ASX:BCC) is pleased to advise that BlueCrest Energy Inc. ("BlueCrest") and the Company have executed final closing documents with Pioneer Natural Resources Alaska, Inc. ("Pioneer") for the acquisition of the Cosmopolitan Project ("Cosmo"). Cosmo is being jointly acquired with privately owned Fort Worth, Texas based BlueCrest acquiring a 75.0% working interest, with Buccaneer acquiring a 25.0% working interest and assuming operatorship of the project.Additionally, BlueCrest and Buccaneer have executed a Joint Operating Agreement ("JOA") that formally designates Buccaneer as the Operator of the project.
The closing documents are being held in escrow until the Company's lender Richmond Hill Investment Co., LP provides final written consents in respect to Buccaneer assuming the role of Operator. These consents are expected to be provided by Richmond Hill in the week commencing 20 August 2012 and once provided the funds will be transferred to Pioneer to enact financial close of the transaction.
Background
Cosmo is an undeveloped oil and gas field located in 50 feet of water in the Cook Inlet of Alaska and is in close proximity to the shoreline at Anchor Point on the Kenai Peninsula. Cosmo has regional proximity to Buccaneer's other Alaskan assets and will utilise the capabilities of the Endeavour rig during the northern hemisphere winter.
The strong interest in the region, which contains the Cosmo project, is demonstrated by Apache Corporation acquiring leases surrounding and adjoining the leases near Cosmo during the last State lease sale conducted in June 2011.
Reserves
As part of its due diligence on Cosmo, Buccaneer and BlueCrest engaged respected consulting firm Ralph E Davis to conduct an independent reserve estimate on the project, which found that Cosmo contains an estimated 55.2 million barrels of oil equivalent ("MMBOE") of 2P reserves (13.8mmboe net to Buccaneer). The 2P Reserves of Cosmo increase Buccaneer's independently assessed Alaskan 2P Reserves from 17.5 million barrels of oil equivalent ("MMBOE") to 31.3 MMBOE.
Preliminary Development Program
Development of the Cosmo project involves two separate programs:
1. A shallow gas development (3,000 - 4,000 feet) to be drilled with the Endeavour jack-up rig; and
2. A deeper oil development (6,000 - 8,000 feet) that can be exploited using directionally drilled wells from onshore.
An offshore well using the Endeavour jack-up rig is planned for late 2012 that will further quantify both the oil and gas zones of the project.
Development of the Cosmo project will begin in the northern hemisphere winter of 2012 and continue through to 2014.
Offshore gas wells will be drilled and tied back to the existing onshore site which will be connected to ENSTAR's recently completed gas transportation line.
Increased Jack-Up Rig Utilisation Improves Economics
The acquisition of Cosmo will allow the use of the Endeavour jack-up rig to provide a more efficient development opportunity than was previously available to Pioneer. Without access to a jack-up rig, all wells, including water injection wells needed to be drilled as long reach directional wells from onshore. Further, the shallower gas reserves could only be reached by an offshore drilling program that will utilise the Endeavour. Utilisation of the Endeavour jack-up rig materially improves the economic parameters of the overall project.
The Cosmo project is located in the southern part of the Cook Inlet which is free of ice flows during winter. Cosmo will provide a winter operational location for the Endeavour jack-up rig to utilise the rig when ice flows in the northern part of the Cook Inlet preclude drilling during the November - March period.
This provides several years of winter drilling activities and is expected to materially improve the profitability of the Company's offshore drilling division which was previously based on a 240 day drilling season.
To view the complete Buccaneer Energy announcement including Cosmo Reserves Estimates table and figure, please click the link below:
http://media.abnnewswire.net/media/en/docs/ASX-BCC-690034.pdf
Source: http://www.abnnewswire.net/press/en/73394/
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