Buccaneer sells stakes in jack-up rig, Cosmo

Buccaneer Energy, the Australia-based independent, has sold off some of its Alaska assets to finance its further work in Cook Inlet, the company announced in a press release Jan. 2.

Assets being sold include Buccaneer’s 50 percent interest in a jack-up rig now in Cook Inlet. The Alaska Industrial Development and Export Authority, the state development corporation, also has a stake in the jack-up rig, and said Buccaneer’s decision will not adversely affect AIDEA’s financial position in the rig.

Buccaneer will sell its 25 percent share in the offshore Cosmopolitan oil and gas project in Alaska’s Cook Inlet to Texas-based independent BlueCrest Energy Inc., Buccaneer said. After the sale closes BlueCrest will own 100 percent of Cosmopolitan.

Buccaneer, as operator at Cosmopolitan, drilled an exploration well at Cosmopolitan in 2013 and made a natural gas discovery. Pioneer Natural Resources, which previously owned the asset, had also confirmed an oil discovery at deeper reservoir intervals, and Buccaneer’s plan was to follow up on tests of the deeper oil formations.

BlueCrest will pay $41.25 million for Buccaneer’s 25 percent interest of Cosmopolitan. Buccaneer has invested $9 million as its share of costs at the prospect.

“The sale gives the company as opportunity to monetize an asset in which it holds a minority interest at a significant premium to its sunk costs. The sale price is within acceptable market parameters for undeveloped projects of this type in Alaska,” said Curtis Burton, Buccaneer’s managing director, in the press release. 

The sale is expected to close in mid-January.

Buccaneer also said it will sell its 50 percent share in Kenai Offshore Ventures, owner of the Endeavour jack-up rig now in Cook Inlet, to Teras Investments Pte. Ltd. of Singapore, for $23.95 million.

Tera is a subsidiary of Ezion Holdings, Ltd., also of Singapore. Ezion is already a 50 percent partner with Buccaneer in the Endeavour rig, so the sale will have the Singapore company own 100 percent of the Endeavour.

Buccaneer will continue to operate the rig, however, under a contract that expires in 2017 to charter the rig for drilling.

The Alaska Industrial Development and Export Authority, the state of Alaska’s development finance corporation, also has a stake in the rig through a preferred stock position in a financing arrangement agreed to in 2011. AIDEA’s shares are to be acquired by the other rig owners, now Ezion only, so the authority’s financing is essentially a loan.

Buccaneer will use the proceeds of both sales to provide working capital and to repay loans.

The sale to BlueCrest is expected to close in January, after which BlueCrest will assume management of further drilling that is planned at the Cosmopolitan oil and gas prospects.

The Endeavour rig has been contracted  for delineation drilling at the Cosmopolitan this winter and three other Cook Inlet offshore prospects still owned by Buccaneer. Those include “Tyonek Deep,” or deep oil prospects in the North Cook Inlet gas field owned and being produced by ConocoPhillips, and where Buccaneer has an agreement to test the deep parts of the field; Southern Cross and North West Cook Inlet.

The Endeavour is now in winter storage at Port Graham.

AIDEA’s interest in the rig is protected, and the authority believes the company will now be better financed to pursue its Cook Inlet exploration program, AIDEA spokesman Karsten Rodvik said in a statement.

“Buccaneer Energy advised AIDEA that they would be selling their common shares in Kenai Offshore Ventures (KOV) to Ezion Holdings, the other common owner. This action requires AIDEA’s consent as the preferred member in KOV,” AIDEA’s statement said.

“We are working on our due diligence regarding the transaction. This change in ownership does not impact Buccaneer’s agreement with AIDEA, nor does it impact the KOV operating agreement or the Bare Boat Charter,” of the rig by Buccaneer.

“We believe that with this consolidation, Buccaneer will be better positioned to continue its Cook Inlet exploration and development. Ezion is an experienced player in offshore oil and gas support, and we are very pleased to continue our partnership with them in the development of Alaska oil and gas resources.”

Buccaneer spokesman Richard Loomis said his company will continue to be responsible for the drill rig under the bare-boat charter arrangement to KOV, the rig owner, even though Buccaneer would no longer be an owner.

AIDEA has a contract with Buccaneer to drill a certain number of wells using the jack-up rig and that contract remains in place.

Tim Bradner can be reached at [email protected].

01/08/2014 - 10:32am