Bahamas Petroleum Company (BPC) is preparing to kick-start drilling at the Saffron #2 well in Trinidad and Tobago later this month as rig mobilisation at the site commences this weekend.
The Caribbean and Atlantic margin focused oil and gas company informed investors that all equipment has now been mobilised to the Trinidad site, including various re-usable items from the Perseverance-1 well in the Bahamas, along with the necessary contractor personnel.
BPC said the design of the Saffron-2 well includes a production completion, which allows for immediate oil production and sales on a successful well, with anticipated rates of 200 - 300 bopd, which it is estimated would provide more than $1.8m per annum of cash flow to BPC.
Based on these pre-drill estimates, at such a rate the Saffron-2 well would have a payback of 12-18 months as well as a return on investment (ROI) of in excess of 200%, the firm noted.
The spud of Saffron-2 is expected to occur on or around 23 May 2021, the group told investors and, should this be successful, a further five to nine production wells are currently planned to be drilled in H2 2021 as part of an overall field development of up to 30 wells.
These further five to nine wells are projected to deliver average daily production of up to 1,000 - 1,500 barrels of oil per day (bopd), which it is estimated would provide US$8m - $12m annual cash flows going forward (based on a US$60 / bbl oil price), the company reported.
Thereafter, field development drilling would continue through 2022 and 2023. The current estimated overall field development would comprise up to 30 wells in total, with a peak production projection of around 4,000 bopd. The current full Saffron field development scenario would generate annual incremental cash flows for BPC in excess of US$25m.
"I am pleased to advise that rig mobilisation has been confirmed for the drilling of the Saffron-2 well, all major contractors and suppliers are in place, and we are operationally ready such that drilling activity can commence around 23 May 2021,” said Eytan Uliel, CEO Designate of BPC.
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.
In a success case, this well can be quickly brought into production, potentially adding 200-300 bopd of oil sales and $1.8 million or more of annual cash flow. A full-field Saffron development could see peak production of 4,000 bopd and around $25 million of annual cash flow - a material project by any measure, and one we are thus eager to get after,” he added.
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While shares in Bahamas Petroleum Company have taken a recent hit after drilling at the Group’s Perseverance #1 well did not identify commercial volumes, BPC has noted “multiple value drivers” via appraisal, infill and well testing campaigns across its portfolio in 2021.
BPC is now awaiting the drilling of the Saffron #2 well, which the group anticipates will start on or around 23 May 2021, as the first part of BPC’s 2021 Trinidad drilling program.
Should drilling be successful, the Saffron #2 well is expected to deliver immediate oil production rates of 200 - 300 barrels of oil per day (bopd) to the group, while upon its completion, a further five to nine production wells are currently planned to be drilled in 2H21.
BPC is becoming a multi-asset ‘full cycle’ oil and gas company, with a range of exploration, appraisal, development and production assets and licences, located offshore in the waters of The Bahamas and Uruguay, and onshore in Trinidad and Tobago, and Suriname.
Successful Acquisitive Growth
As a result of its merger with Columbus, BPC has been granted access to high-impact exploration wells in The Bahamas, five producing fields, two appraisal / development projects Trinidad, and an expansive frontier exploration acreage offshore Uruguay and Suriname.
BPC believes the merger will allow both groups to provide something different from within that business cycle to the combined entity and that together the asset base is ‘more robust, has broader interests and is, as a consequence, more financeable and thus more valuable.’
“With the completion of the merger of BPC and Columbus, we today become a single company, in pursuit of a single-minded vision: the creation of a revenue generating, full-cycle, Atlantic margin exploration and production business,” said Potter in August.
He added, “Going forward, BPC is an exploration and production business, intent on generating reliable, growing production cash flows capable of supporting exploration activities, and which together will create significant value for all stakeholders.”
2021 Operations
Following the conclusion of the Perseverance #1 drilling programme, BPC is seeking to consolidate and further strengthen its balance sheet, so as to direct maximum effort towards planned value-adding drilling activities in Trinidad and Suriname during the course of 2021.
BPC’s 2021 work programme in Trinidad and Suriname is focused on near term operational activity, targeting exit production of c.2,500 bopd as well as prospect maturation in Uruguay.
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