This is because the State of Alaska is paying for the well... Buccaneer will break even before the well is ever produced - or actually owe on a small percentage (maybe 10%) of the total exploration cost...
Buccaneer owns the rig, they can carry a rig-rate of approximately $160K/day (that they never have to pay because they own the rig)... However, the state of Alaska who has agreed to pay for 50% of the drilling cost will refund 1/2 of $160K/day. The State of Alaska also pays for 50% of all 3rd Party service company products, services, and rentals. So, as long as Buccaneer's 1/2 of all the 3rd Party service company products, services, and rentals does not exceed $80K/day, then Buccaneer is getting a free well... Worse case scenario & BCGYF will only have to pay for 5% to 10% of the total drilling cost.
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