Buccaneer Energy - Letter of Intent – Offshore Farm Out - ASX Release
Buccaneer Energy Limited (“Buccaneer” or the “Company”) is pleased to advise that a non binding Letter of Intent (“LOI”) has been executed with a US based public company (“Farm-In Party”) to farm-out the following projects that are currently 100% owned by the Company:
Southern Cross Unit;
North West Cook Inlet Unit; and
North Cook Inlet Unit – Deep Oil Rights.
The Farm-In party will pay 100% of the costs associated with two wells in each of the above projects for which it will earn a 49% working interest.
In addition the Farm-In Party will be granted an option to earn a 49.0% working interest in the Company’s 100% owned onshore West Eagle project by paying 100.0% of the costs of the first two wells.
Buccaneer will retain a 51.0% working interest and the role of Operator in all of the above projects. Additionally, the Company will retain its existing working interest in both the Kenai Loop Project (100%) and Cosmopolitan Project (25%).
The LOI contemplates that on completion of the above wells and the assignment of a 49.0% working interest to the Farm-In Party that all future expenditure on the above projects will be based on individual working interest ownership.
The LOI stipulates that the Endeavour jack-up rig must be used on all off shore drilling that is subject to this LOI.
The LOI provides the basis for the parties to negotiate and if agreed, execute, a binding Exploration and Development Agreement (“Agreement”) at which time further details will be disclosed. The LOI acknowledges that the proposed transactions will be subject to satisfaction of conditions, including board approval by both parties. The LOI will automatically terminate on 15 September 2013 if an Agreement has not been executed and either party may withdraw from the LOI at any time.
If the Farm-In party proceeds to drill all 8 wells subject to this LOI, total expenditure by the Farm-In Party is expected to be between US$150.0 - US$200.0 million.
BUCCANEER ENERGY LIMITED
Mr Dean Gallegos
For further information please contact Dean Gallegos, Executive Director on 0416 220 007 or 02 9233 2520. Alternatively visit the Company’s website at www.buccaneerenergy.com.
Buccaneer Energy Limited is an Australian listed company focused on developing its 100% owned oil & gas assets in Alaska. The Company's flagship projects are a series of onshore and offshore developmental and exploration prospects in Alaska’s Cook Inlet.
Buccaneer Energy has a 3 pronged cashflow strategy:
Developing the 100 % owned Kenai Loop onshore gas project with independently assessed 6.4 MMBOE in 2P Reserves;
Operating a offshore jack-up rig for use by third parties in the Cook Inlet; and
Developing its 100% owned offshore Cook Inlet projects that have independently assessed 150.8 MMBOE in 2P Reserves / P50 Resources using the acquired jack-up rig.
Buccaneer Energy has a 50/50 joint venture with Singaporean-based Ezion, a leader in the development, ownership and chartering of strategic offshore assets, and the Alaskan Industrial Development and Export Authority (“AIDEA”). This joint venture has acquired the jack-up rig “Endeavour” which is capable of drilling in all areas of the Cook Inlet, the Beaufort Sea and the Chukchi Sea. Mobilisation of the Endeavour into the Cook Inlet was completed in late August 2012.
The Alaskan Government is supportive of oil and gas in the Cook Inlet. There are a number of fiscal incentive programs for exploration and development in the Cook Inlet.
Buccaneer Energy has two onshore wells at Kenai Loop producing at a combined rate of 10.0 MMCFD (1,666 BOEPD). The Company expects this to increase to 11 - 12 MMCFD (1,833 – 2,000 BOEPD) if a third gas sales contract can be finalised in the coming months.
Buccaneer Energy also has major working interests in Texas and the Gulf of Mexico, USA.