Buccaneer Has Second Gulf of Mexico Success

ASX-listed Buccaneer Energy Limited announced that the second well in the Pompano field was successfully tested in two gas-productive sands totalling 74 feet (22.4 metres) of net gas pay found in the well. Buccaneer has a 65% working interest in the well.

This is a dual completion well, allowing for two sand intervals to be produced simultaneously. The well's Operator, AnaTexas Offshore, plans to put the well into production in the next 10 days.

"These two sands are expected to produce at a combined rate of 7 million cubic feet per day plus 30 barrels of high quality condensate," says Director Mr Dean Gallegos. "We're pleased to report that the level of production surpasses our expectations of 6.0 million cubic feet per day."

Notably, the pressure reading from the E Sand was estimated to be a 4,820 psi bottom hole pressure (BHP), which the Operator advises is a near-virgin pressure. With the pre-drill estimate of 2,500 psi BHP, it is evident that the E Sand has repressurised since it was last drilled in 1982. According to the Operator, this increased BHP in the E Sand will have a positive impact on recoverable reserves.

This successful well follows on from the Pompano # 1 well that was drilled in January 2008 and was put into production in mid March 2008 at the rate of 7 million cubic feet per day. As a result of the strong market for gas in the United States, it is anticipated that the two wells will generate net revenue of US$1.3 to US$1.5 million per month for Buccaneer at the current gas price.

Corporate overheads are running at approximately US$250,000 per month meaning the Company will be profitable, the Company has a current market capitalization of approximately A$37.0 million

"We choose the Pompano project as our first because the infrastructure is already was already in place," Mr. Gallegos stated, "The project has two off-shore platforms and sales pipelines and this has saved us approximately US$15 million in development costs and 6-9 months of time and the benefits of having this infrastructure in place are now bearing fruit."

"Buccaneer has a 65% working interest in the Pompano project including these first two wells, which is relatively a high level compared to other companies in similar arrangements. This means all successful wells that are drilled at the project have a bottom line financial impact for our shareholders. We believe that if it is a development project and the risk is relatively low compared to an exploratory project then the working interest should be higher." stated Mr. Gallegos.

"Going forward there are at least another four other drilling locations at the Pompano Project, Buccaneer hopes to drill at least two of these this calendar year. All of the wells we will drill at Pompano will have at least 2P (proven and possible) reserves associated with them, therefore we have a high degree of confidence that we will be successful in a high percentage of future wells at the project.

According to Mr. Gallegos, Buccaneer's strong management team is one of the key reasons for the Company's prime position within this industry.

"Our management team is 100% based in the US in Houston, Texas," Mr. Gallegos stated, "Combined they have around 175 man years of experience in the oil and gas industry both locally and internationally. By being physically located in the US they have the ability to monitor the current opportunities and acquire the ones that conform to Buccaneer's requirements in a timely fashion."