Oil explorer still pursuing license renewal, carbon credit option

Oil explorer still pursuing license renewal, carbon credit option

NASSAU, BAHAMAS — Challenger Energy Group, formerly The Bahamas Petroleum Company (BPC) is continuing its push to renew its oil exploration licenses and says that it is engaging with the government and various third-party consultants on monetizing its assets in the country through carbon credits.

The company informed shareholders in its just released 2022 annual report that in March, it had notified the government of The Bahamas of its intent to renew its oil exploration licenses into a third 3-year exploration period. This renewal remains pending. 

“At the same time, the Group is engaging with the Government and various third-party consultants on a joint initiative seeking to monetize the asset via an alternative approach based around carbon credits,” noted Eytan Uliel, the company’s Chief Executive Officer.

The company did not indicate how the carbon credits proposal would be structured.

The company has to-date invested more than $150 million in its oil exploration efforts in The Bahamas. In early February 2021, the company which was then known as The Bahamas Petroleum Company announced that drilling had ceased on the Perseverance #1 well, with the well permanently plugged and abandoned after commercial quantities of oil were not found.

The company also revealed that it is still in talks with the government over the payment of license fees it owes. 

“The group is required under its Bahamian exploration licenses to remit annual rentals in advance to the Government in respect of the licensed areas. On February 27 2020, the company advised that, consequent on the granting of Environmental Authorisation for the Perseverance-1 well, the Company and the Government of The Bahamas had agreed on a process seeking a final agreement on the amount of license fees payable for the balance of the second exploration period (including the additional period of time to which the license period was extended as a result of force majeure).

“At the time, the parties entered into discussions with a view to finalising this outstanding matter. This discussion has been delayed owing to the State of Emergency declared and ongoing business disruption caused by the national response to the Covid-19 outbreak in The Bahamas,” the company noted.

“However, subject to said confirmation, the company expects that an appropriate side-letter agreement will be finalised in due course. In March 2021 the Company notified the Government of The Bahamas that it was renewing the four southern offshore exploration licenses for a further three-year period, having discharged its obligations under the previous license term.

“The group remains in discussions with the Government over the terms of the renewal of these licenses, which will include agreement on the level of annual rental fees payable over the renewed term.”