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Buccaneer finds oil, gas at Cosmo; fights takeover effort by Chinese investors

Posted: June 25, 2013 - 10:06pm

Australia-based Buccaneer Energy has encountered oil and gas-bearing zones in its Cosmo No. 1 exploration well in Cook Inlet, the company has announced.

Meanwhile, the company is fighting an attempt by two Chinese investors to take over the company. A special board meeting is planned July 2, with a proposal presented by dissident shareholders for a new board.

Under Australian law, shareholders with more than 5 percent holdings in a company listed on Australia’s exchange can call for a special meeting of shareholders and replace the entire board.

The two shareholders, who are unidentified, are affiliated with Hong Kong companies, sources familiar with the dispute say. They hold 8.69 percent of Buccaneer’s shares.

Buccaneer’s chairman, Alan Broome, has recommended that shareholders vote against the proposal to replace the board at the July 2 meeting.

On the drilling results, oil and condensate shows were encountered in the lower Tyonek formation at the 5,600-foot level, 400 feet higher than expected, Buccaneer said in a press release.

The well is three miles offshore Anchor Point on the Kenai Peninsula south of Anchorage, and is being drilled with the Endeavour jack-up rig, which is partly owned by Buccaneer.

Buccaneer, operator of the project, owns 25 percent of the Cosmopolitan prospect, with 75 percent owned by BlueCrest Energy of Fort Worth, Texas.

The Tyonek was expected to be mainly a gas-bearing zone, and several gas intervals were penetrated at higher levels. There are proven oil resources in the lower Starichkof and Hemlock formations, which the well will also test, according to the company.

However, finding oil in the Lower Hemlock was unexpected.

“The three primary gas zones totaled 175 feet. The Logging While Drilling equipment indicated good resistivity, permeability and porosity characteristics. These results need to be confirmed with wire line logs and flow testing, if warranted,” Buccaneer said in the statement.

“The gas zones were all accompanied by a sharp increase in gas, relative to background gas measurements, prior to intersecting each gas zone,” the statement said.

The company is setting casing at the 5,485-foot level in preparation for drilling deeper through the prospective and known oil formations. The company’s plan is to take cores in the oil formations to augment known reservoir data, and to plan development of the deposit.

A flow test of the gas-bearing zones in the upper Tyonek is also planned.

Cosmopolitan is an oil and gas discovery that has been known for years and previously tested with extended-reach wells drilled from shore by previous owners ARCO Alaska and Pioneer Natural Resources. The deposit is about three miles offshore Anchor Point, on the east side of Cook Inlet.

Based on the previous drilling and testing Cosmopolitan has an estimated 31.2 million barrels of oil equivalent of proven reserves and 55.2 million barrels of proven and probable reserves of oil equivalent

Technical problems with testing through horizontal wells drilled through extensive coal seams prevented ARCO and Pioneer from doing a complete evaluation of the deposit, however.

Buccaneer’s use of a jack-up rig, which allows vertical wells, will lead to a more complete evaluation the prospect. The company hopes to develop Cosmopolitan with a subsea production system to avoid installation of a platform at the site, which is near shore and an onshore pipeline system.

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