By Tom Winnifrith, The Sheriff of AIM | Friday 23 April 2021
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
On 17 September 2011, it was announced that Simon “Harry” Potter was to become CEO of Bahamas Petroleum (BPC) with the shares ending that day at c9.3p. Last year, Potter trousered £375,000 as CEO so it is fair to say that his nine and a half year gig has cemented his position as a millionaire. But what of those dirty grubby peasants the shareholders? How have the hoi poloi prospered? Over the years, I have repeatedly warned about the ramping of the shares, the extremely suspect financing arrangements and Harry – watch me make your ISA disappear, its magic – Potter’s ample rewards for failure.
The shares trade today at 0.4p meaning that while ‘arry has made off with millions, the great unwashed who have hung on for his promises of better times ahead have lost 96% of their cash.
The company has now announced a change of strategy and change of name and a new CEO. You would have thought that after presiding over such monumental failure, ‘arry would be kicked into the long grass but this is AIM where failure and success are both rewarded handsomely. So ‘arry will become a Non Exec “with a remit to provide ongoing support to the Company’s executive team given Mr Potter’s long history with the Company, and his deep industry knowledge and experience.” Whatever.
His replacement is Mr Eytan Uliel, the Company’s Commercial Director since 2014. What does a commercial director do when he is at home in a company that has, since 2004, generated retained losses of £70 million, a number that will grow massively as intangible assets (i.e. exploration spend on useless wells) is written off? Oi Eytan, what have you commercialised since 2014 you bullshitter?
Bahamas is not only reshuffling the chairs on its Titanic like deck but is changing its name to Challenger Energy Group. Whatever will that achieve? Anyone who cannot see through the change of name smokescreen is, I suggest, somewhat challenged themself.
There is also yet another fund raise. I have lost count of how many there have been. This time it is a £6.9 million open offer to Qualifying Shareholders of 1.967 billion shares at a price of 0.35 pence per share on a 1 new share for every 2.46 shares held basis. The Company plans for any shares not taken up in the Open Offer to be placed with institutional investors at the same price. Oh well, it is other folks’ cash so why not spunk a bit of it, eh chaps?
At least there will be no more bet the ranch on number 13 deep wells in the Bahamas. Instead we are told that near-term activity schedule focussed on significantly increasing production and cashflow, including:
The Saffron # 2 appraisal / production well to be drilled in May / June 2021, budgeted cost $3m million, expected production in the range of 200 – 300 bopd generating cashflows of US$1.8 – US$2.6 million per annum, and paving the way for a full-field development projected to achieve in an initial phase average daily production of 1,000 – 1,500 bopd / generate annualised cashflows of US$8 – US$12 million; and longer-term an overall field development could ultimately comprise up to 30 wells in total, with a peak projected production of approximately 4,000 bopd.
Appraisal well and extended well test at Weg Naar Zee in Suriname planned to be drilled in July 2021, budgeted cost US$0.7 million capital expenditure, and paving the way for an initial field development projected to produce c.100 bopd / generate annualised cashflows of US$1m per annum; and longer-term with a full WNZ field development scenario projected to generate annual cash flows for the Company in excess of US$2.5 million
Ongoing production maintenance and enhancement work in Trinidad and Tobago, from five producing fields with current production averaging in the range of 450 – 500 bopd, currently generating annual cashflows to BPC of approximately US$3 million per annum, and with the potential for cashflow growth from enhanced production levels and/or increased oil prices.
On a pro forma basis, the company would, at 0.4p, be valued at c£28 million. The T&T fields formerly owned by Columbus always require hefty maintenance so the odds are that they will not chuck off much in the way of free cashflow. Suriname might just make a contribution to PLC costs and Saffron might just make enough to cover the remainder of PLC costs but with a promise of additional exploration and appraisal work, the chances of Bahamas actually generating free cashflow, after PLC costs, are slim to non existent.
To those shareholders who have responded to my multiple warnings with moronic abuse, I suggest that you do not throw good money after bad, just move on and sell. You can change the name, change the boardroom titles but once a dog with fleas, always a dog with fleas.
Meanwhile, how much do you think millionaire ‘arry will earn as a Non Exec as he shares his valuable experience of destroying folks’ savings?
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