In a recentupdate, Bahamas Petroleum (LSE:BPC) announced a convertible loanfacility and funding update. The company is a great stock to trade both longand short, and I now think there is likely to be more opportunities to trade inthe future.

The funding facility that Bahamas has unveiled means that itcan now go it alone according to chief executive Simon Potter.However, at the same time, he adds, we continue to consider severalfarm-in options.

Now, we have to take these farm in options with morea few grains of salt, given that Bahamas has literally been talking about themfor years with little to show for it.

The firm did manage to agree to an exclusivity period, whereit earned $250,000 of cash per month for three months. However, in the end, themajor international oil player walked away in spite of the cost it had sunk. Ifthe major was not interested, then who else will be?

Do not get me wrong I would love to see a farm-in here.Not just for the believers, but because the share price will go bananas and Iknow I will be able to take more money out of this stock. But right now, I cannotsee it happening. I guess I am right until I am proven wrong.

The Perseverance-1 Well

This well has potential to be a company-maker. Bahamas istargeting an estimated 1,030 million barrels of prospective resources.

Many shareholders have been waiting for this well for a longtime. It is a roll of the dice that could see multiples of the share price ifit strikes and is found to be commercially viable.

If the well is a duster, and then plugged and abandoned,then this will not be great for Bahamas. I have no idea what its next plans areif this does not work out.

Terms of funding

The terms of the funding here are not great. When all issaid is done, this is death spiral financing, known for its destruction to theshare price. This was hidden in the RNS but the clue is there:

ConversionPrice:The lower of (i) a 25% premium to the price of the Companysordinary shares on the date of draw-down, or (ii) the lowest closing bid priceof the Companys shares on the five days prior to the date of conversion

It is not drawn down yet, but alongside the costs of thewell the companys recent equity issue will not be enough to fund this.

Therefore, the company has these options:

Now, management work for shareholders. But they also workfor themselves, as a company with no cash cannot pay any wages. It will beinteresting to see what happens but I am expecting volatility to increase asthe story develops.

How does the chart look?

We can see that volume and volatility has increased in recent months and certainly in the last few days.

Chart taken from SharePad

This stock has been a wild ride, and I previously calledthis a short around 2.6p, given that the AGM resolution to issue more equitywas passed. I then shorted more when Tom Winnifrith posted about a placing.

However, the company pulled this placing, resulting the biggap up in October where I covered and went long for a trade, closing the sameday. The board then managed to get a fundraise away much higher. So far,management have played an absolute blinder with the stock price sitting whereit is, and I have to take my hat off to them.

Shareholders will be hoping that they can continue this runof form into the drill.

AuthorMichael Taylors website http://www.shiftingshares.com contains a number of tutorialson how to trade and invest as well as his free book How to Make Six Figuresin Stocks.

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The Shifting Shares View: Trading opportunities abound at Bahamas Petroleum (BPC) - Value The Markets