|
Buccaneer sees harvest Australian independent seeks to farm-out as many as four Cook Inlet prospects Eric Lidji For Petroleum News
Just days after a shake-up on its board of directors, Buccaneer Energy Ltd. plans to farm out three of its offshore prospects, the Australian independent announced July 5.
Under the terms of a letter of intent, the as-yet-unnamed partner would shoulder the cost of six wells at the three prospects in return for a 49 percent working interest in the fields.
The partner — currently described only as “a US-based public company” — would drill two wells each at the Buccaneer-operated Southern Cross and North West Cook Inlet units, and at the ConocoPhillips-operated North Cook Inlet unit, a legacy natural gas field where Buccaneer recently farmed-in the rights to explore and develop deep oil deposits.
The letter of intent requires the partner to use the Endeavour jack-up rig for the offshore wells. Kenai Offshore Venture LLC, a joint venture between Buccaneer and Ezion Holdings, and the Alaska Industrial Development and Export Authority own the rig.
The deal would also give the partner an option to pay for two wells at the Buccaneer-operated West Eagle prospect in return for a 49 percent working interest in the onshore natural gas prospect located in the southern Kenai Peninsula, just northeast of Homer.
The full eight-well program would cost the partner as much as $200 million, Buccaneer said. The cost of any drilling undertaken after the initial commitment would likely be divvied up according to the new working interest percentages, according to Buccaneer.
The deal must be executed by Sept. 15 or the letter of intent expires, Buccaneer said.
No Cosmo, Kenai Loop The proposed deal noticeably excludes the Cosmopolitan prospect.
Buccaneer is currently drilling at the prospect off the coast of Anchor Point. As of July 9, the well was at 7,258 feet toward a target depth of 8,000 feet, according to the company.
The Cosmopolitan No. 1 well had previously encountered oil shows in the Lower Tyonek formation, a shallower interval than anticipated, and “good oil and gas shows” in “multiple additional sands” between 5,620 feet and current depth, Buccaneer said.
While Buccaneer is the operator of the program, the company holds only a 25 percent interest in the leases. The privately held Fort Worth-based company BlueCrest Energy II holds the remaining 75 percent. Buccaneer is the sole owner of its other prospects.
The deal also excludes Kenai Loop, an onshore gas field near the city of Kenai and the only producing asset in Buccaneer’s portfolio. Buccaneer owns 100 percent interest in the field, which currently produces from two wells and is expected to host future drilling.
Of the four prospects under consideration in the farm-out deal, Buccaneer owns three outright, but the fourth is a farm-in of ConocoPhillips’ North Cook Inlet unit. Asked whether the agreement allowed for a subsequent farm-out, ConocoPhillips declined to comment, saying it does “not discuss commercial negotiations or agreements.”
Shake-up aftershocks? The deal is the first transaction since a major shakeup of the Buccaneer board.
At a special meeting on July 2, shareholders of the Australian independent removed two directors from the four-member board and appointed three new directors proposed by a pair of Hong Kong-based shareholders. Shortly thereafter, Buccaneer appointed another director, creating the possibility of an equally divided six-member board of directors.
The two shareholders — Pacific Hill International Ltd. and Harbour Sun Enterprises Ltd. — had requested the meeting to replace the entire board, accusing Buccaneer of having “lost its way,” particularly in Alaska. The two shareholders wanted Buccaneer to focus on higher return prospects in its portfolio rather than accumulating additional promising properties. Buccaneer CEO Curtis Burton said success in Alaska required “a big vision.”
In an attempt to allay shareholder concerns about the company being perpetually underfunded, Burton said Buccaneer was open to “creative funding,” which he said included funding work in a piecemeal fashion, selling its interest in the Endeavour rig and taking on partners. His comments came during a conference call several days before the meeting and were part of a push to get shareholders to keep the previous board.
The newly announced deal, if executed, would appear to alleviate concerns about funding as well as the delays Buccaneer has faced as it attempts to fulfill its work commitments.
| 