Buccaneer to Drill Two-Wells in ConocoPhillips Unit by 2015

Buccaneer Alaska recently executed an agreement with ConocoPhillips, that will give Buccaneer the right to earn a 100% working interest in ConocoPhillips deep oil rights in 23,368 acre North Cook Inlet Unit.

The North Cook Inlet Unit has produced roughly 1.9 trillion cubic feet of gas from the shallow Sterling and Beluga formations since the 1960’s and the unit is currently held by gas production that has been predominantly used to supply ConocoPhillips’ Kenai LNG facility. The shallow gas production will remain owned by ConocoPhillips.

Dean Gallegos Director of Buccaneer Energy said that ConocoPhillips’ North Cook Inlet Unit borders Buccaneer’s North West Cook Inlet Unit and as part of the transaction Buccaneer has entered into a license agreement on the existing 3D seismic owned by ConocoPhillips. The 3D license covers both the area subject to the Deep Oil Rights Agreement and parts of the adjacent North West Cook Inlet Unit, including the areas over which the Buccaneer is permitted to drill two wells.

Buccaneer’s Endeavour jack-up rig was an important aspect in negotiating the Deep Oil Rights Agreement. The agreement calls for Buccaneer to drill two wells in the area, with the agreement calling for the first well to be spudded by December 31, 2014 and a second well by December 31, 2015.

Gallegos said that Buccaneer plans to spud the first well in the southern portion of the unit using the Endeavour jack-up rig, which is leading Buccaneer to revise its planned offshore drilling schedule over the next two years. This may require some discussions with the Alaska Department of Natural Resources, once this is finalized further details will be announced.

This agreement includes no upfront cash consideration to be paid by Buccaneer and ConocoPhillips with retain an Overriding Royalty Interest.

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