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  • Buccaneer Energy, BCC.AX could be making over a million in cash every month. 0 comments
    May 19, 2011 5:38 PM | about stocks: APA, DVN, COP, BP

     Buccaneer and Anchorage Alaska seem to be tied at the hip, at this point.  With the find in Kenai Loop, a lot of potential moves are open to the company.  Enstar is building a storage facility not to far from the field, so this gas can be sold even during the summer.

    With this amount of pay, one could expect 5,000+ MCF a day.  The question is what would that mean to the company.  In the lower 48 a well like this would be a good, but marginal well.  Similar to the Pompano project now that natural gas is sitting below five dollars.

    I believe the reason there has been such a comparison made between other historical wells in the area is that Buccaneer Energy is trying to tell a story that appears to be true. 

    First flow rates of 5,000+ are very possible and second, the price per MCF is published on the Enstar Website.  Lets run some rough numbers and see what this might mean for Buccaneer.

    At 5,000 MCF with a net to BCC of $6.00 that equals 30k a day.  With an average of 30 days in the month that could mean 900,000 a month in cash flow.  However, the question remains, when will we know what the flow rate will be and how long will it last? 

    Perhaps the flow rate will be 6,000 MCF a day with a net to BCC of $6.00 that equals 36k a day or over 1 million a month.  At 10,000 MCF a day the figure could be 60,000 a day for Buccaneer, or 1.8 million a month.  While no one knows how long it will last, historically these wells keep right on pumping once they prove to be viable.

    Another major concern is when will the well pay for itself?  Fortunately for Buccaneer, the State ACCES funds help with this little problem and BCC will be eligible for those funds almost immediately.

    At just about any of these rates, BCC will quickly be able to drill again in Kenai Loop on cash flow alone, but what will such a scenario do for their borrowing base?  The more they borrow, the less dilution and the more value for the shareholder.

    I am beginning to see why Helmsec likes the Kenai Loop project.  So much so they gave the stock a target of 25 cents with success.  Well, by all indications we have success.  Time to buy more shares, before the flow test gives us a true indication of what the cash might be from the first well.

    I have heard that some might want to wait, for fear that this project will experience the delays that LEE 1 well had and might never make it to the pipeline.  To that I would remind everyone how fast Vic 2 and Alexander 1 were drilled and the production sold.  Also, this is not Lee County and the wells are not in the Austin Chalk.

    I guess we will have to see what this little company can do in the short term.

    Stocks: APA, DVN, COP, BP
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