Bahamas Petroleum Company currently owns 100% equity in five exploration licences, Bain, Cooper, Donaldson and Eneas in Southern Bahamas and Miami in Northern Bahamas. Bahamas Petroleum Company has made two, 100% equity applications named Santaren and Andros by the Government; additionally the Company has joined with Statoil/Hydro for three split equity applications in the Cay Sal area, given the names Zapata, Falcones and Islamorada by the Government.

Upon making the licences application, Bahamas Petroleum Company was required to define the applied for area of blocks and to give that area a name; the Government then decides when awarding the licences whether they accept the proposed name(s) or whether they wish for the Company to change them. After the Government confirms and accepts the names they are typed into the actual licence agreement along with all other fiscal terms and obligations.

The names of the licences and applications hold no significance. The names of the four Southern licences run alphabetically and reflect 'traditional' Bahamian family names rather than pertaining to any particular person, or persons related to the oil industry or Bahamas Petroleum Company.

The agreement delimiting the maritime boundaries of The Bahamas and Cuba was signed on 3 October, 2011, by the Deputy Prime Minister and Minister of Foreign Affairs Brent Symonette. This agreement defines the dividing line between the two countries and the limits of territorial waters. Further, it defines the exclusive economic zones and continental shelves between the two nations which then also allows for cooperation in the management of living and non-living marine resources in the area. The agreement delivers on the Government assurances to protect not only the Bahamian borders but also the extent of the granted exploration licences. This affords Bahamas Petroleum Company certainty as it relates to the limits and extent of its currently held exploration licences.

The Petroleum Act ('the Act') 1971 Chap 219 governs Petroleum exploration, making provisions for the granting of Permits, Licences and Leases. Additionally, the Act covers the level of Royalties and granting of all rights required by a licensee or lessee in order that petroleum may be searched for, bored for, gotten, stored, treated, converted, or carried away. The Act is further refined by the Petroleum Regulations 1978 Chap 219; which goes beyond simply defining the term of the licence to actually detailing the procedures and obligations for the licence and/or lease. For instance, where the Act speaks only to Petroleum exploration; the Regulations specifically deal with the Term and Renewal of Licences, Expenditure and Pooling of Expenditure as well as Abandonment, Completion and Suspension of wells; etc.

Bahamas Petroleum Company was awarded five licences in 26 April 2007 for a twelve (12) year term, though the currency of the licence has to be renewed every 3 years - consistent with the existing Act and Regulations. A 2-year extension was granted to the first 3-year period in March 2008 after Bahamas Petroleum Company was requested to hold operations until The Bahamas/Cuba Delimitation agreement was assigned. Bahamas Petroleum Company accordingly deferred commencing seismic surveys in the awarded areas, with the first 2D survey not commencing until June 2010 and the 3D a year later in July 2011. Thus the renewal of the first '3' year term was extended until 26 April 2012 when the Governor General, under advice from the Minister,shallgrant Bahamas Petroleum Company a licence renewal. This, provided Bahamas Petroleum Company is in compliance with its obligations under the Petroleum Act, the regulations and the Terms and Conditions of its licence agreement. The Company is in compliance given the aggregate expenditure to date of some $50 million exceeds by over 60 times the obligations placed upon it by the licence agreement. There is no room for ambiguity in that compliance shall lead to renewal and each year (to the year of this report) the Company has received from the Ministry of Environment a letter attesting to compliance.

The Company and the Minister of Environment agreed the specific obligations pertaining to the licences before the licences were awarded in 2007. In summary, it is a requirement that Bahamas Petroleum Company pay annual rental fees for each licence, conduct seismic surveys, prepare and submit an Environmental Impact Assessment (submitted in October) and Environmental Management Plan (currently being drafted) ahead of drilling; additionally, there are certain reporting requirements for annual submission, such as a Plan Report showing annual expenditure for each licence; an amount which the Company has exceeded by a considerable amount.

In August 2010 the Minister of Environment, Earl Deveaux, announced that as a result of the Deepwater Horizon rig incident in the Gulf of Mexico; the government were to impose a moratorium on the consideration of any new oil exploration licence applications pending the enactment of revised/new environmental regulations covering petroleum operations. This immediately impacted the pending award of the three licence applications Bahamas Petroleum Company made jointly with StatoilHydro, plus the two 100% equity licence applications. However, Bahamas Petroleum Company has never received any documentation, official or otherwise, informing the Company how this refers to existing licences or modifies (if at all) the obligations placed upon it. In the absence of any official or direct advice the Company has continued, and will continue to honour, obligations to the Government, as defined in the terms and conditions of the licences.  Bahamas Petroleum Company is active in supporting the Governments efforts to implement revised environmental regulations compliant with international standards and embodying lessons learnt from the incident in the Gulf of Mexico.  The Company will ensure compliance with all and any, existing and new, regulations in all aspects of operations, including drilling.