Buccaneer has entered into an oil and gas lease with the Cook Inlet Regional Corporation (CIRI) in respect to a 100% working interest of an additional tract at the Company's Kenai Loop project.
The lease comprises a total of 1,275 acres that directly offsets the proposed Kenai Loop # 1 well location that is anticipated to spud in April 2011. As previously stated construction of the pad location has commenced.
Kenai Loop is an onshore gas play located in the eastern Cook Inlet Basin in the northern part of the Kenai Peninsula near the city of Kenai. The Company has now acquired a 100% working interest (80% to 86.5% net revenue interest) in approximately 9,009 acres from multiple landowners.
Features of the Kenai Loop Project are as follows:
- Lies on a ridge between the Kenai Cannery Loop field (175 BCF gas production) and Beaver Creek oil and gas field (6 million barrels oil and 205 BCF gas production);
- Seismic amplitude anomalies in the same productive intervals as the above fields;
- Several control wells and 200 miles of 2D seismic data were used to map Kenai Loop and, similar to the surrounding fields, there are multiple stacked pay zone possibilities between 5,000 and 10,000 feet;
- Resource potential per well is 5 BCF gas and the in-house estimated reserve range is between 35 - 78 BCF gas with most likely reserves of 52 BCF gas. Initial rates per well are estimated to be in the 5 to 10 million cubic feet per day range;
- Three drilling locations are in the process of being permitted;
- The first well will be a step-out well from the Kenai Cannery Loop field and is targeted to spud in late April 2011, subject to confirmation of rig availability;
- 1 mile to the nearest gas sales pipeline;
- Strong local market for gas in the area, recent gas contracts have a US $7.00 / MCF floor and US $10.00 / MCF ceiling.