Buccaneer Energy Limited (ASX:BCC) is pleased to advise that it has completed arrangements to secure rights in respect of the Glacier Drilling Rig # 1 ("Glacier Rig").
The Glacier Rig was owned by Glacier Drilling Company, a wholly owned subsidiary of the Marathon Oil Company ("Marathon"). The Company has facilitated the purchase of the Glacier Rig by a third party that specialises in the energy sector.
The new owner and a wholly owned subsidiary of the Company, Kenai Land Ventures, LLC ("Kenai Land"), that has been set up specifically for this transaction have entered into a 3 year Bare Rig agreement.
The Bare Rig lease rate to be paid by Kenai land is a discount to the rates charged by Glacier Drilling to the Company for drilling the Kenai Loop wells in 2011 and is therefore this is seen as financially advantageous transaction for the Company. Kenai Land has exclusive access to the Glacier Rig during this period or alternatively it can lease the rig to third parties and charge a premium to the lease rate it is charged by the owner.
Option to Purchase
Kenai Land has an option to purchase the Glacier Rig at any time after the first 6 months for 7,338,000. Upon exercise of the option to purchase, a portion of the lease payments paid to that time will be credited against the purchase price.
The Glacier Rig is a Mesa 1000 carrier mounted land drilling rig. It was built in 2000 and can drill to depths of approximately 15,000'. The rig is unique in that it was designed and built with the input of the drillers that would operate the rig on the Kenai Peninsula, Alaska. Glacier Rig was designed to operate close to neighborhoods on Alaska's Kenai Peninsula. The small size is ideal for pad drilling, minimizing the drilling footprint and impact to its surroundings.
The Glacier Rig was used to drill both of the Company's Kenai Loop wells in 2011 and the Company considers its acquisition as an enabling asset and ensures its ability to develop onshore projects.
Buccaneer Director Dean Gallegos said:
"This transaction is yet another significant milestone and key component of our onshore Alaskan strategy, it will allow us to immediately secure an enabling asset in the Cook Inlet in what is a tight rig environment for three years. This arrangement also maintains the option to purchase the rig.
The lease back and option to purchase conserves capital for development of the Company's Kenai Loop project, ensures timely drilling at our Kenai Loop project and also assists by controlling the costs associated with the project."
