Challenger Energy seeks partner, license extension off Bahamas despite dry well

Challenger Energy, the company formerly known as Bahamas Petroleum, is trying to extend its license periods for offshore blocks in the Bahamas, regardless of the first well there being a disappointment.

Challenger Energy in February 2021 said that the Perseverance #1 well offshore the Bahamas – the first well drilled off the country – encountered oil but the volumes were not considered commercial.

The Perseverance #1 well was spud on 20 December 2020, using the Stena IceMAX drillship. Drilling operations continued through to 7 February 2021.

The company targeted P50 prospective oil resources of 0.77 billion barrels, with an upside of 1.44 billion barrels, at the well using the Stena IceMAX drillship.

According to Challenger Energy, the results from Perseverance #1 would reduce the technical risk for any further exploration in the region.

Regarding the license extension, the company expects the process to take an extended period of time, similarly to the previous application.

Challenger Energy stated: “Under the terms of the company’s licenses, three months prior to the conclusion of the second exploration period, the company had the right to seek a renewal of the licenses into a third, three-year exploration period.

“The second exploration period concluded on 30 June 2021, and accordingly, in March 2021, the company advised the Government of The Bahamas of its intent to renew the licenses.

“As part of any such renewal, a number of commercial matters must be discussed and agreed between the Government and the company, including the scope of any future work program and licence obligations.

“Additionally, under the terms of the company’s licenses, on renewal from a second to third exploration period the Company is required to relinquish 50 per cent of the licensed area, for which the company has submitted a detailed relinquishment proposal to The Government“.

In the country, the company holds 100 per cent of five exploration licenses covering approximately 16,000 square kilometres.

Four of the licenses are located in the southern territorial waters of The Bahamas named Bain, Cooper, Donaldson, and Eneas while the fifth is located in the northern territorial waters of The Bahamas.

As for the potential farm-in partners, Challenger Energy said the farm-out process was a process ‘with a number of parties having expressed interest and engagement with the company.’

The farm-out is seeking to introduce funding and operating partner for the next stage of exploration activity in The Bahamas.

Eytan Uliel, CEO of Challenger Energy, said: “[…] it is often the case in our industry that several exploration wells are required before the potential of a frontier basin is unlocked. We had hoped for ‘instant gratification with Perseverance-1, which was not the case.

“However, notwithstanding the non-commercial results of that well, based on what we have learned we continue to believe that the licenses in The Bahamas are highly prospective.

“As such, we advised the Government of The Bahamas of our desire to renew the licenses into a third three-year exploration period, and are working through that process, which will likely take some time.

“Meanwhile, we are continuing with our evaluation of the exploration potential of the licenses, working to reduce technical uncertainties, and continuing in our efforts to secure a farm-in partner for the future. We will keep shareholders apprised of material developments“.