Bahamas Petroleum nears drilling go-ahead

Bahamas Petroleum has announced it is "closer than ever" to realising its goal of exploring the hydrocarbon potential of the Bahamas.

In its final results for the year ended 31 December 2012, the company revealed post-tax losses of $6.3 million (£4.1 million). Losses were down from $10.1 million reported for the full year in 2011.

The firm's cash position stood at over $21 million at the year-end, enhanced by cost reductions and conservative cash management.

"The corporate cash position remains strong whilst the process to seek a funding partner continues. Proactive cost management has ensured that the cash at hand is sufficient to manage the needs of the business for several years," explained chief executive Simon Potter.

Operationally, the company said 2013 was off to "an exciting start", with the Bahamian government confirming that, following adoption of revised environmental regulations by parliament, Bahamas Petroleum could undertake exploratory drilling prior to a referendum process, which will only be held once commercial hydrocarbon reserves have been established.

"Our focus is now firmly on developing this fresh political mandate into progress with potential farm-in partners and thus drilling preparations over the next 12-18 months," Potter commented.

"That drilling will proceed under strengthened and modernised regulations is to be welcomed as this will provide the government, as well as the people of the Bahamas, sound assurance of a solid environmental and safety framework consistent with international best practices."

Analyst view

Analysts at broker FoxDavies warned the share price would come "under pressure" as investors anticipate a funding round, but also acknowledged this could be offset to some extent by the prospectivity of Bahamas Petroleum's acreage.

"After what has been a difficult period for the company, these annual results are about the future work programme, and how it will fund it," they stated. "In this respect, [Monday's] announcement is very light, other than to say that it continues to lobby politicians in Nassau.

"While this is essential, the main focus must be the securing of a farm-in partner, or additional funding to be in a position to drill by the time the drill or drop date comes round."

Malcolm Graham-Wood, oil and gas analyst at VSA Capital, commented: "Figures out today for Bahamas are as expected meaningless.

"We already have all the news and are up to speed on the political process and the drilling and farm-out plans."He concluded: "The shares have been poor performers in the last year as drilling has been pushed out again and again but at least now everything seems to be underway."