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  • Buccaneer Energy,LLC (BCC:ASX) could be moving toward a target of 36 cents.

    It is no secret that one of my favorite little stocks is Buccaneer Energy, LLC (BCC:ASX).  For several years I have written about the team, the projects, the ups and the downs.  However, recently it seems that others have begun to notice.  I saw a Wall Street Journal article by Ryan Dezember that outlined the company’s strategy in Alaska.  It was followed by a Bloomberg piece a few days later that outlined the purchase of the Rig written by David Wethe and Edward Klump. 

    Of course the trades like the Oil and Gas Investor, the Oil and Gas Journal, Hearts E&P, and others have begun talking about Buccaneer Energy on a weekly basis.  Recently RigZone did a rather long piece on the Buccaneer.  In Alaska this company is hard to miss with coverage in all the local papers on an almost daily basis. I new things were starting to buzz when Energy Intelligence’s Oil Daily did a piece on the Alaskan market and mentioned Buccaneer Energy and quoted Curtis Burton as he described why he was leading the pack there.  They were even featured on CBS in Anchorage for having the courage to ask the community to help them rename the Adriatic XI to something more suitable to the Alaskan adventure.

    Following Buccaneer has been like waiting for everyone else to arrive at a party where you have all ready tasted the hors d’oeuvres and sampled the main entre. Those of us who know the company can't believe that they have not been discovered by everyone else.  Since last February the stock has steadily downtrended uninterrupted while the company has regularly put out positive news and made some real progress on an excellent business plan.

    Management has made several presentations of late where they state their goal is to mitigate risk and maximize opportunity.  Recently Curtis Burton was one of the Key Note speakers at the Oil Councils Energy finance conference in New York.  At the same conference Executive Vice President Scott Bernstein was seen on a high level panel with the CFO of Energy 21.  This year the news has been very interesting.  First, they drilled a successful well at Kenai Loop suggesting that they may have made the first major Alaskan natural gas discovery in the last ten years. They turned the corner on buying a major Jack-Up rig which effectively unlocks the value of their offshore reserves.   They wrote a sales contract for all the gas they can produce, and they accomplished a major capital raise while their stock price continued to trend downward.

    That is until yesterday.  The stars seemed to align for BCC on the last two days of trading this week.  The stock had better than usual volume and finished the week at 9.7 cents.  Moving to 9.7 at the close is a break of three significant resistance points.  Closing on a weekly high of 9.7 is above both the 50 day and 200 day moving averages.  Significantly this broke the intermediate term downtrend that began in Mid-February.

    What does this mean?  Well, I think it means that all the hard work and positive moves that management have made over the last year have finally been recognized.  How far will BCC run, hard to tell.  If you read the Helmsec report they should be trading between 20 cents and 30 cents.  A recent report from Shaw gives a 36 cent price target.

    Does this recent activity signal a change in direction for this little gem, I certainly think so.  Time to top up and get ready for the run.

    Oct 14 12:42 PM | Link | 1 Comment
  • Buccaneer Energy, BCC.AX could be making over a million in cash every month.
     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.

    May 19 5:38 PM | Link | Comment!
  • Helmsec Issues a very positive report on Buccaneer Energy (BCC.ax) Will The Share Price Take Off?

    Looking over the 2011 and 2010 companies that Helmsec has done business for…they seem to be pretty good at picking winners.  Now mind you, I didn’t look to see how any of these companies compared to each other, just at what the share price of companies represented by Helmsec have done over the last year or so.  I also tried to stick to the oil an gas space.

    I found an interesting trend, all have done better and in some cases much better.  Could just be coincidence or perhaps they pick good companies.  CLR was only 86 cents back on 12/17/10 and today is trading over at almost two dollars.  BTU was trading at 14.5 cents on May of 2010 and today is trading at just over a dollar.  GXY in May of 2009 was only trading at 49 cents and today is trading at over a dollar.  ROL in December of 2009 was only 62 cents and now trades above a dollar fifty.  Even ADU was trading at .40 last May, while today it trades around 65 cents.

    Was Helmsec responsible for this, probably not.  I don’t even know whether they even published research reports on these companies.  I couldn’t find any with only a cursory look and I did not bother checking each website.  What I can say is that with small resource companies they seem to be able to pick them very well.  Or small resource companies that will do well seek them out, not sure which.

    As it relates to Buccaneer Energy and Buccaneer Alaska,  in the report it stated that if Keni Loop was successful they would rate the company at closer to 25 cents.  From the look of the press release the well is successful, so the company is trading at less than ½ projected value. 

     

    Another key factor is the gas market in Alaska.  Since the market is isolated they sell their gas directly to the utility.  The utility is paying close to $7 an MCF while in the lower 48 we are barely passing $4.

     

    Ensource Prices for Natural Gas

    A review of the contracts that supply the Utility is enlightening as well.

     

     

    Imagine what BCC would do with a natural gas well in a productive field that can produce like others in the region and sells gas for between $6 and $9.  What would that do for the cash flow picture and for the value of the stock.

    Looking at the choices Helmsec has made, they seem to pick companies that do well in the months following their reports.  Espcially when they have the fundamentals to back up the positive predictions in the report.  If I had bought stock in 5 of the 7 companies that have been represented by Helmsec in the resource space over the last couple of years I would be very wealthy today.

    So one has to wonder, what is holding this company back.  The management team has been vetted.  They survived the Great Financial Crisis when so many others did not.  They have a producing field in the Gulf of Mexico.  They have a producing field in the Austin Chalk sitting on a viable Eagleford Shale play.  They have proven reserves in the offshore of Alaska and they have a brand new well onshore Alaska that has every indication of success.

    Shouldn’t this stock be taking off right about now, or am I missing something?

     

    May 18 2:32 PM | Link | Comment!
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