Buccaneer Energy Ltd. (ASX: BCC) has closed the farm-out of certain Alaskan projects by the execution of a binding participation agreement (PA) and joint operating agreement (JOA) with EOS Petro Inc. (OTCQB: EOPT), a California-based public company.
The terms of the joint venture are that EOS will earn, or have the right to earn, a 50% non-operating interest in Buccaneer's offshore projects, Southern Cross Unit and North West Cook Inlet Unit Deep Oil Rights, and in Buccaneer's onshore West Eagle project. EOS will have an option to earn a 50% working interest in the company’s North West Cook Inlet Unit (Offshore) under the same terms.
EOS will pay 100% of the costs associated with the first two wells in each of the above projects. Buccaneer will retain a 50% working interest and will be the operator of each of the projects. Under these agreements, total gross expenditure by EOS is expected to be between US$150 million and US$200 million.
EOS recently announced that it has signed a stock purchase agreement with GEM Global Yield Fund, a US$3.4 billion fund and member of the Global Emerging Markets Group (GEM), which formalizes a commitment from GEM, announced by EOS in January, to fund EOS with an aggregate of up to US$400 million, through a stock subscription agreement for EOS’ acquisition of domestic and international oil and gas assets, as well as for working capital.
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 long-term contract. It is anticipated that the Endeavour will be mobilized to the Southern Cross Unit to drill the first well in the farm-out program this weekend. Glacier is currently drilling the Kenai Loop #1-4 well; on completion of this well, 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%).
Chrystal Capital, based in London, first introduced EOS to Buccaneer in early January 2013. The farm-out fits within the strategic review on which Canaccord Genuity (Australia) Ltd. is advising the company.