Buccaneer Energy Ltd., Sydney, has taken a farmout from ConocoPhillips Alaska that gives Buccaneer the right to earn a 100% working interest in the deep rights on 23,368 acres in the North Cook Inlet Unit in Alaska.
Buccaneer agreed to the division of the farm-in area into two acreage blocks, Blocks A and B. Buccaneer must spud a well in either block by Dec. 31, 2014, and a second well in the remaining block by a year later.
Buccaneer is revising its drilling schedule for the next 2 years and plans to spud the first well in the southern Block A using its Endeavour jack up in the project.
The North Cook Inlet Unit adjoins Buccaneer’s North West Cook Inlet Unit, and as part of the transaction Buccaneer has licensed existing 3D seismic owned by ConocoPhillips. The 3D license covers both the area subject to the Deep Oil Rights Agreement and parts of the North West Cook Inlet Unit, including the areas over which Buccaneer is permitted to drill two wells.
North Cook Inlet Unit has produced nearly 1.9 tcf of gas from the shallow Sterling and Beluga formations since the 1960s and is held by gas production that has been used mainly to supply ConocoPhillips’ 100% owned LNG facility. ConocoPhillips will continue to own the shallow gas production.
The farmout entails no upfront cash consideration, and ConocoPhillips retains an overriding royalty interest.