Buccaneer's Kenai Loop Reserves Exceed Expectations

Buccaneer announced an initial Proven and Probable Reserve of 38.3 BCF (4.8 MMBOE) at 100% owned Kenai Loop. These booked Reserves substantially exceed the Company's pre drill assessment of approximately 5.0 – 10.0 BCF.

Ralph E. Davis completed an independent reserve assessment of the Kenai Loop project. Ralph E. Davis is a respected consulting firm providing independent reservoir engineering, geological, technical and financial services to the domestic and international energy industry since 1924.


  Proven (1P) Proven & Probable (2P) Proven & Probable & Possible (3P)
Gas - BCF 31.5 38.3 51.6
Oil Equivalent- MMBOE 3.9 4.8 6.5

The above Reserves were calculated using subsurface mapping, pressure and flow rates data attained from KL #1 well. The current Reserves include only two sand packages at 9,700 feet and 10,000 feet. An average drainage area of 340 acres was used to calculate the Reserves and the Company expects that a second well will be required to drain the entire 340 acres. The Company's mapping indicates the two sand packages have a total closure area of 1,600-2,000 acres.

The Proven Reserves have a Future Net Income of US $127.9 million and a Net Present Value (NPV) of US $73.6 million. Assumptions used in the NPV calculation include:

  • Two wells producing at 5.0 mmcfd;
  • A gas price of US $5.71 / mcf;
  • A pipeline tariff of $0.21 / mcf;
  • Operating Costs of US $15,000 per month; and
  • A discount rate of 10%.

The KL # 1 well was drilled to a depth of 10,680 feet and intersected 26 separate gas zones totaling 645 feet of gross pay. The Company elected to perforate and test only the 9,700 and 10,000 feet sands (which totaled 87 feet of gross pay) due to rig availability constraints. The remaining 24 zones totaling 558 feet of gross pay are yet to be tested and do not form part of the Reserves assessment.

Kenai Loop is 100% owned by Buccaneer with total acreage under lease of 8,988 acres.

Near Term Work Plan

The Company expects to spud the second well at Kenai Loop this quarter. The second well will be drilled from the same location as KL # 1 and will have two primary objectives:

  • a step out well to test and possibly extend the known aerial extent of both the 9,700 and 10,000 feet sands. If successful this will effect an increase in the current Proven and Probable Reserves; and
  • to test the sands below 10,000 feet and specifically those at approximately 10,600 feet intersected in KL # 1. These sands appear similar to the 9,700 and 10,000 sands. If this or other objectives are successful then it is expected Proven and Probable Reserves will be increased.

Further details on the commencement date of this well will be made once rig contracts have been executed.


Director of Buccaneer Energy, Dean Gallegos said, "This is a very significant result. We expect that further drilling at Kenai Loop will yield additional increases to booked Reserves. These increases would be based on both the current two pay zones and zones below10,000 feet.

"Clearly, there is substantial upside from the remaining 24 zones (totaling 558 feet of gross pay), which are yet to be tested.”

"As part of the Buccaneer's 3 prong strategy, the Company has planned an aggressively drilling program for the development of the Kenai Loop field and expects to drill additional wells in the next 12 months.

"We anticipate placing the Kenai Loop field into production by the end of 2011."