Lower Cook Inlet Cosmopolitan leases being acquired

Buccaneer Energy Ltd., Sydney, will acquire a 25% operated working interest in the two main productive leases in the former Cosmopolitan Unit in Alaska’s Lower Cook Inlet from Pioneer Natural Resources Alaska Inc.

Cosmopolitan is an undeveloped oil and gas discovery in 50 ft of water just off Anchor Point on the Kenai Peninsula. Buccaneer said the acquisition will hike the company’s proved and probable reserves in Alaska 79% to 31.1 million bbl of oil equivalent.

BlueCrest Energy II LP, private Fort Worth independent, is to acquire the other 75% working interest in Cosmopolitan, said Buccaneer. Closing is planned by Mar. 30, 2012.

Buccaneer noted that Apache Corp. acquired leases surrounding and adjoining Cosmopolitan at the June 2011 state lease sale.

Buccaneer said Cosmopolitan, “as a more advanced project with an existing well and some infrastructure already in place … provides nearer term oil and gas production potential than our two other Cook Inlet offshore projects which will still be developed in parallel.”

Buccaneer said development involves two separate plans, a gas development at 3,000-4,000 ft to be drilled with a jack-up and an oil development at 6,000-8,000 ft that can be exploited with wells drilled directionally from shore. An offshore well using Buccaneer’s Endeavour jack-up rig is planned for late 2012 that will further quantify both zones.

Development will begin in the 2012 northern hemisphere winter and continue through to 2014. The preliminary development plan includes drilling and producing oil wells from the existing onshore production site and drilling offshore water injection wells for reservoir pressure maintenance.

Separately, offshore gas wells will be drilled and tied back to the existing land site and connected to ENSTAR Corp.’s recently completed gas pipeline.

The acquisition will allow the use of Endeavour to provide a more efficient development plan than was previously available to Pioneer, Buccaneer said. Without access to a jack-up, all wells including water injection wells needed to be drilled as extended reach directional wells from shore. Further, the shallower gas reserves could only be reached by offshore rig.

Because southern Cook Inlet is ice-free, Cosmopolitan will enable Buccaneer to use Endeavour when ice floes preclude drilling in northern Cook Inlet in November-March.

Cosmopolitan was first drilled in 1967, and the unit was created in 2001. Various wells have tested hydrocarbons from the Tyonek and Hemlock formations.