Buccaneer confirms execution of financing for Cook Inlet projects

On May 23 Buccaneer Energy confirmed that it had executed binding agreements for $20 million in financing from New York-based Richmond Hill Investment Co. Buccaneer says that the financing, which matures in January 2013, will enable the company to “capitalize on the further development of its Cook Inlet assets” prior to establishing a long-dated financing alternative.

Buccaneer has also established a $30 million revolving credit facility with Richmond Hill to fund receivables under the State of Alaska’s ACES, Alaska’s Clear and Equitable Share, tax exploration and development incentives, Buccaneer says. And the company has financed with another party the acquisition of the Glacier No. 1 drilling rig from Marathon Oil Co.

“Putting together financing facilities totaling US$50 million in the current funding environment is a significant milestone for Buccaneer Energy,” said Dean Gallegos, Buccaneer executive director. “We are pleased to be working with Richmond Hill and we appreciate the cooperation of all our stakeholders while we have worked through the process.”

Ambitious plans

Buccaneer has ambitious development and exploration plans in Alaska’s Cook Inlet basin, having brought its Kenai Loop gas field into production through a single well in the northern Kenai Peninsula. The company has been gathering 3-D seismic data over the field and wants to drill further development wells. With funding assistance from the Alaska Industrial Development and Export Authority, or AIDEA, the company is also in the process of bringing a jack-up rig to Alaska for offshore drilling in Cook Inlet — the rig has been undergoing refurbishment and modification in Singapore and is expected to leave Singapore for Alaska around June 20, AIDEA has told Petroleum News.

Buccaneer also wants to conduct onshore exploration drilling on the west side of Cook Inlet and in the southern Kenai Peninsula. And the company has purchased leases over the Cosmopolitan prospect, an oil pool offshore Anchor Point in the southern Kenai Peninsula.

Contractor payments

However, Buccaneer has run into difficulties over payments that it owes to the various contractors that have worked on its Kenai Loop project. The company now says that it is using its new funding from Richmond Hill to pay its outstanding contractor bills. The financing will also cover the cost of drilling another well at Kenai Loop in the second quarter of this year, as well as covering some other business expenses, Buccaneer says.

The company says that its strategy for handling its future cash flow has three components: continuing the development of the Kenai Loop gas field; operating the jack-up rig for third-party use in Cook Inlet; and using the jack-up rig to develop Buccaneer’s offshore prospects. The offshore prospects have been independently assessed to hold about 73 million barrels of oil equivalent in hydrocarbon resources, the company says.

—Alan Bailey

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