BCC - Buccaneer Energy

[doctorj]

Hi Prawn, are not these e-mails a private matter that holds trust from the company not to be displayed in public?I`ve seen others do it and I think it is the height of disrespect.

I would think a Director shouldn't/wouldn't be saying anything to one shareholder they wouldn't be prepared to say to another.

Plus if it saves the poor guy from having to repeat himself, I'm sure he'd be in favour of it.

 

[prawn_86]

Hi Prawn, are not these e-mails a private matter that holds trust from the company not to be displayed in public?I`ve seen others do it and I think it is the height of disrespect.

Anyway the information is very promising and confirms they are determined to grow the company.
$4 mill. shheeesh.

On the first point i would say my view is the total opposite. The management recognise the co as undervalued, therefore the more promotion the better. Also, it is a publicly listed company so why should one shareholder be privvy to info over another (although i admit it happens). If it were a private company then it would be different. There is nothing market sensitive in this email, just a bit of an update which any shareholder can obtain.

The 2nd point about the cash i agree 100%, perhaps even a divvy? Who knows, surely they cant spend all that money...

 

[prawn_86]

I would think a Director shouldn't/wouldn't be saying anything to one shareholder they wouldn't be prepared to say to another.

Plus if it saves the poor guy from having to repeat himself, I'm sure he'd be in favour of it.

LOL beat me to it doc.

While your here care to have a look at their projects? As i know you have a lot more O&G knowledge than myself

 

[prawn_86]

What exactly does the market want these days? (apart from ridiculous spec stocks for taxi drivers to gamble on)

This is drifting lower daily, yet is bringing in profits of over $2 mill per month. PE is getting lower by the day, and by years end they will have almost double their current profits per month.

Seems that if your not in a 'hot' sector the market doesnt care who you are or how much you are making...

 

[Agentm]

agree with all your saying prawn,, this one is on my radar..

i will look closer at the austin chalks play, i think the email was fine to release, i have plenty of emails form directors, but rarely have i released any.. this guy is nt saying anything that he wouldnt say to to anyone else, the entire managment is standout material..

i cant comment on the sand play offshore other than to say these guys are brilliant on it, no doubt they have this thing covered.. my database is rstricted to onshore wells right now, so i wont have any play data to examine.. but the chalks is definately my game right now and thats my interest in this bcc share.. i think they went lower risk first, then they go up the scale....

 

[prawn_86]

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.


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.

Recieved an email from Dean Gallegos today. He is a director and the Aus contact person for the co. As follows:

As we have previously stated the next 6 months are going to be very active. We only drilled 2 wells in the last 6 months but in the next 6 months that figure should be a minimum of 4 and possibly more so there is going to be a lot of news flow. We are focusing on the development / appraisal drilling opportunities and so we expect to substantially increase our production base and comfortably achieve our net US$4 million per month by December 08.

Ok so i have been looking further into what Dean gallegos said in his latest email. He said 4 more wells at a minimum for this year.

Pompano 3 is due to spud late July, and as they have the option, one would assume they will keep the rig and use it for Pompano 4. Thats 2 wells.

At the O&G conference Curtis Burton said that Lee County would be drilled this year, so thats a 3rd well. P90 reserves of 20BCF, lets assume they can get 25BCF. This is the one that has caught AgentMs interest (any additional info appreciated Agent )

The 4th well is what im not sure about. Could be Cove Deep, which also has a p90 of 20BCF. Or it could be Bright Star, of which the co says:

Prospect generator estimates unrisked potential for five of the identified exploration prospects at approximately 480 BCF gross gas.

So lets assume that it is the 2 Pompano wells, 1 Lee County, and 1 Cove Deep well to be drilled.

PUD upgrade for current reserves should put them at about 40BCF.

Assume another 20BCF from the 2 Pompano (very conservative, more likely to be >50BCF)

Assume 8BCF from Lee County

Assume 10BCF from Cove Deep

That will take them up to 80BCF reserves and is only based on their P90 figures.

Throw in their $4mill per month profit by years end (currently at about $2.5 per month), and it makes sense to me


So much potential, so little recognition at the moment....

 

[prawn_86]

Some big volumes going through today, and up over 10% on a day the index is getting smashed.

Personally i think it is an insto taking a position, as there was some weird small bot trading happening yesterday, which is strange considering there are no instos in the top 20.

I guess we will just have to wait and look out for an ann.

Also could be insider buying on news of Jaguar permit been granted, as the permits are awarded every Friday, so perhaps someone knows something they shouldnt...

 

[prawn_86]

Highest volume for nearly a month went through today. There are a number of things in the pipeline, but this Buccanneers ship isnt normally leaky.

Heres a bit more about Lee County, which will be drilled soon:

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.

 

[prawn_86]

I have being doing more digging and have come up with this:

Pompano Drilling Program
Well Anticipated Spud Date* 2P Reserves


# 3 Well June 08 - August 08 6.5 BCF
# 4 Well August - October 08 25.5 BCF
# 5 Well October - December 08 TBA
# 6 Well December 08 - February 09 TBA

3p Reserves for #3 and #4 are 99BCF (as per ppt pres at O&G conference)


Lee County Project

High impact exploration project, onshore Texas with potential to be a
company maker

Over 1 billion barrels of oil and 10 TCF of gas from this trend

25 miles from giant Giddings Field that has produced some 4.8 TCF gas and
750 million barrels of oil from the Austin Chalk

A previous well flowed at 10.8 mmcfgd gas over 24 hour test

Oil was recovered during testing

First well in the program will "twin" this well

First well July / August 2008

With success, this could generate a multi-well program with multiple
objectives

Also note that their B/E figures on current projects is $20 pb oil and $3 mcf for gas. Currently earning about 5x that on both

So i think we might actually here something about Lee County sooner than i anticipated. A simple vertical twin well could add 50% again onto what BCC are already producing.

If they can get Lee County flowing at that historical rate, and Pompano 3 up and running within the next 2 months then their PROFIT will easily be over the $4mill per month [/B]Dean Gallegos was talking about.

 

[prawn_86]

Ann out: Jaguar Lease awarded.

jaguar is a 500acre block in the GOM, very similar to Pompano. PUD reserves are there and an independent report will be released by the end of July with some figures.

Good to see management acting quickly upon projects rather than sitting on their hands. in 8 months since listing they have become a profitable comapny, with only 2 wells and many more to come, plus continue to acquire low risk projects which will in turn bring on more cash, without the need for wildcat drilling.

Management are building a gas powerhouse IMO. Hopefully Jaguar will take their reserves up to about 120 - 150 BCF, which would be half of MAEs reserves, yet they are 1 6th of the market cap and are earning more. Figure that one out...

 

[prawn_86]

Ok after having another read the best part of the ann is this imo:

As the block is in shallow waters with existing infrastructure in place it can be drilled and placed on production in 2008

This means we have a definite 4 wells coming up for the 2nd half of this year. Maybe even more depending on how quickly the work with this new project.

I just wish i had more cash, it has to be re-rated eventually (or taken over)

 

[prawn_86]

Market didnt react at all to todays ann. What do these guys have to do?

1. They are in profit when cash is king
2. That profit per month will be almost doubled by years end
3. They have just acquired another project which can come online this year
4. No further dilution, unlike spec miners etc
5. Excellent management
6. Current reserves of about 40BCF which should be at least doubled by years end
7. Gas prices strong and rising


Im going to stop now but you get the picture. Im just surprised at lack of interest here and in the market.

I guess it shows that interst in a forum is a good approximation/extrapolation/sample of interst within the market place...

 

[prawn_86]

Ok, further researh and i have dug up some maps and stuff of Pompano, Redfish, and the new Jaguar project.

Jaguar is actually a fair way from the other 2, with it being in Lousina jurisdiction as far as i can tell.

Also note the maps are 7 years old, hence why i had to add on the Pompano and Redfish bits as they must have opened more up since then...

 

[J.B.Nimble]

Market didnt react at all to todays ann. What do these guys have to do?

1. They are in profit when cash is king
2. That profit per month will be almost doubled by years end
3. They have just acquired another project which can come online this year
4. No further dilution, unlike spec miners etc
5. Excellent management
6. Current reserves of about 40BCF which should be at least doubled by years end
7. Gas prices strong and rising


Im going to stop now but you get the picture. Im just surprised at lack of interest here and in the market.

I guess it shows that interst in a forum is a good approximation/extrapolation/sample of interst within the market place...

Hey Prawn, don't worry about the lack of interest. That will come right soon enough. Meanwhile market sentiment is giving us an opportunity to accumulate ahead of an inevitable rerating. This company is a remarkable success story on a rapid profit growth trajectory. These guys execute so well. Fantastic management, good prospects, gas flow, cash flow... Its a winner for me... No profit to show for my investment yet but it will come. I'm glad you shared your findings - I would never have found this gem otherwise.

 

[iimamit]

HI All,

An interesting article on Bloomberg on the expected rise in the Natural Gas prices in the future due to it being a cleaner fuel and the basis of equivalence in energy content with Oil basis.

Natural Gas to Converge With Record Oil, Qatar and Algeria Say

By Ayesha Daya

July 2 (Bloomberg) -- Natural gas, trading at a 39 percent discount to crude, may rise to reach the record price of oil as demand for cleaner-burning fuels increases, according to energy ministers from Qatar and Algeria.

U.K. natural gas sells for 72.15 pence a therm, or the equivalent of $86 a barrel based on its energy content, compared with $141 for Brent crude. British natural gas rose 38 percent this year, lagging behind the 51 percent advance in oil.

Natural-gas use worldwide rose 3.1 percent last year, almost three times faster than the 1.1 percent increase in oil, according to figures compiled by BP Plc. Gas is cleaner-burning than oil and creates half as much carbon dioxide as coal when used to generate power, helping ease the buildup of greenhouse gases blamed for climate change.

``Gas is clean and it is an alternative to oil,'' Qatar Oil Minister Abdullah al-Attiyah said in an interview in Madrid this week. ``The price should be at least competitive to oil.'' Qatar holds 895 trillion cubic feet of gas reserves, the world's third-largest, after Russia and Iran.

Rising global energy demand, environmental restrictions and slower progress in expanding nuclear power and wind farms are increasing demand for gas.

Liquefied natural gas may become more expensive than crude oil as demand from Asia and Europe rises faster than supply, Sanford C. Bernstein & Co. said in a report last month.

Winter Prices

In Japan, utilities paid as much as $20 a million British thermal units for liquefied natural gas imports last winter, which equates to an oil price of $120 a barrel, after an earthquake closed the country's largest nuclear power reactor. U.K. prices for the 2008-2009 winter trade at a similar level.

``Gas prices will follow oil prices; they will converge,'' said Algerian Energy Minister Chakib Khelil. The country is scaling back oil production growth to concentrate on gas.

``Our efforts are really focused on gas,'' he said. Exports will rise 37 percent by 2012 to 8.5 billion cubic feet a day, said Khelil, who is also the president of the Organization of Petroleum Exporting Countries. Al-Attiyah and Khelil are in Madrid this week for World Petroleum Congress.

Global trade in LNG expanded 7.3 percent last year to 226 billion cubic meters, led by increased shipments from Qatar and Nigeria, according to the annual review of world energy by London-based BP. About twice as much gas is imported across national borders by pipelines, where Russia is the biggest supplier, exporting 148 billion cubic meters last year.

Iran No. 2

Iran halted a gas supply deal to the United Arab Emirates since 2006 to negotiate a higher price than agreed in 2001. Iran hasn't built new liquefaction plants, in part because western companies including Royal Dutch Shell Plc and Total SA are wary of U.S. sanctions.

Qatar, the biggest shipper of LNG, is diverting some cargoes destined for European to Asia, where prices are higher.

Nigerian President Umaru Yar'Adua said in May that gas export agreements will have to be renegotiated to ensure Africa's most-populous nation has enough for its domestic needs.

Algeria took Spain to an international tribunal to raise the contracted prices for gas supplies.

``The gas was sold in 1995, when oil was at $15 a barrel,'' Khelil said. ``When oil rose to $50 a barrel a few years ago, we decided to renegotiate.''


Reference: bloomberg.

 

[prawn_86]

Yeh i think that gas is a real sleeper. Oil gets all the attention and yet gas rises steadily and recieves virually no interest from the public.

Im happy though holding, as i actually think that gas will have its day in the spotlight soon enough. As the article says, it is a energy source that can easily substitute for oil, requiring very little or no outlay to change technologies. Plus it is relatively easy to get out the ground.

As oil prices rise, so do gas prices, meaning more cash in the bank for BCC. The market has to realise this eventualy, be it by capital gains or a takeover

 

[jman2007]

Hi Prawn,

So after promising to get back to you on BCC I promptly went ahead and forgot about it!

I have to say, a nice piece of independent research you've done here. Unfortunately my own paltry and meagre knowledge of the O & G sector probably wont add too much to the thread, and I have next to no knowledge of the geology in this part of the world, so just a few general comments to add really.

Management looks quality, a factor way to often overlooked in bringing any project to development. Great to have a small cap company producing so early in the piece and generating cashflow. Re the production costs at Pompano, the company seem to make a big deal out of the 60 foot of water operational depth. Perhaps this may be run-of-the-mill depths for this part of the world?.. but my feeling is with numerous companies having "been there and done that" in this part of the world , there should be enough expertise and know-how to keep costs in check.

I find it interesting that BCC are lsited on the ASX, certainly a big coup having Mac Bank on Board as supporters, definitely gives them some real momentum going forward. My only slight reservation with these types of companies would be the focus on domestic markets and perhaps the limited price upside for natural gas in the US. I tend to view Asia as perhaps a bigger sleeping giant in terms of untapped markets. Could well be a moot point however, when one considers the size of the US domestic market, and the expected surge in demand for natural gas products over petroleum for obvious reasons.

Cheers
jman

 

[prawn_86]

Thanks Jman,

I personally thought they make a big deal about the depth, because it is quite shallow, and therefore less problems. Other co's in the GOM, such as Texeco, Shell, BP etc are drilling in hundreds of feet of water.

I am fairly certain BCC is selling at the Henry Hub spot price, so yes they are targeting the US (obviously). Personally i think gas prices will continue to move in line with oil, but it is good to know that these operations are profitable at $4mcf of gas, when current prices are above $13. So there is a lot of room for movement there.

i agree that Asia has a lot of gas potential, and who knows, one day BCC may work there, but for now its focusing on the US, and its interesting to note in Dean gallegos' last email that they are starting to recieve some US insto interest. At the moment there are no instos in the top 20 for some strange reason... And there has not been 1 peice of Australian journalism or broker reports on them

Some areas of the investment society can be slow to catch on...

 

[prawn_86]

From Bloomberg this morning:

PRICE*
Nymex Henry Hub Future 13.49
Henry Hub Spot 13.31
New York City Gate Spot 14.27

 

[prawn_86]

Ann Out: Mac Bank upgrades Credit Facility from $5mill to $50 mill!

Good to see things progressing at a rapid rate. $12mill available now, with the next 38 being available as more wells and cashflow comes online.

Will be used to fund further drilling and acquistions.

A note on there regarding how this option is the best to avoid dilution to holders, and that when more projects come online (other than just Pompano) they will seek better credit terms, so its good to see they are constantly looking ahead into the future.