Buccaneer Energy Announces Kenai Loop Well Final Testing Results

January 18, 2013

Buccaneer Energy announced the final production testing results from the 100% owned Kenai Loop # 4 well.

The Kenai Loop # 4 well was shut-in for a 20 hour period with shut-in tubing pressure peaked at 3,899 psi. A flow test over 4 different choke sizes, a 4 point test, was then successfully conducted. This test includes the measurement of pressures at each of the choke sizes which allows for the calculation of the AOFP.

A 10′ section of the upper most sand at 10,300′ measured depth was perforated, this sand has gross pay of 20′ and correlates to the 9,700′ sand in the Kenai Loop # 1 well and the AOFP was calculated as 9.0 MMCFD.

The long term deliverable production rate from the Kenai Loop # 4 well is estimated to be 3.0 – 4.0 MMCFD (500 – 667 BOEPD1). The addition of the Kenai Loop # 4 well will increase the field’s total production rate to 10.0 – 11.0 MMCFD (1,666 – 1,833 BOEPD1).

The Kenai Loop # 1 well performance continues to be excellent and is currently producing 6.5 – 7.0 MMCFD (1,083 BOEPD), the Company is selling 5.0 MMCFD into its long term gas contract with ENSTAR at a annual weighted average price of US$6.24 / MCF. In addition, the Company has sold on a temporary basis 1.5 MMCFD to two smaller non-utility Cook Inlet users at US$15.00 / MCF.

South-central Alaska is currently experiencing severe gas shortages and the winter peaking pricing of incremental gas supply has reached US$22.00 / MCF. This high pricing range is weather and supply related and could remain in place while winter heating conditions persist; the additional gas available from Kenai Loop field is capable of being sold into this spot market.

The Company has identified temporary portable production equipment to allow an early start-up of production from Kenai Loop # 4 and estimates the well will be on production in 3 – 4 weeks, thereafter the Company will build permanent production facilities at Kenai Loop when weather conditions permit.

The Company will now engage a third party engineer to restate reserves at the 100% Kenai Loop project.

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LNG World News Staff, January 18, 2013; Image: Buccaneer Energy