Shares in Bahamas Petroleum (LSE:BPC) were up 15% to 3.28p in early Monday trading as the exploration firm announced it had won a 30-year licence to drill for oil in offshore Argentina.
BPC were awarded the contract for the 15,000km2 licence at OFF-1, off the Atlantic coast of the South American nation, by the Uruguayan national regulatory agency, ANCAP.
ANCAP has the right to back-in for up to 20% of any commercial fields discovered.
There are no annual licence fee payments, and no drilling is required in the initial four-year period, said BPC.
BPC said it was targeting a potential resource of 1 billion barrels of oil equivalent (bboe). Bosses said they had identified minimum costs of $200,000 in the first year of the work programme.
CEO Simon Potter said BPC moved for the licence because it was a “low-cost, high-calibre” project, covering a “largely underexplored” region “of various vintages” but that it “represents a similarly underappreciated opportunity to that secured by the company in 2007 in The Bahamas.”
In recent years oil supermajors Royal Dutch Shell (LSE:RDSB), BP (LSE:BP) and French giant Total have all been granted licences in similar regions off the coast of Uruguay.
In December 2019, mid-sized American upstream explorer Kosmos Energy (LSE:KOS) was awarded two adjacent Uruguayan offshore blocks to OFF-1.
Applying modern exploration techniques of seismic imaging would reveal the full extent of the licence, Potter said.
Potter added: “The current period of introspection in our industry is presenting nimble, forward-thinking companies such as ourselves with compelling opportunities to expand our portfolio and achieve countercyclical growth.”
Perseverance-1 in the Bahamas, targeting 770 million barrels of oil equivalent in its first phase, remains the company’s prime focus and the well is expected to spud in late 2020 or early 2021, BPC said.
In March 2020 the company said it was expected to start drilling by early June.
Two months later BPC said it had signed a rig contract.
BPC has four exploration licences totalling 12,500km2 in the Bahamas and has been promising investors its maiden Bahamas well for a long time. This Uruguay licence gets them no closer to Perseverance, which appears to be quite the pivot for the company.