BCC - Buccaneer Energy

[Caliente]

lol prawn. The way Buccaneer is trading I dont think its going to do anything for the share price at all. On a day like this, thats not necessarily a bad thing

 

[prawn_86]

lol prawn. The way Buccaneer is trading I dont think its going to do anything for the share price at all. On a day like this, thats not necessarily a bad thing

Yeh, the market doesnt even seem to know about these guys at all. As evidenced by not having one insto in the top 20.

As oil and gas prices rise eventually this will get re-rated. Otherwise it will keep piling up the cashflow and pay a decent dividend one day.

Also worth noting that current MC is about $60 mill, yet Mac Bank are happy to give them $50 mill line of credit. That shows a lot of confidence to me...

 

[prawn_86]

As for dilution, while in theory the options will cause it, the nett affect will be very little. Here is my reasoning:

Assume 9 mill options for ease of calcs.

9mill is 5.6% of the current shares on issue.
macbank will have to pay $3.6mill to exercise those options. (9mill * 40c)
3.6 mill is actually 6% of the current market cap.
So therefore they are diluting 6% to gain 6% of their MC back in cash.

Does this make sense to others? It does to me, but im not 100% sure if its right

 

[Agentm]

still on my radar prawn..

the credit facility interesting..

"The Company will not be able to access traditional project finance until it has
multiple wells in production from more than one field, when the Company has this production profile it will move to source this type of competitive finance."

why only allow macbank in on it? and not allow your shareholders a chance to be part of the capital raising? didnt macbank play a large part in the ipo?

any reasons to be suspicious on this or are all shareholders interests being looked after?

 

[prawn_86]

Not sure about the IPO, but macbank did give them the last $5mill promissory note (which is now void because of this deal). So they have been dealing with them for the financing the whole time.

Personally i would rather they use debt, than to do a capital raising. Cap raisings take time, cap the share price and dilute the number of shares on issue as well as not being certain of how much will be raised.

Debt provides leverage and rewards the existing holders.

Once agian, they are in a profit so it is just a way of speeding up the process, and providing they use it sparingly/well then i see no problem. Management have delivered so far, so i can only trust them to continue. I will re-evalute if an ann that i dont like comes out though

 

[iimamit]

Today's announcement on the cashflows is encouraging. Also I read more articles on more uses for Natural gas and the use expanding as a substitute product of Oil which is encouraging. Both Oil and Gas prices are well supported presently which is good for BCC. Anyway all this is a bonus and even at the price of $9.00 for Gas, the company would do well. Once the rig becomes operational, it will be on BCC projects for atleast an year or so since the redfish prospect is adjacent to Pompano and transportation costs and times would be minimal.

BCC price is much lower than the intrinsic value but given the fact that it has not fallen in this market suggests strong support and no sellers at lower prices. As Ray suggested, contrarian opportunists are accumulating patiently without moving the price high.

So less Capital (borrowed from Ray) else I would have gladly put more ...

 

[prawn_86]

Good to see that these guys are holding slightly below my entry price. I thinks its only a matter of time before market recognition, they keep on ticking all the boxes.

Even if the market decides not to price any 'blue sky' in, then theoretically the price should still move up as the profits roll in and the cash at bank increases. Assuming a conservative $1mill per month profit that they keep in the bank, then that is 12mill per year, meaning the price should move up by 20% at least from where it is now, if it is to maintain the same market cap to cash ratio.

 

[SBH]

Does anyone on this thread have an idea of what the the Jaguar field is most likely to produce? BCC call it a proven undeveloped reserve but how much are we talking about, thats the million dollar question obviously. Also who is the owner of these eshewed shares?

My disclaimer - Ive recently had a punt on these guys. Id like to say it was based on an in depth analysis of PEs and what not but no... its because the world is going bonkers for oil and BCC may have a wellload

 

[watchingall]

http://www.worldenergysource.com/focus/interviews/buccanneer_qa_WE_v11n1.pdf

Interesting interview with Curtis Burton and Dean Gallagos

 

[prawn_86]

well these guys have copped a hammering on the back of falling gas prices.

Even at these prices they are still making a profit of about $1.5 mill per month, putting PE under 1.5 with Pompano 3 coming up to drilling and extra production.

Just a matter of sitting and waiting for recognition IMO. At these levels only 2.5 yrs production and their cash will be greater than their MC.

 

[J.B.Nimble]

Crikey - took my eye off the ball on this one...

Prices at the Henry Hub have fallen $3.42 per MMBtu, or 26 percent, since July 2, but remain more than 65 percent above the level reported last year at this time.

This is somewhat more abrupt than the oil retrace. I figured I better learn a little more about the volatility. This site provides some analysis...
http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp

And this one provides some charts
http://www.oilnergy.com/1gnymex.htm#since30

Fortunately there is a lot more to the BCC story than just high spot prices for gas. With the rig due to arrive mid August for drilling the 3rd Pompano well, it shouldn't be too long before we can see some volume related revenue growth... As for price, it doesn't change my view of this stock - the current blip aside (or maybe the previous spike aside) the underlying trend is very much one way traffic. US gas supplies are tight and getting tighter by the year...

 

[prawn_86]

Exactly JB.

Gas seems to be more volatile than oil, but it barely ever gets a mention anywhere but Bloomberg. Its a commodity which flys under the radar.

I can remember Curtis Burton saying that they are profitable with gas prices anywhere above $3 so im not worried at all. This would be a good time to accumulate if you want to have a wager against the overall arket sentiment. Im thinking of picking up some more but am undecided as yet, as sentiment may push it even lower...

Assets and cash and profits mean nothing in this market climate

 

[J.B.Nimble]

Assets and cash and profits mean nothing in this market climate

Ain't that the truth... my favoured cash generators have been beaten down every bit as much as my wishful thinking speccies... Where is the safe haven in this market?

But cheer up Prawn, I thought I would share this with you as it is particularly relevant to the US gas scene. If ever you needed something to make you feel good (or better than good) about BCCs prospects, the answers are in here.
http://www.aspo-usa.com/fall2006/presentations/pdf/Hughes_D_NatGas_Boston_2006.pdf

The good stuff starts with the reserves to production chart on top of p5.
Move on to the production chart top of p7 - US production peak 2001, Canada 2002.
Or the Canada treadmill chart bottom of p8 - number of wells quadrupled over 10 years just to hold the output steady...
Similar chart for the US at top of p16
Top of p18 - US drilling rig numbers doubled in 6 years but total output declined (BCC have been doing well to secure their rigs in this sort of environment)
Bottom of p20 - LNG can't save them...
Top of p23 - Energy return for energy expended - unconventional gas is going to be a larger share of the market and the numbers say it will come at higher cost than conventional gas. Got to be good for prices..
And so on.

Selling gas to energy junkies should be a criminal offence... but I'm in to it!

 

[Wysiwyg]

Natural gas will be retreating to below US$8/mcf in the near future which cuts into my gas stock (well and truly buried in the bottom drawer) returns as well.BCC are targeting 30+ mmcf/d by year end so that will compensate for lower prices.Natural gas price down the elevator on the chart with a probable bounce soon.

 

[prawn_86]

Natural gas will be retreating to below US$8/mcf in the near future which cuts into my gas stock (well and truly buried in the bottom drawer) returns as well.BCC are targeting 30+ mmcf/d by year end so that will compensate for lower prices.Natural gas price down the elevator on the chart with a probable bounce soon.

I personally think the drop in gas prices has been overdone. Usually, recently it trades at about 10% that of the oil price, so now a gap has opened up, where it is significantly different to that 10% figure.

As i said above, BCC is profitable anywhere above $3 or 4 for gas so im not worried, it just means a bit less cash in the bank.

Will be interesting to see the quaterly Depending on if they have already paid for Pompano 3 or not, they should have a cool 4 or 5 mill in the bank. With MC drifting down towards $40mill and virtually assured production increases this looks better by the day... (damn market sentiment)

 

[prawn_86]

mmmm thats some good quarterly reading...

My personal highlights:

Cash reserves of $4.7 mill. That is over 10% of their market cap.

Pompano
All on track as suspected. Pulling in the cash

Lee County
The lease position has now been increased from 690 acres to approximately 5,000 acres. Leasing rates have also increased from $75 - $100 per acre to $200 - $300 per acre mainly after the success of a recent well in the Austin Chalk located approximately 6 miles from Lee County and which the Company understands is producing at 700 barrels of oil per day.

And of course, this calender, complete with the teaser of another unannounced projects. 5 wells this year... bring it on

 

[prawn_86]

Another acquisition just announced.

Cougar project.
PUD Reserves of 600 000 barrels of Oil, based on only 30% recovery factor. Expected flow rates of 500 - 1000 bopd.

Needs a bit of infrastructure (IE 4 mile pipeline), but nothing too major.

First well planned this year.

Exploration upside of 16 - 20 million barrels!


So now have:
Pompano - flowing with 2 more wells this year
Lee County - Drill this year. Historical flow rate of 10mmcfpd.
Jaguar - Drill this year.
Redfish - Right next to Pompano.
Cove Deep - Trying to organise something with major holer
Brightstar/Smackover - Still holding.
Cougar - As per todays ann.

So for a MC of 40 mill you get:
7 highly prospective projects, with one already producing and others coming online this yr.
$1.5 mill profit per month at current rates.
5 more wells to come this year.
Should be producing about 2 - 3X current levels if all wells go to plan.
Great Management


IMO still one of the cheapest producers on the ASX.

 

[prawn_86]

http://www.youtube.com/watch?v=OjDW8lIK_20

Good link for interview with BCC.

Jaguar is pretty much identical to Pompano he said, with infrastructure already in place.

Lee County fit the "quick, fast turnaround, aggressive" style of BCC and will produce this year.

All good

 

[prawn_86]

Starting to get some broker notice. This is from Intersuisse..

Either i am way off the mark, or way ahead of the market... Lets find out in a years time...

Buccaneer Energy Ltd BCC Monday, 4 August 2008

At least five more wells before the end of the year

Recommendation Speculative Buy

Overview

BCC aims to participate in the drilling of a further five wells in the Gulf of Mexico before the end of the year. This follows the participation in two successful wells at the Pompano field (65% WI) where combined production for the month of June was 270,181 mcf of gas and 1,067 barrels of condensate. Net revenue to BCC for this production was US$2.2
million.

Two further wells are to be drilled at the Pompano field where the company is
participating in its redevelopment. The field is located approximately 145 km southwest of Houston and 50 km east of Port O’Conner, Texas. It is located 11 km off the coast in approximately 17 metres of water. The project had existing production facilities in place including a four pile production platform with 25 mmcfd gas production handling capacity and other satellite structures connected by flowlines to the production platform, from which new wells can be drilled, completed and connected to rapidly increase production and sales.

Since activities recommenced at the field in mid January 2008 two wells have
been successfully drilled and placed into production. Independently estimated 2P reserves for these two wells are 17.1 Bcf of gas and 48,207 barrels of oil. A third well, Pompano #3, has been delayed until September due to rig availability. It is anticipated that this well will be placed on production in November and will be followed by the drilling of Pompano #4 which the company expects to place on production in January 2009.

BCC will also participate in the drilling of a well in Lee County, Texas within the next two months. The company has a 43.75% working interest in this project which covers 20 sq km. The well will target the up-dip Austin Chalk oil play. The project lies about 40 km from the giant Giddings Field that has produced home 4.8 Tcf of gas and 750 million barrels of
oil.

The company was recently awarded a 20 sq km block in the Eugene Island area, 50 km off the coast of Louisiana in approximately 15 metres of water. This project, named Jaguar, is another of the company’s low risk, field re-development gas and condensate prospects with multiple well opportunities that includes attractive upside reserve potential. As the block is in shallow waters with existing infrastructure in place it can be drilled and
placed on production during 2008. A recent log reinterpretation indicates multiple hydrocarbon bearing zones at Jaguar with over 100 metres of potential reservoir thickness between 1,670 and 2,590 metres. A previous well flowed at 10.8 mmcfgd on a 24 hour test and was shut in as there was no gas market at the time. Apparently significant volumes of oil were recovered in the drill string while performing drill stem tests when drilling. The company plans to twin this well with drilling to commence in October
and anticipated production coming on line in December. An independent report on the proved undeveloped reserves is expected by the end of August.

The company has just announced that it has acquired a 20 sq km block 166 km offshore Louisiana (75% net revenue interest) in approximately 100 metres of water with proven undeveloped reserves of 600,000 barrels of oil. The project, named Cougar, has unrisked upside of 16 to 20 million barrels of oil. BCC is now planning a directional well to offset a former Anadarko discovery of 9 metres of gas on 9 metres of oil on water. This discovery
never produced due to lack of pipeline infrastructure and low oil and gas prices.

BCC expects net revenue of about US$2.0 million for July 2008 production based on the gas sales contract price for July of US$12.84 per mcf and anticipated production rates. At current spot gas prices of US$9.20 per mcf the company expects net revenue of US$1.5 million per month for future production if these rates become established. The company continue to maintain corporate overheads at a level of around US$250,000 per month.
Exploration and evaluation expenditure for the June quarter was US$5.7 million. The company has established a US$50 million credit facility with Macquarie Bank from which it has drawn down US$5.0 million and is seeking to draw down an additional US$7 million to fund project development activities. The draw down of the remaining US$38 million will be subject to the establishment of additional production at the company’s
projects.

 

[prawn_86]

Wow, BCC has been smashed lately.

I see no fundamental reason for this. It has fallen 50% from its highs, whereas gas has only fallen 35%. They will have increased cashflow by years end.

I know the market is always 'right', but i just dont get it sometimes. Keeps getting cheaper IMO....