Sydney, Australia, Jan 7, 2014 - (ABN Newswire) - Buccaneer Energy Limited (ASX:BCC.AX - News) (OTCMKTS:BCGYF - News) advises that the Alaskan Oil and Gas Conservation Commission ("AOGCC") has determined that the proposed Cosmopolitan State # 2 well, which is planned to be drilled to 5,685', could potentially penetrate formations that are capable of flowing oil. Consequently, a major modification to the Company's Offshore C-Plan will be required. A C-Plan is an oil spill clean-up plan.
A major modification to the current C-Plan can take up to an additional 120 days due to additional studies required as well as the requirement to give the public an opportunity to comment on the proposed changes. The Company has discussed the AOGCC decision with its Cosmopolitan joint venture partner, BlueCrest Energy Inc. ("BlueCrest"), and it is the intention of the joint venture to file an administrative appeal on the AOGCC decision.
Unless the decision is reversed on appeal or early drilling is allowed as an extension to the summer drilling season, offshore drilling operations in the Cook Inlet cannot commence until 15 April 2014, the anticipated start of the summer drilling season. The Endeavour jack-up rig will remain at Port Graham until that time.
In early 2013, the Company applied to drill the Cosmopolitan State # 1 well during the 2012 / 2013 winter drilling season to a depth of 6,000'. The Cosmopolitan State # 1 well was designed to test both gas targets in the shallow Tyonek formation and previously identified oil targets below 6,000' in the Hemlock and Starichkof formations. At that time, the AOGCC determined that the Cosmopolitan State # 1 well had the potential to flow at 26 barrels of oil per day ("BOPD") above 6,000' and therefore required a major modification to the Cosmopolitan C-Plan.
Given the AOGCC's determination was made late in the winter season, the Company deferred on making the major C-Plan amendment and therefore the Cosmopolitan State # 1 well was drilled in the 2013 summer drilling season, which commenced on 15 April 2013.
On 8 October 2013 the Company made a request to the AOGCC for a determination that the Cosmopolitan State # 2 well would not penetrate oil formations down to 5,685'. Based upon the data that was attained in the Cosmopolitan # 1 well, the Cosmopolitan State # 2 well was planned to be drilled only within the known gas formations within the Tyonek Formation, i.e. a "gas-only" well. Approval of the "gas only" status was expected.
Under Alaska law, the AOGCC had the responsibility to review the technical data and make a recommendation to the Alaska Department of Environmental Conservation ("ADEC"). Their rejection of "gas only" status will result in the aforementioned schedule changes.
Sale of Cosmopolitan Project
As advised in the ASX release dated 2 January 2014, the Company has executed a Sale and Purchase Agreement with BlueCrest for the sale of its 25% interest in the Cosmopolitan project.
Total consideration raised for the Company by the sale is US$41.25 million, inclusive of the repayment of a US$1.25 million bond.
Settlement is expected to take place in mid-January 2014.
About Buccaneer Energy Limited:
Buccaneer Energy Limited (ASX:BCC.AX - News) is an Australian listed company focused on onshore and shallow waters of the Cook Inlet of Alaska and the Gulf of Mexico, as well as onshore Gulf Coast assets that have been left behind or overlooked by other players.
The Company has a large existing portfolio and disciplined acquisition strategy focused on opportunities with:
- Assets with attractive economics;
- Assets that have existing infrastructure in place that can be accessed;
- Assets near a commercial market that has been de-risked; and
- Assets that have multiple stacked pay targets.
Buccaneer's management team has a proven track record of finding and exploiting oil and gas reserves and generating new opportunity deal flow.
Buccaneer Energy Limited T: +61-2-9233-2520 F: +61-2-9233-2530 WWW: www.buccenergy.com
Buccaneer Energy Limited
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