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A Canaccord Update was released on September 17.
It’s worth noting that in their original May 22 Report on Buccaneer Energy they had a 12 months target price of $0.095c, so it’s been a significant rise to $0.15c - given the increased dilution since then.
Also, Canaccord seems pretty 'bullish' about Southern Cross with it seen as having the potential to be a 40mmbbl field. That would be nice!
There is a reconfirmed Buy recommendation.
The Update notes that…
“$0.15 Price Target represents 114% upside potential from the current share price of $0.07, and 371% upside to reach the unrisked estimate of $0.33….also….. the unrisked valuation could be as high as $0.33/share using 2P or “Best case” estimates which may in fact be exceeded. Gas and oil price assumptions could also be conservative, adding to the upside potential. If BCC meets with with success in some, but not all these projects, we expect the share price to reflect much more of the value as it becomes more evident.”
Canaccord says “CONFIDENCE RISING”
Investment Perspective
The Buccaneer Energy (ASX: BCC) share price has reversed the negative trend experienced in the last two years, and we believe there is more to come. BCC will have lots of news flow in the next 2-3 months: 1) Kenai Loop#1-4 well is in the target and should add to gas production in time for winter; 2) the Southern Cross-1 offshore well is about to spud, the first of up to 8 wells paid for by EOS Energy; 3) the West Eagle gas exploration well to spud in October; 4) new reserves and resource estimates for Kenai Loop; 5) new Board assembled. Our risked DCF valuation has increased to $0.15/share and we reiterate a Buy recommendation.
Investment highlights
The Kenai Loop#1-4 well is in the target zone...
... This well has been drilled from well pad #1 in a SE direction, with an expectation of adding reserves and production from a separate fault block to the two existing gas producing wells on the field. Assuming similar thickness and quality of the reservoirs, the well will probably be completed for production rather than undergo any flow testing. This may take 1-2 months, which will be in good time for the Alaskan winter market, where an extra 3-5mmcfd would add cash flow up to $5m annualised. Our 4.5¢/share DCF has upside potential.
Southern Cross is about to spud…
… only awaiting final approvals to start drilling. This is the first US$30m well paid for by EOS under the farm-in agreement, leaving BCC with a free carried 50% interest in the project once a second well is drilled. We have modelled Southern Cross as a potential 20mmbbl oil project, and risked the company’s share of the DCF at 50%, which generates a value of 2.7¢/share. Drilling may suggest that reserves are more like 25-40mmbbl, potentially valued in the 5-10¢/share range.
Raised Target Price to $0.15ps, Buy maintained
A detailed review of BCC’s oil and gas prospects has led us to increase the Target Price from $0.13 to $0.15/share.
Revised modelling of the deep oil rights at North Cook Inlet is the main reason for the valuation upgrade. We use the independent estimate of 2P reserves of 38.5mmboe gross, we delay the project until 2018, a year later than BCC’s plans, we include 10 water injectors at US$10m each which may not be needed, and we risk the project at 50% and still end up with a value of A$199m or 8.3¢/share. Netherland Sewell values North Cook Inlet’s 1P reserves of 9.8mmbbl at US$138m (A$150m). Drilling won’t take place until next year, but the upside is evident. We reiterate a Buy recommendation on BCC, with a $0.15 Target Price.
xxxxxx
See the Update here:
http://www.buccaneerenergy.com/pdf/sep202013_CGAU_BCC.pdf
Nice articles...thanks!
Update on Kenai Loop-
http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=BCC
futr
New Presentation
http://www.buccaneerenergy.com/pdf/04sep2013_updated_company_presentation.pdf
futr
Great news on Kenai Loop number 4.
It seems that yet again this company surprises. I have also heard about the spacing exception and I am surprised that anyone is concerned. Having been up in Alaska for a while with different companies you should know that the pissing match between native corporations and the rest us is not unusual.
Think about this like trying to get through the border crossing in Tia Juana Mexico. The more you pay the faster you go.
Buccaneer will have to make some sort of deal with them, but it is not unusual. My sources say they have all ready struck the deal because the regulators through out the objection.
Business as usual in Alaska. The more important thing is that they found gas and they are drilling ahead.
Letter from State of Alaska to Conoco telling them to reopen LNG facility
September 5, 2013
Trond-Erik Johansen
President
ConocoPhillips Alaska
700 G Street, ATO 2100 (99501)
P.O. Box 100360
Anchorage, AK 99510-0360
Dear Mr. Johansen,
I am writing to you to request that ConocoPhillips take action to support the State's broad
interests in continued investment and exploration in Cook Inlet. Recent filings at the Regulatory
Commission of Alaska (RCA) indicate that local utility demands will be supported by contracts
that cover the next five years, or until 2018. The State's objective is to foster an environment in
Cook Inlet that continues to provide supplies of gas that are adequate to meet demand and can be
reliably contracted for by local utilities. This requires market opportunities in the near term that
incentivize companies to invest in the exploration and development today that will lead to secure
supplies in the future. Robust oil and gas activity in the Inlet is critical to the State's primary
focus on energy security - that an adequate supply of natural gas from Cook Inlet is available for
Alaskans' heating and electricity needs.
To provide an additional market opportunity for gas from the Inlet, I request that Conoco Phillips
file an application with the Department of Energy's Office of Fossil Energy for a three year
authorization to export Liquefied Natural Gas (LNG) from your facility in Kenai, Alaska. In
addition to promoting energy security, the oil and gas activity this market opportunity would
support also advances the State's interests in economic health, robust employment, and
responsible development of the State's abundant natural resources.
The current supply oflocal utilities' contracted gas is the result of a resurgence in investment in
Cook Inlet during the last several years. A variety of factors have supported the recent increase,
including legislative support for tax credits, ownership transitions, and state advocacy. Recent
years have seen significant spending in the Inlet by new companies with substantial exploration
budgets, as well as in-field developments that are revitalizing existing fields. This investment
brings jobs and economic opportunities to Alaskans in addition to energy security. It is very
much in Alaskans' interest that these high levels of Cook Inlet investment continue, both within
existing fields and in new exploration areas.
2
Now that contracts can support local utility demands through 2018, there are concerns that future
exploration budgets may be significantly scaled back. Without market opportunities for gas
discoveries, companies lack the incentive to invest in continued exploration activities. In
addition to the economic challenges this would present for those employed in the Cook Inlet
energy industry, a lack of healthy exploration now may lead to supply contractions in the future
as existing wells' production levels decline.
Diminished exploration budgets also hurt the State's interest in seeing its resources developed.
State lands in Cook Inlet hold tremendous amounts of possibly recoverable natural gas, and the
United States Geological Survey has estimated that the entire basin may still hold trillions of
cubic feet. More market opportunities would create a more attractive business environment for
gas sales that would in tum encourage aggressive exploration to utilize the State's resources.
Were exploration efforts to encounter significant success, new long-term industrial and economic
opportunities in the State's interest, including long-term LNG exports, could be considered.
While it appears that Agrium is interested in re-starting their facility, which would support a
long-term demand for Cook Inlet supplies, their project start-up date could leave a gap in the
near-term. It appears that the only near-term market opportunity for significant additional
demand lies with the re-opening of the Kenai LNG facility.
As you are aware, limited market opportunities threaten the long-term deliverability of existing
gas wells in addition to future exploration prospects. When existing wells that could be in
production are 'shut-in' due to lack of demand for gas, water can migrate through the reservoir
and mix with sandstone clays. This creates sand in the well bore and causes serious operational
problems when there are attempts to restart production. Such operational problems negatively
impact the State- especially in cases where the State is the resource owner - as they limit
resource recovery and thus economic activity on leases. Renewed operations at the Kenai LNG
facility will allow wells to maintain flow during the summer months when local utility demand is
at its lowest and avoid these problems.
Consistent with the interests described above, I also request that you install an appropriate LNG
truck-rack and other necessary equipment at the Kenai facility to support the shipment of LNG
by truck throughout Alaska. The Governor and State Legislature have taken important steps to
support the use of North Slope gas in the Interior of Alaska, including financial support for the
build-out of distribution infrastructure. The installation of truck-rack equipment in Kenai would
provide a back-up plan to strengthen Interior Alaska's energy security, as well as another
possible outlet for Cook Inlet's gas supplies.
The operation ofConocoPhillips Kenai LNG export facility is needed to sustain exploration and
development budgets and activity in the Inlet. The State's concern is that the recent rise in
investment will falter if these kinds of market opportunities are not available in the near future.
The State is making every effort to continue to support exploration in Cook Inlet and advance
Alaska's interrelated interests in energy security, economic security, and resource recovery.
3
Thank you for your consideration. I would be happy to discuss these issues further and answer
any questions that you may have. I look forward to continuing to work with you to support Cook
Inlet's oil and gas industry.
Joeseph R. Balash
Acting Commissioner
Dept. of Natural Resources
BCC global investor call...
http://www.itnews.it/news/2013/0905094503319/buccaneer-energy-limited-asx-bcc-global-investor-call.html
I can't say that I am overly thrilled with this stock, but as a short term gain I can put 100% behind it. First of all, the stock got pummeled on a board shake up. The idea was that the current board would be removed and the new board would sell it all off.
However, that didn't happen. The core of the old board was put up against the new board and the old board won, and the assets were not sold. But they were, at least 50% of them in the offshore. Who knew that was in the works, besides current management.
Now the company is in an expansion mode, this was not going to happen before the execution of the Farm In, now the company is looking for new stuff. Before this they were looking at survival now it is expansion.
Short term this company will see rapid growth while others stagnate. A great time to get in.
Kenai Loop Drilling Update-
http://www.buccaneerenergy.com/pdf/3sep2013_kenai_loop_drilling_update.pdf
futr
Today, Buccaneer buys Apache leases, anyone else think it is interesting that Apache is willing to give up leases next to a proven structure for something that is not "material". My guess is Apache is out of the inlet, leaving more opportunity for Buccaneer. They probably decided that it was too much hassal when you can do Egypt without interference.
This is a post on August 14 from someone's FB wall that lives very close to the CI drilling site...
"The well is located in front of my home. I have been watching them all summer. They have been flaming off the gas on & off for the last two weeks. I knew they found a lot of gas. Great! Drill baby drill!!"
Well, I think it is pretty obvious that with EOS on board and no way to vote against the farm in, and being on the record that farming out was the right move, the new appointees bailed.
If the goal was to get control, no control was possible with a farm-in all ready done. At the same time, by giving them access tot he data room they would have known how complicated the structure is and how much time it was going to take to unravel it.
Since the Singapore crowd was not going to put more money in, and Meridian was obviously not going to vote in favor of the new directors, they bailed.
Question is, why did Meridian vote for them in the first place? Was Meridian promised access to more capital if they did? Did that deal fall through when Dean and Curtis stayed on the board?
Who knows, what we do know is what is going on now. We drilled Cosmo, we are going to drill SC and we are drilling KL 1-4.
With all mystery it seems things are getting clarified.
I see... thanks! Good or bad in your opinion?
Nikolas Konstant
Konstant... who, what? Sorry can you explain what you are talking about.
Is this good or bad in your opinion?
Ok, now I am slightly amazed.
I have been in the oil and gas business for the last 30 years and I have run across Konstant 4 times. Each time he comes across as a newbee, yet each time he comes with expertise and real value. I have never seen him do anything in the USA.
Wow, who knew that these two would come together. Perhaps the whole board thing was a distraction, but Konstant never does anything he doesn't control so expect a take over offer really quick.
Board shake up is interesting, it was obvious that the Pacific Sun and Harbor wanted control, they didn't get it because Meridian came in and bought the majority share. However, Meridian did give them the nod and add their members. But the new direction would only have worked if Meridian agreed. They obviously didn't.
Meridian must be looking for something beyond the squash and privatise that these guys were after. They are ready to abandon the singapore investors and proceed on their own which is a good thing in my opinion.
These guys will take profits and get out.
Good to see this trading,above .06!
Agree with your take regarding sales,but you've got to find commercial reserves before sales,and it looks promising so far.
Now lets hear that the jv has closed!
futr
Aussie close was A$.064 X .9155 conversion rate = US$.05859
So US investors are bidding it up a little bit compared to Aussie close. Hopefully soon, they will have many more reasons to bid up the stock. Prospects sure look juicy but they have to drill the wells and eventually hook up some production to generate the big gains I am expecting. Good start!~
BCC up nearly 10% on Austrailian market... lets see how that translates over...
Gotta love face book, they are flaring again...means "last zone" is going great guns. Gotta be at least 6 by the size of the flare.
Thanks for the reply, wont be long now until we know..
Nice to see KL drilling, hope the new target comes in..
As I said, it is only a rumor at this point, but the rumor came from a Directional Driller & they normally know what is going on because you can't do a whole lot without a mud-motor or RSS these days, it just isn't cool... So if they were to drill deeper, the Directional Drillers would be the first to know...
From a 2nd Source: Based on findings from the Cosmo Well, the AOGCC is really excited about what might be deeper below the present TD of the Cosmo Well. They are encouraging other operators change their drilling programs, using larger diameter casing, to leave the option for deeper exploration into Jurassic Sediments...
Everything said above is a rumor... it is all a rumor...
But, In my defense, the last rumor I posted came out a day prior to a Buccaneer PR & was almost word-for-word...
Hi Geopressure
Are you refering to the Pre Tertiary $25mil rebate that has been common knowledge for years??? or are you suggesting something else is in the pipeline....I cant see why BCC would continue drilling Cosmo when they need to get on and drill Southerm Cross, Bluecrest would have no say in this as they are not the operator....Not to mention BCC may choose to chase that incentive on another project that they hold a larger interest in like Southern Cross.....Interested to hear further..
Regards
In the case of resource play wells or even traditional wells that are not explorational, but development in nature, it is prudent to make inferences from choke sizes.
I would caution you against comparing choke settings between exploration wells. There is nothing unorthodox about testing/producing a well on a large choke (or even an open choke) so long as the reservoir is large enough support the production & the Tubing Pressure holds relatively flat. The goal of testing is to find the largest choke size that the reservoir can support.
Without knowing more information, I can only surmise that the reservoir tested in the Cosmo#1 Well is larger than the reservoir tested in the Kenai Loop Well.
--
I am hearing that the AOGCC is convinced that significant reserves are stored in deeper, Jurassic Sediments. that they are hell-bent on testing the Jurassic at the bottom of the Cook Inlet Basin & they are offering some pretty unheard of incentives for operators to drill wells with large surface & intermediate casing so that the wells can latter be used to target deeper formations...
Let me caution you that this is just a rumor, but I have heard that Blue Crest is going to continue drilling the Cosmo#1 down to these Jurassic Sediment. The AGOCC is/has approached other operators regarding such exploration, but they seem to think that the Cosmo Structure is the best place to drill such a well... & why not do it while the rig is on location? If I get more information, I will share it, but as for now it is just a rumor...
It's great that the oil looks commercial and the first gas test is also solid. Looks like they opened up the choke further than they did in the Kenai Loop tests so it probably produces at 1/2 the test rate at best from this zone. BUT this is the first of several tests. I was hoping for a test exceeding 10mmcfpd but this is a good start. If they have several good zones, we may be able to co mingle the zones if the pressures are similar.
Also have to remember that Buccaneer has 25% WI in this well as opposed to 51% to 100% in their other wells.
Looks like their first offshore well is a success but how good is still to be determined. 400' feet of pay is great but we need a couple good zone tests to allow Blue Crest to finance more Cosmos drilling.
COSMO# 1 WELL – SUCCESSFUL GAS PRODUCTION TEST
Buccaneer Energy Limited (“Buccaneer” or “the Company”) is pleased to advise that Sunday, 4
August 2013 (Sydney), a 73’ section of the sand at approximately 5,500’ measured depth (MD) was
perforated and flow tested in the Cosmo # 1 well in which the Company has a 25% working
interest.
The well has successfully tested gas at a maximum rate of 7.2 million cubic feet per day (“MMCFD”)
on a 30/64” choke with a flowing tubing pressure (“FTP”) of 1,318 psi and no water. Gas was flared
at the location, see Figures 1 and 2 below.
A four-point test was carried out to estimate the absolute open flow potential (“AOFP”) of the
reservoir. Once the pressure data is recovered from down-hole testing equipment and the AOFP
finalised a further release will be made.
At this time, the preparations are underway to test the second gas zone at 4,300’ MD with a 60’
interval of perforations.
Summary of Previous Results
As indicated from logging, MDT and sidewall cores,the Cosmo # 1 well has confirmed the presence
of an extensive hydrocarbon column covering numerous formations above the previously known oil
reservoirs. The Cosmo # 1 well was drilled on the crest of the structure and encountered geologic
formations 200 - 300’ higher than those encountered by the Starichkof State # 1 well. The Cosmo #
1 well has encountered oil bearing sands ~400’ stratigraphically higher than any other wells drilled
on the structure to date.
The Tyonek formation, which contained all exploratory targets, was found to have 488’ of indicated
oil and gas pay, including 18 gas zones and 8 oil zones.
The previously-discovered Starichkof and Hemlock formations were confirmed to contain oil in this
well. The Starichkof formation was found to have 43’ of indicated oil pay, and the Hemlock
formation was found to have 149’ of indicated oil pay.
Not all of the zones intersected will be flow tested; however, the newly-discovered zones will be
high graded and a testing program implemented in conjunction with BlueCrest Energy Inc. who
holds the remaining 75.0% working interest.
Yours faithfully
BUCCANEER ENERGY LIMITED
I drove past the K. Loop 1 pad the day before they announced drilling approval. The glacier rig was in place on the correct side of the pad. I expect they spudded Tues - Wed last week.
Greenoilman
Any links to the photos???
Cheers
Well looking at the pictures circulating on the internet, that flare has to represent at least 4 million a day or better. Stopped the Coast Guard cold.
Buccaneer Energy Limited (ASX:BCC) Cosmo No Well Progress Report - Oil Testing Results
July 30, 2013
Buccaneer Energy Limited (ASX:BCC) ("Buccaneer" or "the Company") is pleased to provide the following update on the progress of the Cosmo # 1 well in which the Company has a 25% working interest:
Time: 9.00 am (Sydney) 30 July 2013 / 3.00 pm (Anchorage) 29 July 2013.
Depth: 7,599' Total Vertical Depth ("TVD")
Activity: Two oil zones within the Tyonek formation totalling 86' were perforated between 5,824' to 6,092' MD and a drill stem test has been completed. After a moderate "blow", swabbing resulted in good oil recovery. The Endeavour rig has very limited oil storage capability and more extensive flow testing of the oil zones cannot be conducted at this time. This recovered oil is being analysed in detail and will be fully reported when testing is completed.
The testing of the oil zones has achieved the anticipated results and it is expected an upgrade in the oil reserves of the project will be achieved. The next test will target the lowermost gas zone in the Tyonek.
http://www.itnews.it/news/2013/0730071504666/buccaneer-energy-limited-asx-bcc-cosmo-no-well-progress-report-oil-testing-results.html
Anyone else think it's a big coincidence that all this good news started flowing after the new board was elected in???? IMO, there's no way all of this happened RIGHT after the investor came in and took a few seats on the board. I could be wrong I guess.
BCGYF/BCC.ax Buccaneer closed in Australia at A$.056 or US$.0515
I bought a few more today at .0497 because it was slightly below the last close in Australia. The bid is still .0495 but the ask has moved up to .06. Getting very anxious to see those Cosmos test results. Always takes longer than you want but these are important to show that the old wells can be duplicated and how big the new oil zones are that Buccaneer found.
KL1-4 approved. to spud in 7 to 10 days using the Glacier rig.
Buccaneer also proceeding with the West Eagle onshore well. That well should spud in late August after the Glacier rig is done at KL1-4.
With Cosmos testing due in August, Buccaneer should have lots of news to help the stock price. Of course, bad news on Cosmos could also hurt the stock. Still the opportunity to prove up it's inventory is there and Buccaneer is busy drilling!
http://www.buccaneerenergy.com/pdf/25jul2013_Kenai_Loop_Drilling_Permit_Approved.pdf
been nibbling a bit more today at .049 and .0501. The offer at .0501 shows 10,000 shares but I've hit it for 60k shres and it hasn't budged. Next offer is .051.
Last night Aussie close of A$.056 X exchange rate of .9123 gets you US$.051. A tiny smidge under. Guess we'll need good test results to blow thru a few more levels. I'm done for now.
Will be watching anxiously for test results over the next few weeks. This part is agonizing because you're so close to the answer but you might not like it once it arrives.....or you'll be elated.
Big volume is right...nice to see some green on BCC for the last few days.
Buccaneer keeps gaining. Big volume day in Australia, 21 million shares. +.003 to A$.055
It's going to be a long wait till we get the Cosmos test results. Will take a few weeks and it will probably seem longer.
Buccaneer owns the Glacier Rig. Here is their description. This is the rig that has drilled the previous 3 Kenai Loop wells.
The Glacier Rig is a Mesa 1000 carrier mounted land drilling rig. It was built in 2000 and can drill to depths of approximately 15,000'. The rig is unique in that it was designed and built with the input of the drillers that would operate the rig on the Kenai Peninsula, Alaska. It is described as a purpose-built truck mounted drilling rig designed for work on the peninsula. Glacier Rig was designed to operate close to neighborhoods on Alaska's Kenai Peninsula. The small size is ideal for pad drilling, minimizing the drilling footprint and impact to its surroundings.
The Glacier Rig was used to drill both of the Company's Kenai Loop wells in 2011 and the Company considers its acquisition as an enabling asset and ensures its ability to develop onshore projects.
Rig Specs
I think that it would be best for all involved parties if Buccaneer would step down as the Operator of the leases on the Farm-in deal. Buccaneer Management does not have the personality characteristics that are needed to drill wells in a timely & efficient manner.
That said, Buccaneer's Future is looking brighter & brighter everyday. I'm holding...
Kenai Loop, do you know what rig will be utilized to drill this well?
I've been adding lately. I bought most of my shares several months ago but the Farm In announcement is very positive. If a "large public US energy company" is willing to commit that much money to Buccaneer's several projects, I think that adds a lot of credibility to their portfolio. I've always liked the above market prices for ngas in Cook Inlet AND the rebates from Alaska for drilling there.
But IF they can get the Farm In closed, they will have drilling money for the next 18-24 months. No more stock issuance!!!
I got discouraged when they issued that big chunk at .04 in addition to the already huge share count.
So my enthusiasm is higher for Buccaneer lately and I've been scraping together little bits of money to buy more. My enthusiasm doesn't mean much, though. If they don't sign the Farm In, there will be lots of pain for Buccaneer holders.
So watch for Cosmos test results but most of all, watch for the Farm In announcement. That will signal a new era for Buccaneer. They will have multiple chances, funded by a big player, to strike it rich! One bad result won't stop the program. And presumably the big player will have experts helping determine where to drill to increase our chances.
Avast ye Matey, the Pirates of Buccaneer Energy have treasure to plunder!
Bob - thank for your continued updates! You seem a bit more positive lately about BCC. I'm hoping we continue to see an increase in PPS with good news.
GLTY!
somebody took out the offer with a buy of 257,721 at .044. Congrats to the buyer. Lowest offer is now .05. I think that offer started at 450K shares. Somebody was anxious to get out because based on last night's close in Australia at A$.052, they should have moved up their ask to .046 but they obviously wanted out and got their price.
Exciting times ahead for Buccaneer. We should get test results over the next month from Cosmos. Kenai Loop should spud any day and the 800 lb gorilla is the FARM IN!!!!! We need that deal signed and put to bed so we can proceed with accelerated drilling plans without worrying about where the money is coming from.
If the Farm in Partner is somebody big like Apache, we should get a boost in credibility. Why would somebody big commit $150-200 million to a little company like Buccaneer unless they controlled highly prospective drill targets that had legs. A big public company isn't going to be satisfied if all 8 wells hit unless there is a lot more acreage to develop after the initial success.
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