TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH BUCCANEER ENERGY LIMITED
(ASX:BCC) MANAGING DIRECTOR, CURTIS BURTON
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me for the first time from Buccaneer Energy is Managing Director, Curtis Burton.Curtis welcome to FNN. Can you start by introducing Buccaneer Energy, how long’s it been going, what do you do and when did you list?
Curtis Burton: Well thanks Clive, appreciate the opportunity to visit. We initially listed in the ASX November of 07. Did that principally because of the availability of funding and we liked the model that we saw as far as the ASX went. And we saw an opportunity to come here and raise capital where it’s very difficult to that point to raise capital or even pre-meltdown in the US, for small operations like this. We went out to raise twenty million and that’s a very difficult niche in the US, you really - to get anybody’s attention up there, you have to be in the two hundred million range and as many people are aware right now, whether you are trying to raise two dollars or two hundred million, it’s impossible in the US. So that was the initial impetus to come down here.
Clive Tompkins: Curtis you’ve had some very good success in the Gulf of Mexico and are about to commence drilling in Texas, can you introduce both projects?
Curtis Burton: In the case of Pompano for instance, it was discovered by Shell in 1976, was produced for a number of years but when 3D seismic came along, what you saw in that 3D seismic was where they should have drilled many of the wells. So what we did was we acquired that in the run up to the IPO and then went out and started developing in that and again, our pitch to the market here was - we will do this very rapidly and very consistently. So we IPO’d in November, we booked the rig in December, drilled the well in January - seventeen days after we finished drilling, we had it hooked up and producing. That’s a pretty good feat in an off-shore environment. It’s not so much of a feat on land - lots of people can do that, but off-shore that was very rapid. And to the naysayers that came along and said, well that was a fluke, we never repeated it and had the next well on line in a similar sort of seventeen day period after we finished drilling. So we had two wells on line and producing by March/April of 08 and we were doing about sixteen million cubic feet a day, which for a start-up company was pretty impressive even if I do say so. We have yet to drill a dry hole - everything that we drill together we’ve found hydrocarbons. We’ve taken a bit of a break from doing things on Pompano to move over to what we think is more relevant to the market we’re in right now. We’re going after our Lee County property which is an oil play with associated gas in Lee County Texas and that is imminent within the next week or so.
Clive Tompkins: The Ruby Project also looks very exciting, can you tell us a little more?
Curtis Burton: Ruby is a slightly smaller deal for us as twenty-five percent of the position currently. We’re doing some things behind the scene right now that might change that, but a little bit too early to make any commitments on that. But that is an offset to a couple of very successful wells in shallow water there. One of them has produced 29 b/s and 788,000 barrels of oil and there are other locations around that that have produced up to 5.7 b/s and a couple of hundred thousand barrels of oil. So it’s a very low risk property in keeping with the kinds of things that we’ve done elsewhere and it’s something that we think has some good value for the company, and we’ll just have to see how that matures over the next few months. Like everything else we’ve done, there are staggered targets here. The Tex W is one of the formations that’s targeted and that’s seen as a PUD type. It’s a proven undeveloped reserve, so when you are looking at things in the oil and gas world, PUDs are one of the things you like to have – you know it’s there, it’s not a lot of risk, you are not doing exploration, pure exploration. So the initial drill is the Tex W and then down deeper is the Cib Op which has a fifty percent likelihood, to put it in layman’s terms, of having about 40 bcf of gas. Forty billion cubic feet of gas is a lot, but one of the things that make it interesting is that you could see production rates based on other production in the area that could be thirty million cubic feet a day. If you remember back to what I said, we drilled two wells and had about sixteen million cubic feet a day; this would be one well out of one zone that would more than double that. So it’s a low risk property and it has opportunities that give you very rapid rate which is, as you know, how you make money in the oil and gas business.
Clive Tompkins: Curtis, I understand you’ve also been profitable the last couple of years at the EBITDAX level, how profitable?
Curtis Burton: Our first year of operation we came in as I recall at about 2.7 million EBITDAX and then last year, even in spite of all the things that were going on in the financial markets and with the commodity prices, we still came in at a 4.2 million level. So we think that’s unusual on a couple of counts. One is its good performance in our opinion, given all of the unknowns and the problems that were going on out there. But it’s also unusual for start-up holding gas operations to see that kind of performance, even two or three years in, let alone from day one.One of the ways that we achieved that result last year was that as times got tough, the management team took some fairly significant pay cuts. Some of the senior people took fifty-seven percent cuts. Some of the other guys took fifty percent cuts and in addition to that, several of the people that came on board with us - if you believe the thing about people are your most important asset, we had put contracts in place to keep those guys there and they all, including myself, gave up those contracts.
Clive Tompkins: Last question. Where do you see Buccaneer Energy this time next year?
Curtis Burton: We’re very excited about the opportunities that are going on. We have still in place - Macquarie was involved with us in our IPO. We still have in place an excellent credit facility within that is untapped at the moment.We believe because of the tightness of the financial markets in the US and the absence of anyone funding things in the US just now and because of the financial situations that have occurred, you’re going to see investment opportunities come out of the oil and gas market in the US over the next few months, that we will be uniquely capable of taking advantage of because of our financial position. Not only with Macquarie but the money we still have in the bank and the access we’ve got to the markets, we are actively looking at opportunities and we think that is going to give us quite a boost over the next twelve months.Clive Tompkins: Curtis Burton thanks for introducing Buccaneer Energy.
Curtis Burton: Thank you.
