Buccaneer’s JV Gives Alaska-Focused Company Money To Move Ahead
Formed JV in the Cook Inlet where EOS will finance the first two wells drilled and in turn has an option to earn a 50% WI in the projects.
Buccaneer Energy’s joint venture with EOS Petro Inc., announced Aug. 22, gives the Alaska-focused Buccaneer a true financing partner willing to pour in up to $200 million in the Cook Inlet.
The agreement farms out Alaskan projects between Buccaneer, based in Australia, and EOS. EOS in turn will foot the bill on the first two wells drilled in several areas.
"Bringing on a partner like EOS is a key component to our long-terms strategy, one that we have been pursuing for quite some time,” said Curtis Burton, Buccaneer’s CEO. “We are very pleased to have accomplished this objective, as it will help us better leverage our assets to continue to provide returns for our shareholders.”
The deal gives EOS the right to earn a 50% working interest several projects either fully owned by Buccaneer or in which Buccaneer has the right to earn a 100% of the interest.
The onshore and offshore projects include the Southern Cross Unit, the North Cook Inlet Unit and West Eagle.
EOS also has an option to earn a 50% working interest in Buccaneer's North West Cook Inlet Unit under the same terms. Buccaneer will operate and retain a 50% working interest in the projects.
EOS is picking up the tab for the first two wells in each of the projects and EOS' 50% working interest will be assigned to it after funding the first commitment well of the Southern Cross Unit.
"We are looking forward to working with Buccaneer Energy on these projects in the Cook Inlet of Alaska," said Nikolas Konstant, chairman of EOS. "We look for projects with the right risk profile for development and have become convinced that Buccaneer's operations in Alaska will provide that for us. Being able to partner with an established operator on permitted projects that are ready to drill is ideal."
Based on Buccaneer’s data, EOS anticipates its 50% working interest will amount to 1P reserves of 8.10 million barrels of oil equivalent (MMBOE) and 2P reserves of 25.70 MMBOE.
Total gross expenditure by EOS under these agreements is expected to be $150-$200 million.
EOS gains access to Buccaneer geologists and geophysicists, on a cost plus basis, to evaluate other opportunities that the two companies may partner on.
“With a clean balance sheet, onshore operations ramping up and an offshore program that is just beginning, we believe the prospects for Buccaneer are extremely bright -- the remainder of 2013 and through 2014 will be a very exciting time for the company,” Burton said.
Unless otherwise agreed by Buccaneer, all the offshore wells will be drilled using the Endeavour offshore jack-up rig and all the onshore wells by the Glacier onshore rig. Buccaneer currently has both of these rigs under a long term contract.
The Endeavour offshore rig is currently being mobilized to the Southern Cross Unit to drill the first well in the farm-out program. The Glacier onshore rig is currently drilling the Kenai Loop # 1-4 well, on completion of this it will be mobilized to the West Eagle project on the southern end of the Kenai Peninsula to commence drilling the West Eagle # 1 well.
Buccaneer will retain its existing working interest in both the Kenai Loop Project (100%) and Cosmopolitan Project (25%).
Buccaneer's flagship projects are a series of onshore and offshore developmental and exploration prospects in Alaska's Cook Inlet. EOS is an American company primarily in the business of acquiring, exploring and developing oil and gas-related assets, both domestically and internationally. EOS' current, active properties are located in the Illinois Basin. Chrystal Capital LLP, a London-based corporate finance firm, first introduced EOS to Buccaneer in early January.
"We are looking forward to working with Buccaneer Energy on these projects in the Cook Inlet of Alaska," said Nikolas Konstant, Chairman of EOS. "We look for projects with the right risk profile for development and have become convinced that Buccaneer's operations in Alaska will provide that for us. Being able to partner with an established operator on permitted projects that are ready to drill is ideal."
Curtis Burton, CEO of Buccaneer, added, "Bringing on a partner like EOS is a key component to our long-terms strategy, one that we have been pursuing for quite some time. We are very pleased to have accomplished this objective, as it will help us better leverage our assets to continue to provide returns for our shareholders. With a clean balance sheet, onshore operations ramping up and an offshore program that is just beginning, we believe the prospects for Buccaneer are extremely bright – the remainder of 2013 and through 2014 will be a very exciting time for the company."