Bayfield Energy Holdings plc, an upstream oil and gas exploration and production company with interests offshore Trinidad and South Africa, provides the following updates concerning its activities.
Oil sales contract
Bayfield and the Trinidad state oil company, Petrotrin, have agreed revisions to the Crude Oil Sales Agreement governing the sale of Bayfield’s share of production from the Trintes field, offshore Trinidad.
Bayfield first entered into a contract for the sale of its crude oil with Petrotrin in April 2009, which set the sales price at a 17.5% discount to the published price for West Texas Intermediate (“WTI”) crude, a commonly used marker for crude sales in the Caribbean market. The discount of 17.5% reflected the low volumes produced by Bayfield at that time of around 600 barrels of oil per day (bopd).
The negotiations leading to the revised contract terms have recognised that developments in crude markets have resulted in a situation where the use of WTI as a reference price no longer fairly reflects the market value of Bayfield’s crude and also acknowledged significant increases in production from the Trintes field.
Accordingly, Bayfield and Petrotrin have agreed upon revised pricing terms for Bayfield’s crude such that the sales contract will adopt Brent crude as the reference price and a revised discount of 9.5% for a minimum period of 12 months. The revised terms are effective from 1 August 2012. Brent has been trading recently at a premium to WTI of around US$20.00 per barrel.
There are no other material changes to the contract terms.
Exploration programme and rig deployment
The Company previously announced its contractual commitments to utilise the Rowan Gorilla III rig during Q3 and Q4 2012 to drill two wells in furtherance of its exploration programme on the Galeota licence in Trinidad. The rig is presently engaged in drilling on behalf of Niko, a co-signatory to the drilling contract, and is not scheduled to be available before November. Following its release by Niko, it is expected that the rig will be assigned by Bayfield and Niko to a third party operator in Trinidad for a period of at least six months. As a consequence, Bayfield will have no further liability under the rig contract except in relation to any future wells to be drilled at its option.
Bayfield Energy Chief Executive, Hywel John, commented:
“It is encouraging to report on the success of our initiatives to improve cash flow and manage our financial commitments to enable us to establish a sound platform from which to continue our exploration programme.”
Press Release, September 24, 2012