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Southern Cross Unit # 1 Well – Progress Report

Buccaneer Energy Limited (“Buccaneer” or “the Company”) is pleased to provide the following update on the progress of the Southern Cross Unit # 1 well.

After completing the installation of the 30” diverter and well control equipment on the conductor pipe, some settling of the rig’s legs into the seabed was noted. The rig was levelled and side scan sonar was used to evaluate the seabed conditions, evidence of movement of sand behind and around the bottom of the rig legs was observed which is also called “scouring”.

This movement is caused by the strong currents during incoming and outgoing tides. The current location was surveyed and approved by various State agencies prior to mobilising to the location; the current issue is not uncommon in shallow offshore drilling.

A new drilling location approximately 450’ south-east of the current location has been surveyed using sonar, and as an added precaution, the Company mobilised divers to sample the seabed to ensure it would be suitable. The new location has been approved by the required State agencies and tugs are being mobilised to the Endeavour. It is anticipated that the rig will be moved to the new location on or around the 29 September 2013.

Once the rig is at the new location, a new conductor pipe will need to be driven and preparations will be made to commence drilling operations.

The Southern Cross Unit is currently 100% owned by the Company. The Company has executed a farm-out agreement with Los Angeles based EOS-Petro, Inc. (“EOS”) where EOS will earn a 50% working interest by paying 100% of the well costs of the first two wells at the Southern Cross Unit, including the Southern Cross # 1 well.

Yours faithfully, 
Mr. Dean Gallegos
Executive Chairman
BUCCANEER ENERGY LIMITED

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.

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 cash flow strategy:

  • Developing the 100% owned Kenai Loop onshore gas project with independently assessed 6.4 MMBOE in 2P Reserves;
  • Operating an offshore jack-up rig for use by third-parties in the Cook Inlet; and
  • Developing its 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.

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