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Buccaneer Energy - Executes Agreement With Conocophillips On North Cook Inlet Deep Oil Rights

HIGHLIGHTS
  • Right to earn 100% working interest in 23,368 acres of drilled and tested oil formations
  • Licensed agreement for 3D seismic over both Deep Oil Rights acreage and existing North West Cook Inlet Unit
  • No upfront cash consideration
  • Endeavour jack-up rig integral to securing deal


Buccaneer Energy Limited (“Buccaneer” or the “Company”) is pleased to advise that it has executed an agreement with ConocoPhillips Company and ConocoPhillips Alaska, Inc. (collectively “ConocoPhillips”) whereby the Company has the right to earn a 100% working interest in ConocoPhillips deep oil rights in 23,368 acres (“Deep Oil Rights Agreement”) held by the North Cook Inlet Unit (“NCIU”).

The NCIU has produced almost 1.9 trillion cubic feet of gas from the shallow Sterling and Beluga formations since the 1960’s and the NCIU is currently held by gas production that has been predominantly used to supply ConocoPhillips’ 100% owned LNG facility. The shallow gas production will remain owned by ConocoPhillips.

ConocoPhillips NCIU borders the North West Cook Inlet Unit and as part of the transaction the Company has entered into a license agreement on the existing 3D seismic owned by ConocoPhillips. The 3D license covers both the area subject to the Deep Oil Rights Agreement and parts of the Company’s North West Cook Inlet Unit, including the areas over which the Company is permitted to drill two wells.

The Company’s access to the Endeavour jack-up rig was an important aspect in negotiating the Deep Oil Rights Agreement. Buccaneer agreed to the division of the farm-in area into two acreage blocks, Block A and B, with a well commitment in each. A well must be spudded in either Block A or Block B by December 31, 2014 and a second well in the remaining block by December 31, 2015.

The Company plans to spud the first well in the Southern Block A using the Endeavour jack-up rig. As a result of this transaction the Company is revising its planned offshore drilling schedule over the next two years. This may require some discussions with the Alaska Department of Natural Resources, once this is finalised a further release will be made.

There is no upfront cash consideration to be paid by Buccaneer and ConocoPhillips shall retain an Overriding Royalty Interest (“ORRI”).



Yours faithfully

BUCCANEER ENERGY LIMITED

Signature




Mr Dean Gallegos
Director

 
 www.buccenergy.com.
 
About Buccaneer

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 88.4 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 drilled the two wells onshore Kenai Loop both of which are in production 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 two producing projects in Texas, USA. Pompano is an offshore gas project located in the Gulf of Mexico, drilled by the Company in 2008 and has an additional pipeline of ‘drill-ready’ gas prospects.

 

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