal and development projects and a prospective exploration portfolio in the South West Peninsula, which lies in the extreme south-west of Trinidad and consists of stacked shallow and deep prospects.

A discovery was announced by Columbus in two zones at one of these prospects in late April.

In Suriname, Columbus has an onshore appraisal and development project.

BPC holds licences located in the southern territorial waters of the Bahamas.

It is currently on track for drilling an initial exploration well, Perseverance 1, in late 2020 or early 2021, with the well targeting recoverable prospective oil resources of more than 700 million barrels.

Drilling was expected earlier this year but was delayed by the Covid-19 outbreak.

A rig contract has already been signed for the drilling of this well, while long-lead and critical path items have already been purchased.

“The combined group will have access to high-impact offshore exploration in the Bahamas with drilling expected to take place within the next nine months, material onshore exploration, appraisal and development projects in Trinidad, a material onshore appraisal and development project in Suriname, and longer-term exploration prospects of scale in Uruguay,” BPC said.

BPC chief executive Simon Potter said: “In one bold step we have given ourselves a production base in Trinidad from which to generate cash, and the opportunity to leverage a range of low-cost developments via workovers, reactivations and new wells targeting shallow reservoirs, along with a range of further options for organic growth and exploration prospects.

“We also have low-cost appraisal of existing discoveries in the South West Peninsula of Trinidad to look forward to, and further infrastructure-led exploration at Weg Naar Zee in Suriname.”

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

“The Columbus board is unanimous in its recommendation that this merger is in the best interests of shareholders... the board intends to recommend that Columbus shareholders accept the proposed transaction.”

Following the merger, the existing board and management team of BPC will remain unchanged, with Simon Potter as chief executive, Eytan Uliel as chief commercial officer and Nathan Rayner as chief operating officer.

Koot will join the BPC board as a non-executive director and Geoffrey Leid, currently managing director in Trinidad for Columbus, will join the BPC executive leadership team.

Anthony Hawkins, current chief executive of Columbus and Gordon Stein, current chief financial officer of Columbus, will step down from their roles.

The merger is expected to be completed later this year.

Finance

London-listed players merge to focus on Caribbean and South American E&P