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Buccaneer closes on farm-out deal Partnership with California independent EOS Petro will fund six wells at three prospects with the option for a fourth Eric Lidji For Petroleum News
Buccaneer Energy Ltd. has closed on a farm-out agreement designed to cover much of its Cook Inlet exploration commitments, the Australian company announced on Aug. 22.
Under the deal, the California-based independent EOS Petro Inc. will fund six wells in return for a 50 percent stake in as many as four Buccaneer-operated prospects.
The deal requires EOS Petro to pay for two wells each at the onshore West Eagle unit, the offshore Southern Cross unit and the offshore North Cook Inlet unit. ConocoPhillips operates North Cook Inlet, but Buccaneer recently farmed-in the deep oil rights at the legacy natural gas field. The deal also includes an option for EOS Petro to fund two wells at the Buccaneer-operated North West Cook Inlet unit, in return for a 50 percent stake.
The program is expected to cost between $150 million and $200 million.
“Bringing on a partner like EOS is a key component to our long-term strategy, one that we have been pursuing for quite some time,” Buccaneer CEO Curtis Burton said in a statement. “We are very pleased to have accomplished this objective, as it will help us better leverage our assets to continue to provide returns for our shareholders.”
The arrangement requires EOS Petro to use the Endeavour jack-up rig for offshore wells and Glacier No. 1 rig for onshore wells. Buccaneer currently has both rigs under contract.
The Endeavour rig is headed for Southern Cross from its prior location at the Cosmopolitan prospect. The Glacier rig is currently at the onshore Kenai Loop field.
New player EOS Petro is relatively new to the oil and gas game.
The company started its life as Cellteck Inc., which marketed a device for reducing the harmful effects of electromagnetic radiation emitted from hand held electrical devices.
Starting in 2011, Cellteck began acquiring interests in oil and gas properties in Africa and Illinois. While the company plans to continue marketing the cell phone device “for the foreseeable future,” its “principle focus” is now oil and gas. In May 2013, the shareholders changed the name of the company to “EOS Petro” to reflect this new focus.
Through the first six months of the year, EOS Petro earned $220,754 in revenue from its oil and gas operations, up from revenue of $16,474 during the same period of 2012, but the company reported a net loss of $3,426,102 for the half, according to unaudited financial statements in its most recent quarterly earnings report filed in mid-August 2013.
Through a stock purchase agreement signed earlier this year, the investment firm GEM Global Yield Fund will provide EOS up to $400 million for acquisitions and operations.
The London-based Chrystal Capital introduced Buccaneer and EOS Petro in January.
“We look for projects with the right risk profile for development, and have become convinced that Buccaneer’s operations in Alaska will provide that for us,” EOS Petro Chairman Nikolas Konstant said in a statement. “Being able to partner with an established operator on permitted projects that are ready to drill is ideal.”
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