Buccaneer provided the following update on its offshore operations in the Cook Inlet, Alaska that is conducted through its wholly owned subsidiary Buccaneer Alaska, LLC.
North Middle Ground Shoal (NMGS)
Since acquiring the initial leases from Stellar Oil & Gas (Stellar) in March 2010 the company has expanded its lease position from a net 1,280 acres to a net 7,602, of a gross 10,108 acres, through acquisition and control of the NMGS structure.
This net lease holding represents a 50 – 100% working interest in 5 blocks, the remaining 50% working interest (2,506 net acres) in some of the blocks that the Company does not own are held by Chevron.
Importantly, the Company now controls the lease on which the Pan Am A-1 well (MGS State 18743-1) was drilled in 1964 and which flow tested gas (> 3 mmcf/day) in the Lower Tyonek Formation from one of three gas intervals identified on drilling logs; this well also had significant oil shows in the Hemlock formation at the bottom of the well. Neither the gas nor oil was produced due to very low oil and gas prices at that time.
On acquisition in March 2010 the NMGS assessed P10 reserves were 154 BCF of gas and 18 million barrels of oil (MMBO). The P50 reserves were 60 BCF and 8 MMBO. These reserves are expected to increase significantly due to the expanded lease position and the incorporation of 3D seismic data.
The Company has appointed Netherland Sewell, one of the leading US based engineering firms, to complete a third party engineering report on the reserves for NMGS and the Company expects Proven, Probable and Possible (3P) reserves to be assigned.
There is also possible access to the existing Platform approximately 5 miles to the south, this would significantly reduce capital expenditure and time to first production.
The permitting process to drill in the Cook Inlet takes approximately 6-9 months. TheCompany has commenced this process for NMGS and has a detailed work schedule so that all permits are in place for the commencement of the 2011 drilling season commencing in March / April 2011.
The Company already has in place the Air Permit that regulates drilling rig emissions, this is a long lead time permit and does not expire.
A unit application for NMGS has been lodged with the Alaskan DNR, under this application the NMGS project will be renamed the Southern Cross Unit. The unit is expected to be granted late in the third quarter of 2010 after the required public comment process has been undertaken.
The main advantage of combining the lease positions into one unit is that a single discovery well and a plan of operations will hold all of the leases, whereas if they remain individual leases, a discovery well will only hold the lease on which the well was drilled. A unit is typically granted for 5 years.
North West Cook Inlet (NWCI)
The NWCI project is in approximately 100’ water depth with no unusual technical hurdles to drill and develop reserves.
Since acquiring the initial leases from Stellar Oil & Gas, LLC (“Stellar”) in March 2010 the company has expanded its lease position from a net 6,648 acres to a net 9,848, of a gross 10,168 acres, through acquisition and leasing activities at Alaskan State Lease Auctions.
This net lease holding represents a 87.5 – 100% working interest in 6 blocks, the remaining 12.5% working interest (320 net acres) in some of the blocks that the Company does not own are held by Rutter and Wilbanks Corporation.
At the time of acquisition the assessed P10 reserves are 630 BCF of gas and 80 MMBO. The P50 reserves are 386 BCF and 35 MMBO. These reserves are expected to increase due to the expanded lease position and the Company has appointed Netherland Sewell to complete a third party engineering report on the reserves for NWCI.
NWCI is very close to existing infrastructure this would significantly reduce capital expenditure and time to first production.
A unit application for NWCI has been lodged with the Alaskan DNR. The unit is expected to be granted late in the third quarter of 2010 after the required public comment process has been undertaken.
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