Bahamas Petroleum starts countdown to Saffron well drilling

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Bahamas Petroleum Company PLC (LON:BPC) is counting down to the start of drilling for the Saffron-2 appraisal well in Trinidad, with rig mobilisation starting this weekend.


The company, which is soon to be relaunched as Challenger Energy Group, in a statement said it is targeting the start of drilling on or around May 23.


It also highlighted efficiencies built into the programme including the re-use of certain equipment from the Perseverance-1 well in the Bahamas and a well design that will allow immediate oil production and sales, subject to results.


Saffron-2 is predicted to flow at rates of 200 to 300 barrels of oil per day (bopd), the company noted, which it says would equate to more than US$1.8mln of cashflow per year.


At such a rate, the company expects the well will achieve payback in 12 to 18 months and deliver a better than 200% return on investment.


READ: Bahamas Petroleum set for reset and rebrand


Some five to nine further production wells are planned in Trinidad this year, as part of a phase of field development which could comprise a total of 30 wells.


The company aims to establish some 1,000 to 1,500 bopd of new production from the 2021 wells, to generate US$8mln to US$12mln of annual cashflow (based on a US$60 per barrel crude price).


“A successful Saffron-2 well will be a profitable well in and of itself, but more importantly will further our understanding of the Saffron field and enable us to plan for additional field evaluation and appraisal work, as well as to assess the optimal full-field development plan,” said Eytan Uliel, the company’s chief executive designate.


“A full-field Saffron development could see peak production of 4,000 bopd and around US$25 mln of annual cashflow – a material project by any measure, and one we are thus eager to get after.”


In April, the company announced a number of material changes to the business including a GBP6.9mln capital raise, a new chief executive, and a rebrand to ‘Challenger Energy Group PLC’.


Eytan Uliel, currently commercial director, will become the company’s new CEO and Simon Potter is to transition to a non-executive director role, effective from May 20.


Challenger Energy will in the near-term focus on cashflow and production whilst managing a cost cutting initiative to reduce its operational cost by at least 20% to 30%.


“The company is focussed on restoration, renewal and refreshment,” chairman Bill Schrader said on April 23.


“In this context, the company’s forward business strategy for the coming 12-18 months has been firmly set, on significantly increasing oil production and thus cashflow from our assets in Trinidad and Tobago and Suriname, which the board considers to be the most effective manner in which to restore value and create a foundation for future value growth.”

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