Kenai Loop Production Increase and New Gas Contract
Sydney, Nov 30, 2012 AEST (ABN Newswire) - Buccaneer Energy Limited (
ASX:BCC) is pleased to advise that it has increased the production rate at its 100% owned Kenai Loop # 1 well to 6.5 million cubic feet per day ("MMCFD").
Additional production rate increases will be considered on completion of testing of the Kenai Loop # 4 well.
The Company previously advised that it had executed a gas sales agreement with a third party to sell 1.0 MMCFD at US$7.50 MCF, net of pipeline tariffs, for the period 15 October - 15 December 2012. Effective 14 November 2012 the third party has agreed to increase the price under gas sales agreement to US$15.00 MCF.
Additionally the Company has executed a new gas sales agreement with an additional third party in the Cook Inlet to sell 0.5 MMCFD at US$15.00 MCF, net of pipeline tariffs, for the period up until 31 December 2012. The Company may have an ability to extend the contract and increase deliveries however both are subject to the buyers' requirements at that time.
On completion of the above short term contracts the additional supply will be delivered to the local gas utility ENSTAR and will be priced using the daily auction pricing process that has been established by ENSTAR for winter peak demand. Peaking demand and the potential for premium gas prices is weather determined but are expected to persist until mid February 2013.
The high gas prices reflect the tight nature of Cook Inlet gas supply, especially during winter months. Independent studies commissioned by utilities with South Central Alaska where 80% -90% of the population reside and who rely on the Cook Inlet for their energy requirements have forecast that the gas shortfalls will persist for at least the next 2-3 years.
Buccaneer is very well positioned to take advantage of these shortfalls by supplying new reserves to the supply base.
The Kenai Loop # 1 well commenced production on 14 January 2012 and has been on continuous production since late February 2012. Since that time the production rate has been increased by 30% and the well performance continues to be excellent.
Contact
Buccaneer Energy Limited
T: +61-2-9233-2520
F: +61-2-9233-2530
WWW: www.buccenergy.com
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