Buccaneer Resources: Clean Up Crew
Utility
Written by John Zorabedian   
Saturday, 31 May 2008
Buccaneer Resources: Clean Up CrewBuccaneer Resources: Clean American Executive - RedCoat Publishing
Curtis Burton is picking up where the oil majors left off, producing new oil and gas from Gulf of Mexico reserves.
Premier Business Partners:

Focus Exploration
Hercules Offshore
Rimkus Consulting Group
The Gulf of Mexico has been drilled for more than 40 years by oil majors like Shell and BP, but Buccaneer Resources, a start-up Houston oil and gas producer, has found room to prosper in the shadows of these giants as they move further offshore in search of bigger reserves.

Beginning in January 2008, Buccaneer started producing gas from a shallow-water field abandoned by Shell and Zapata in the 1990s, just one month after the company received backing from a public offering in Australia. Buccaneer President Curtis Burton joined with partners in 2006 to develop the Pompano field, after a 3D seismic map shot by speculators discovered significant reserves left in the field.

Buccaneer Resources: Clean Up CrewBuccaneer Resources: Clean American Executive - RedCoat Publishing
Curtis Burton, President
Burton said the company began producing from a second well in the Pompano field in May and has plans to drill six total wells in the field so far. “We’re looking for assets like this that have new data that makes them valuable but other people have missed,” Burton said. And because the field was previously developed, Pompano had about $15 million worth of infrastructure already on it, ready to produce gas in short order. “It had platforms, pipelines, and flowlines already set up,” Burton said. “By assuming the abandonment liability, we got all that hardware and could immediately put this field onto production.”

The Gulf of Mexico is full of opportunities like Pompano that an independent company like Buccaneer can exploit, Burton said. As the majors require greater and greater reserves to compensate for the oil and gas they produce, smaller and depleted reserves are quickly abandoned. And as more mapping of the gulf becomes available from seismic imaging, Burton said the company can find significant reserves that have been passed over.

The Pompano field is producing enough gas to generate about $750,000 per well each month in free cash, Burton said. Still, a large operator would not be able to cover its overhead expenses on a limited number of wells. “These properties are anywhere from 5 billion to 20 billion cubic feet,” he said. “If you’re Shell, you can’t afford to work this.”

By subcontracting out the actual drilling to other companies in the Gulf, Buccaneer keeps a low overhead—the company is run by Burton and a staff of only eight people. Keeping costs to a minimum and exploiting opportunities where oil and gas is already known to be is what makes the operation profitable for Buccaneer and its investors. “We’re a very lean operation and always will be,” Burton said.

Well wishers
Before Buccaneer can start producing at a new well, the company needs to find the kinds of properties that offer good data on reserves and a history of previous production. Buccaneer owns 75% of the interest on the Pomapano field, with 35% owned by the Australian Elixir Petroleum.

“When we have other property deals, we’ll go out to the market to identify drilling partners for those properties,” Burton said. The company negotiates forward supplier arrangements with rig companies such as Hercules Offshore, a preferred supplier. “We are in process of looking at longer-term drilling opportunities and partnering arrangements with Hercules to go after a multi-month, multi-drill drilling arrangement,” he said.

Burton said competition for the fields his company bids on is limited, and the opportunities seemingly endless. Buccaneer’s strategy of finding and quickly exploiting these drilling opportunities is paying off, he said. “It’s rare for someone to have an IPO and less than six months later have two wells with production on them and already be cutting deals to replace the wells we’ve drilled,” Burton said. “What makes us different is we’re targeting impact-level reserves. We didn’t go to the marketplace to say fund us to drill one well. We have multiple opportunities lined up.”

And for the foreseeable future, the Gulf of Mexico is in no danger of drying up. Burton said new data show that only about 100 wells have been drilled deeper than 15,000 feet in the gulf. If Buccaneer begins to run out of shallower reserve opportunities, the company can be confident there are deeper reserves worth exploring.

“We’re not worried about a shortage of opportunity,” Burton said. “We can either go deeper or go to slightly deeper water depths with a floating rig and go to slightly larger reserve targets. Those opportunities are also out there because they’ve been largely abandoned by the majors and big independents.” 
 
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