BCC - Buccaneer Energy

[prawn_86]

but it sounds like it could be a rather expensive remedial job don't you think?

I have even less idea about O&G than you, hence why i asked for opinions. You just about need to be an expert in the feild to be able to invest in some 'public' companies.

I guess thats what brokers are paid for...

 

[Agentm]

i have yet to see a broker that knows enough about the O&G game to be credible..

that well thats getting water will probabaly do a remedial squeeze job, which means pumping cement into to the outer side of the casing and stopping and connectivity between zones.. if you pour it in the casing then you kill the hole completely.. its no big del really, all wells get remedial works done on them all the time, the well is be fixed, its hard to believe the well is in any danger of being a P&A..

not sure on the current drilling, the decisions to sidetrack need to made quickly whilst your paying a fortune per day for a rig.. i am not expert enough on the geology to understand what they are trying to target in the proposed sidetrack..

still waiting on these guys to go after that chalks play, that one interests me a lot, particularily its location...

 

[prawn_86]

Any rough ideas of the costs involved in a remedial squeeze job AgentM?

I guess if its going to cost a fortune its not worth doing, but then again it might be relatively cheap.

 

[prawn_86]

Quarterly Out today, makes for nice reading

Current MC is only about 17mill with 9mill cash and cashflow positive based on Pompano 2 alone.. Mr Market not attributing much value to future prospects

Pompano 1
Will cost BCC about $300k to do a quick 'wire line' clearout, which should bring flows back up to 1mcfpd. Will be done this quarter.

Will cost them 2.5mill to do a full fix remedial workover which will bring flows up to 6mcfpd, with a 75% chance of success.

Pompano 2
Producing at 7mcfpd. BCC are cashflow positive on this well alone.

Pompano 3
Didnt go as planned and are assesing wire logs to decide if it is worht putting another well in to target those sands.

Lee County
The big one and possible 'company maker'. Targeting the same Austin Chalks as ADI. 2 drilling permits filed, one already approved.
First well with 'tin' an existing shut in well which flowed at 10mcfpd but was shut due to lack of market.
This should bring in about $10mill pa for BCC if the 1st one is successful, and not including any success on 2nd well.

Drilling this Quarter

Cougar
Estimated flow of 500bopd with PUD reserves of 20m barrels at 30% recovery.

Ruby
PUD reserves of 6.1bcf.

Drilling mid 2009

Tuna/Tang
Estimates of PUD reserves being developed.

Swordfish
PUD potential of 100BCF. I would say more likely 30 - 40 BCF.

Drilling mid 09

Redfish
PUD potential of 90BCF.

Drilling mid 09 with a 2nd planned straight after if # 1 is a success.

Cobia
PUD potential 48BCF.

Drilling mid 09.

Jaguar
PUD reserves of 21.6BCF and 1m barrels. Seeking a JV Partner. Can re-enter 2 prior wells to get it online quickly.

Cove Deep
Trying to get major % holder to do something with it or put their % on market


Of course i think this is undervalued. I thought it was when it was capped at $60 mill. Just depends on the market i guess, as there are a lot of 'bargains' out there

 

[Agentm]

so lee county has permits in!

will look into this one prawn, may do some research and post some stuff..

watch adi closely..

 

[prawn_86]

so lee county has permits in!

will look into this one prawn, may do some research and post some stuff..

watch adi closely..

Ones already approved. Thats the first one twinning for gas.

They said the 2nd one (still pending approval) will be targeting an up dip in the Austin Chalk. Cant say i know what that means, would be very grateful if you could go into some detail. Its a vertical is about all i know, but i dont know the diff between the 2 types.

 

[Agentm]

you can test a play updip or down dip.. down is deeper and up is shallower..

the deeps is usually where you may find the heavier hydrocarbons, like water..

can you elaborate who the operator is there.. original well name?

everything is heavily disguised in their presentations, been through this nightmare before with adi in the early days.. the drill stem test on the early well interests me..the flow they got was very good.. i can see anardarko had a look there recently and another operator has two horizontals on the go there right now.. so the chalks play is obviously been picked up by many competitors..

 

[prawn_86]

The one granted is called Vick and Vick A is still under review.

Operator is Anatexas Offshore, who do all BCCs offshore work also.

A previous well flowed at 10.8 million cubic feet per day gas on a 24 hour test and was shut-in as there was no gas market at the time. Significant volumes of oil were recovered in the drill string while performing Drill Stem Tests (DST’s) when drilling. The initial test well has been designed to retest this and is located 200 feet to the east northeast.

Thats from their website, but it doesnt say who the or when it was drilled the first time.

As i have said before my O&G knowledge is pretty low, im just in it for the cashflow and management...

 

[prawn_86]

Pompano 1
Will cost BCC about $300k to do a quick 'wire line' clearout, which should bring flows back up to 1mcfpd. Will be done this quarter.

BCC just announced today that the well started flowing at 1mcfpd without any workover done on it, the pressure must have moved the blockage or something. They do state however that the blockage could reform, but they are still assessing options for a new type of workover that will bring flows back up to 6mcfpd.

Proves that Pompano still has plenty of gas in it.

Sellers have also dried up with only 3 sellers between 7c and 15c

 

[prawn_86]

Ann just out Letter of Intent to sell Pompano and Lee County.

The sale of Pompano was flagged in the quarterly, and im not against it, as the most value has probably been extracted from that. Im a bit disappointed they want to sell Lee County, but with the trouble co's like ADI are having in that area then perhaps its a good idea.

All depends on the price they get i guess.

My biggest worry is this puts them back to explorer status rather than producer status.

 

[resourceboom]

Hi Prawny, what prices do you think they'll get for the assets? Why do you favour this company over ADI?

 

[prawn_86]

Hi Prawny, what prices do you think they'll get for the assets? Why do you favour this company over ADI?

I honestly have no idea what they will get for Pompano. Off the top of my head its making 5 - 10 mill per year (thats with the problems at Pompano 1). So 5 - 10 times that maybe? Probably closer to 5 i guess due to tough conditions? But then again its a cash flow positive lease so it may still get a good price.

I like BCC over ADI as they have steady positive cashflow (which will change now if they sell Pompano). I also really like the management, they have a strong track record and are very forthcoming with investor contact. Their approach is a lot simpler than ADI's. Instead of chasing big wildcats they go for areas with PUD reserves, drill them a little, get some flow happening and then flog them off. So essentially its like renovating a house and then selling it for a higher price.

That being said my opinion of selling these assets will be determined by the price. I think mac bank might be squeezing them a bit...

 

[resourceboom]

I see what your getting at, thats a similar approach that I took investing in BUR, (supposedly) low cost and low risk wells, which have all been producing cash flows, but their drop off rates were too poor.

Now they have changed tack. It reminds me of BCC (although to be honest I don't know as much about BCC)

I would be extremely surprised if they sell the current assets for 5X5M (25Mill AUD or above, as then they would be extremely undervalued, with current mkt cap of $5M.)

I'm guessing with little knowledge, but think they will probably get $5-10M, just on the fact that still no one is buying the shares. Still it may be undervalued if they get this amt too!

 

[prawn_86]

I'm guessing with little knowledge, but think they will probably get $5-10M, just on the fact that still no one is buying the shares. Still it may be undervalued if they get this amt too!

Well they are already 'undervalued' as they have more cash in bank then their current market cap. Although they do have a small amount of debt, so hopefully they will get a good price, pay down the debt and still have about 20 - 30 mill left... (best case scenario i think)

 

[resourceboom]

Prawny, the hedging sounds good as per todays announcement. I'm starting to think the current price may be a quite attractive entry point.

 

[prawn_86]

Hey RB,

I personally dont know what to make from todays ann. They have already said they are thinking about selling Pompano, so why put a new hedge in place, unless the sale looks unlikely i guess

I still think Mac Bank is pulling strings behind the scenes.

At current prices market cap is lower than cash, but they have some debt, so DYOR

 

[prawn_86]

A bit of increased volume over the last few days. Its not normally a leaky ship, but does somebody know something about the sale of Pompano? Or is it just people speculating how much BCC will recieve from it.

EDIT - Just realised i missed the last ann BCC to get approx 10mill for Pompano and Lee County

 

[prawn_86]

Current MC @ price of 5.4c = 9.1 mill

Current cash = approx 5 mill plus 12mill coming in for the sale of Pompano.

$17 mill = 10 cents per share cash backing this is not including and potential positives factored in for other projects

 

[Wysiwyg]

Current MC @ price of 5.4c = 9.1 mill

Current cash = approx 5 mill plus 12mill coming in for the sale of Pompano.

$17 mill = 10 cents per share cash backing this is not including and potential positives factored in for other projects

Just wondering where they are going all cashed up? Not the Austin Chalk is it? Would after the next market correction (assuming it is a decent one) be worth a look?

 

[prawn_86]

Just wondering where they are going all cashed up? Not the Austin Chalk is it? Would after the next market correction (assuming it is a decent one) be worth a look?

Part of that cash will be used to retire debt, but that will be $5mill absolute max i would think.

No not Austin Chalk, Lee County was what they owned there and that has been sold also.

Here's a list of projects they still have (note that drilling dates have probably been pushed back due to global economic conditions):

Cougar
Estimated flow of 500bopd with PUD reserves of 20m barrels at 30% recovery.

Ruby
PUD reserves of 6.1bcf.
Drilling mid 2009

Tuna/Tang
Estimates of PUD reserves being developed.

Swordfish
PUD potential of 100BCF. I would say more likely 30 - 40 BCF.
Drilling mid 09

Cobia
PUD potential 48BCF.
Drilling mid 09.

Jaguar
PUD reserves of 21.6BCF and 1m barrels. Seeking a JV Partner. Can re-enter 2 prior wells to get it online quickly.

Cove Deep
*I think they are looking to get rid of this or let the lease lapse
Trying to get major % holder to do something with it or put their % on market