Buccaneer Energy Limited (“Buccaneer” or the “Company”) is pleased to advise that it 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. (“EOS”) (OTCQB: EOPT), a California based public company.
EOS will earn, or have a right to earn, a 50.0% working interest in the following projects, which are either 100% owned by the Company or the Company has the right to earn 100% of the interest:
- Southern Cross Unit - Offshore;
- North Cook Inlet Unit Deep Oil Rights – Offshore; and
- West Eagle - Onshore.
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 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.
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. Total gross expenditure by EOS under these agreements is expected to be between US$150.0 - US$200.0 million.
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.
The Company will retain its existing working interest in both the Kenai Loop Project (100%) and Cosmopolitan Project (25%).
“We are looking forward to working with Buccaneer Energy on these projects in the Cook Inlet of Alaska,” said Nikolas Konstant, Chairman of EOS. “We look for projects with the right risk profile for development, and have become convinced that Buccaneer’s operations in Alaska will provide that for us. Being able to partner with an established operator on permitted projects that are ready to drill is ideal.”
It is anticipated that the Endeavour offshore rig will be mobilised to the Southern Cross Unit to drill the first well in the farm-out program this weekend.
The Glacier onshore rig is currently drilling the Kenai Loop # 1-4 well, on completion of this it will be mobilised to the West Eagle project on the southern end of the Kenai Peninsula to commence drilling the West Eagle # 1 well.
Curtis Burton, CEO of Buccaneer, added, “Bringing on a partner like EOS is a key component to our long-term strategy, one that we have been pursuing for quite some time. We are very pleased to have accomplished this objective, as it will help us better leverage our assets to continue to provide returns for our shareholders. With a clean balance sheet, onshore operations ramping up and an offshore program that is just beginning, we believe the prospects for Buccaneer are extremely bright – the remainder of 2013 and through 2014 will be a very exciting time for the Company.”
Chrystal Capital based in London, UK first introduced EOS to Buccaneer in early January 2013. The farm out fits within the strategic review on which Canaccord Genuity (Australia) Limited is advising the Company.