BCC - Buccaneer Energy

[prawn_86]

Hi all,

Found this litte jem yesterday so allow me to share my info with you

Basically, they have just listed 6 months ago and they are already producing both oil and gas offshore in the Gulf of Mexico.

Excellent sector with all the hype at the moment...

http://www.buccaneerresources.com/

Structure​

150million shares @ 37c = $55.5million Market Cap

55% held by top 20 holders

Projects​

Pompano
This is their cornerstone project and they still have 4 more holes to drill, they have a 65% interest in the project. It is producing at 16mcf per day and 60 barrels of condensate per day.
Reserves are:
Gas = BCF
Oil = Barrels
1P - Proven
Gas Oil
12.60 34,732

2P - Probable
Gas Oil
17.1 48,207

3P - Possible
Gas Oil
23.8 74,617


Lee County
50% working interest

From their website:

High impact exploration project, on shore south-eastern Texas.
Independent Geologist states that “this prospect area has the potential size to be a company making project”.
A previous well flowed at 10.8 mmcfgd gas on a 24 hour test and was shut-in due to lack of gas market at the time. Significant volumes of oil were recovered in the drill string while performing Drill Stem Tests (DST’s) when drilling. First well in the program will “twin” this well.

Also have another offshore interest called Cove Deep and onshore called Bright Star.

Financial Summary​

In the first 20 days they earned $530k, production has now increased, but lets use $500k per 20 days to be conservative.

Therefore, 360/20 = 18 lots of 20days per year.

Multiply that by 500k and you get $9million per year

CURRENT EPS = 6cps

So on a conservative PE basis these guys should be at about 60c using a PE of 10, but on an industry average of 20 the target becomes $1.20.

And this is only taking the current production well into account and not putting any value on any of their exploration projects.

I have taken a small interest, as it all stacks up for me, i think they have been unrecognised because they have become a producer so soon after listing and didnt spend years exploring and talking up their potential, they just got on with the job.

Would be intersted to hear others thoughts, as i must confess to not being an expert on O&G plays

 

[farout]

Re: BCC - Bucanneer Energy

Somewhat interesting, but companies such as GLX are retreating from the Gulf of Mexico to get into the Aussie UCG market. A better prospect in my opinion.

 

[prawn_86]

Re: BCC - Bucanneer Energy

Somewhat interesting, but companies such as GLX are retreating from the Gulf of Mexico to get into the Aussie UCG market. A better prospect in my opinion.

But are co's like that looking aking a profit in their first year. Its the fact that they already have a healthy sized revenue stream which is attractive to me.

Also technically, Yesterday they closed at a all time high, which is nice

 

[Sean K]

Re: BCC - Bucanneer Energy

Yep, pretty impressive chart, a break up from here could give it a target of somewhere between 45 and 50 depending on your perception.

 

[unit]

Re: BCC - Bucanneer Energy

Still a month or so before hurricane season too.
Hurricane season starts July 1 in the Gulf of Mexico. 90% chance of near normal or above normal season in the Atlantic.
http://www.noaanews.noaa.gov/stories2008/20080522_hurricaneoutlook.html
'An average season has 11 named storms, including six hurricanes for which two reach major status.'

“The outlook is a general guide to the overall seasonal hurricane activity,” Lautenbacher said. “It does not predict whether, where or when any of these storms may hit land. That is the job of the National Hurricane Center after a storm forms.”

 

[njc.corp]

Re: BCC - Bucanneer Energy

PRAWN86 -thanks for bringing this to my attention-

let me u ask u something-are bcc looking at making a profit in the first year-

i do like this stock-for 1 reason that u mention-they are already in production-thats a huge leap forward and a step above the pack who have not started production- production to me brings in money-

i also had a chance to listen to the board room media stuff-from what the guy was saying they got some serious people behind the scenes giving them a hand to drill-

i mean good news is better then bad-so far so good-

to the people in the know-how much does these storms affect production-are we talking about a couple of days or weeks?

prawn86 do u have or know the cost of production? to me thats a huge factor-

i dont have any bcc-but as always interested in anything with good idea's and view's and this seems not bad in a time of huge demand for oil

Thanks

Nick--

 

[prawn_86]

Re: BCC - Bucanneer Energy

Yep, pretty impressive chart, a break up from here could give it a target of somewhere between 45 and 50 depending on your perception.

Yeh nice technicals and undervalued fundamentally makes me quite bullish on these guys for the short term. Hop[efully those hurricanes arnt too bad this year either

let me u ask u something-are bcc looking at making a profit in the first year-

Well it appears to be that way. Im not sure if thats what they envisaged when they listed but if they can keep the production as it is for the rest of the year it looks like they will make a profit first year in, which is a bloody amazing feat considering how long some co's explore for.

i also had a chance to listen to the board room media stuff-from what the guy was saying they got some serious people behind the scenes giving them a hand to drill-

to the people in the know-how much does these storms affect production-are we talking about a couple of days or weeks?

I have to admit im very green to the O&G sector, and although i have read the management profiles it doesnt mean much to me. Although it lare co's like Exxon and Shell.

Also as an aside, the Chairman is also the Chairman of Jupiter mines.

No idea how much the storms affect production sorry. Hopefully someone else can answer...

prawn86 do u have or know the cost of production? to me thats a huge factor-

The next quaterly should detail production costs etc, as they started producing after the last one was written.

Here is a quote showing the money they recieved so far is after costs:

Buccaneer has received a net revenue payment of US$488,870 (AUD$518,202) for its share of 20 days production in March 2008. This revenue is for gas sales net of royalties, transportation and severance taxes. The average gas price received during March 2008 was US$8.07 per thousand cubic foot, after transportation costs.
The*operator*has*also*reported*that*Buccaneer*is*due*US$15,800*(AUD$16,745)*for*March*2008 condensate sales when the operator receives payment. Condensate was sold at US$99.47 per barrel for March production.

So the only other costs to come out is things like admin, which they said are running at about $300k per quarter.

Looking very healthy imo

 

[prawn_86]

Re: BCC - Bucanneer Energy

Surprised there isn't more interest in this.

I would love to hear from those members with more O&G investment experience than me, such as DoctorJ or AgentM.

AgentM might be interested to note that Buccaneer say that Lee County has a very similar structure to the Austin Chalks. Not that I personally know what that mean...

 

[jtb]

Re: BCC - Bucanneer Energy

Surprised there isn't more interest in this.

G'day Prawn,

Assume you have had a look at EXR re: Pompano?

Personally, they're more my style and probably a good comparison (oil upside vs gas)

I'm sure the Hatchetman will have something for you also

Good luck

 

[prawn_86]

Re: BCC - Bucanneer Energy

Assume you have had a look at EXR re: Pompano?

Personally, they're more my style and probably a good comparison (oil upside vs gas)

G'day JTB, nice to have someone to talk to

As i have said before, I am very new to the whole O&G plays, hence why i wanted others thoughts and opinions.

Can i ask why you personally prefer EXR? Is it cause they are a bit more diversified?


I spent yesterday scouring BCCs announcements, and actually found out that my estimate for EPS was too lowbut now they have 2 up and running at Pompano.

So below is an EPS comparison:
*note that this is just based soley on the Pompano project and not taking either of the entities other projects into account.

So, most recent ann says that for the last week the 2 wells have been producing at 16 mcfpd and 60 barrels of condensate. So that means that they are selling 16000 thousand cubic feet per day (i hope that makes sense )

BCC Interest​

65% of 16000 is 10400. And of 60 is 39.

Assuming $8 per thousand cubic feet and $90 pb of condensate. (Deliberatly conservative)

Gas = $83000 per day
Condensate = $3500 per day
Total = $85k per day

Total * 365 = $30million

Minus say 20% for hurricanse and unexpected closures, slower flows etc etc still gives $24 million.

Divide by 150mill shares = 16 cps

This puts current PE at a minute 2.3

EXR Interest​

25% of 16000 is 4000. And of 60 is 15.

Assuming $8 per thousand cubic feet and $90 pb of condensate. (Deliberatly conservative)

Gas = $32000 per day
Condensate = $1350 per day
Total = $33k per day

Total * 365 = $12million

Minus say 20% for hurricanse and unexpected closures, slower flows etc etc still gives $9.6 million.

Divide by 161mill shares = 6 cps

This puts current PE at 5.3

Conclusions​

BCC is more undervalued on a simple PE basis, based soley on Pompano. Although EXR still has an upside well over double current prices.

Obviously more research would need to be done with regards to each co's other projects and stuff, but i can see a nice opportunity to do as Nioka does and switch between the 2 in order to keep a portfolio interest in Pompano, but switch to the most undervalued one, if their prices do not move in tandem

 

[pan]

Re: BCC - Bucanneer Energy

Pompano
This is their cornerstone project and they still have 4 more holes to drill, they have a 65% interest in the project.
[

G'day Prawn nice research, very interesting company

Did you come across when the well is to be spudded?

cheers pan

 

[prawn_86]

Re: BCC - Bucanneer Energy

G'day Prawn nice research, very interesting company

Did you come across when the well is to be spudded?

cheers pan

Hey Pan,

Not sure if i understand the question...

They have drilled 2 wells and both of them were commercial and are now producing at Pompano.

The third hole is scheduled to start drilling in about 2 months time and is targeting the 'E' sands from memory, not that i actually know what that is

Hence why i am asking for others opinions...

 

[prawn_86]

Re: BCC - Bucanneer Energy

Wow, i fired off an email this afternoon and got a response within 6 hours on a sunday.

Read below, i have added highlights of what i think are the important parts:

Thank you for your enquiry.

The back-in agreement with AnaTexas is documentated in our prospectus lodged September 2007. AnaTexas retains the right to back-in to Buccaneer's interest in the Pompano project once each well's capital costs are returned plus 20% from net cash flow. This was part of the agreement when Buccaneer acquired the project from AnaTexas in mid 2007.

When this back-in comes into effect Buccaneer's Working Interest will reduce to 52%. This is the only project we have, or are likely to have, which has this type of back-in.

Hurricane's as you are probably aware are very unpredicatable. I don't think there were any that caused significant production shut-ins during the last two years. If a hurricane is not a direct hit you are looking at production shut-ins of anything from a few days to a few weeks, a problem may arise on either our platforms or surface facilities not owned by Buccaneer.

The two platforms at Pompano have been there for many years and have withstood many hurricanes, including Rita and Katrina, so we are confident about there condition and they also receive regular sub-sea inspections.

It is going to be a very active 6-7 months for us and we look forward laying out those plans in the coming 6 weeks.

regards

Dean Gallegos

So now pretty much the one question i had, about the back-in, has been answered and i am even more confident

 

[prawn_86]

Re: BCC - Bucanneer Energy

Presentation out today, that they will be showing at the Oil and Gas conference tomorrow.

The two things i like the most is:

They stated they are cashflow positive and profitable

They are looking to double production by the end of the year.



It looks as though these guys are turning out to be a nice little cashcow. Pity the Aussie market seems to overlook O&G plays, and even small producers for that matter. People would rather punt on an explorer...

 

[pan]

Re: BCC - Bucanneer Energy

The third hole is scheduled to start drilling in about 2 months time and is targeting the 'E' sands from memory

Sorry Prawn, wasn't a well worded question.

I was referring to the other wells and when their were going to be spudded?

Also if you don't mind me asking with price did you enter at?

Haven't brought any yet, still deciding between BCC and GGP.

 

[prawn_86]

Re: BCC - Bucanneer Energy

Sorry Prawn, wasn't a well worded question.

I was referring to the other wells and when their were going to be spudded?

Also if you don't mind me asking with price did you enter at?

Haven't brought any yet, still deciding between BCC and GGP.

Check the presentation out today, very informative.

Lee County is due for Spudding Q1 09.

2 more Pompano drills this yr 1 in Q3 and one in Q4. Still a few months away due to the fact that it is hurricane season and by then they should have more than enough cash in bank to fund the next drilling at Pompan without the need for a debt or equity raising.


I got in at the break of all time highs at 37c. My first target is 50c based on Kennas' flag and pennant chart, and my own fundamental (PE) analysis.

 

[prawn_86]

Re: BCC - Bucanneer Energy

Broke through 40c nicely today.

Still at all time EOD highs, after closing at 41c with an intraday high of 43c.

They presented at the O&G conference after market close today, so it will be interesting to see if the buying interest continues tomorrow.

 

[iimamit]

Re: BCC - Bucanneer Energy

HI Prawn,

Thanks for bringing this stock into the attention of the forum regulars. I had thought of introducing a forum on this stock but was disappointed after my first introduction a small VOIP company MNF (Mynetfone). If there are any experts on the telecom/ VOIP sector, do contribute on that discussion as well.

I have been following BCC since December and accumulated till February. The quality of management and their experience in the field is a big plus. Also there is intangible value to the industry contacts of gray haired leaders (No offence against the cowboys) especially in sectors like oil and gas.

I believe the real value would be unlocked once the company is able to have sufficient cashflows to target large oil and gas reserves. the present foray into pompano is low risk /low return (when compared to returns in the oil and gas world). The big projects I believe would come in after one more year if all goes well (majority of the drilling delivers favourable results).

Disclosure: I have a small interest in this stock.

 

[prawn_86]

Re: BCC - Bucanneer Energy

Bit of a drop back yesterday, but it still a higher low from a techie perspective. Depends what it does today i guess.

Fundamentally nothing has changed and the cash will be building up in their coffers, ready for the next drill at Popano 3 in Q3

 

[prawn_86]

Re: BCC - Bucanneer Energy

http://www-waa-akam.thomson-webcast...b6&portal_id=eaf4f4c6720a8a8ada0f34d1b53e03b6

The link above is the O&G conference presentation from Curtis Burton, the CEO.

Was very informative, and although it is essentially a marketing tool, there was a lot of nice little tid bits to come out of it.

1. He virtually guaranteed that there will be an upgrade to Pompanos reserves within a month, with another 3rd party report, which will this time include the PUD values (proven undeveloped resource). Good to know there is positive news on the way.

2. The eventually want to get their reserves up around the 200bcf number.

3. They are evaluating up to 10 projects per month to find ones that suit the business model.

4. He constantly emphasised the fact that the management team has vast industry contacts meaning their equipment is always up to scratch, andd more importantly, they hear of opportunities before others do.

Pompano

Nett cashflow is now $2 - $2.5 million net per month.

Drilling 2 more wells this year with conservative 50 - 100bcf potential. Already have 2p reserves of 32bcf

Costs to BCC to drill and get a well into production is $5.2mill


Lee County

P90 20bcf, P50 50bcf

BCC drill costs only 620k (47.5% interest)

Drilling to happen Q4 this year.


Cove Deep

BCC cost of $2.4mill to drill and get to production.

Summary​

I previously hadnt taken into account the fact that the drilling costs were to the 100%, not actually BCCs amount.

So therefore, assuming after Pompano 2 well they had $1mill left in the bank. 8 months at $2 mill nett per month = $16mill profit plus the $1 mill gives 17 mill.

Planning 2 more Pompano wells, lets assume they are dusters and get absolutely nothing out of them (99% unlikely as we already know whats there) cost would be 10.5mill. It would actually be less cause these figures assume getting it into production

Drill Lee County cost 600k

Drill Cove Deep cost 2.4mill

Total outgoing on drilling = $13.5 mill

This leaves a profit at the end of Dec of $3.5 mill.
Again this is assuming everything from here on is a duster.


I think i have been very conservative with my numbers but i would love the input from those experienced in investing in the O&G area.