Buccaneer Energy Limited (ASX: BCC) is pleased to provide the following update on the Endeavour – Spirit of Independence, jack-up rig.

As previously advised, since the Endeavour’s arrival in Homer, Buccaneer has been working with local contractors to complete various rig upgrades and repairs ahead of the final vessel inspection and certification. The Company is pleased to advise that work on rig is nearing completion and the Endeavour will soon be ready for operations.

  1. Fast Rescue Craft. The parts required to address a manufacturer recall for the fast rescue craft, issued after the rescue craft was purchased and installed in Singapore, which have been approved by the US Coast Guard, have been shipped to location and will be installed in the next few days.
  2. General Alarm system. The general alarm system, which had been certified in Singapore, but failed subsequent testing on arrival in Homer, has been updated and the system is now working properly. A new, replacement system has also been delivered and will be installed as future rig operations allow; and
  3. Firefighting system. The Novec system was installed and certified in Singapore, however, during transit to Alaska a leak developed in a valve that was discovered upon the Endeavour’s arrival. This has been repaired and a new extinguishing agent will be used to refill the bottle that leaked. Portable extinguishers have been installed at newly requested locations around the rig and an upgrade to the helideck foam system is being finalized to provide more reliable operation during winter operations.

Prior to its acquisition in November 15, 2011, the Endeavour had been idle for several years, and Buccaneer and its venture partners, AIDEA and Ezion, deemed it necessary to complete extensive upgrades and repairs to ensure that the rig was ready for safe, long-term operations in Alaska. As such the rig was dry docked at the Keppel Fels yard in Singapore for 6 months undergoing repairs and upgrades that have continued in Homer, Alaska.

“The Endeavour is a world class Jack-up, and it was essential that we completed comprehensive inspections and testing all of the systems before deployment,” said Andy Rike, EVP Operations. “While it has taken longer than expected, we are nearing completion on all tasks and are fully confident that the rig is ready for safe, environmentally sound operations. Once the permits are approved we will be ready to go.”

“Buccaneer and its venture partners firmly believe that the Cook Inlet basin remains one of the most underdeveloped hydrocarbon basins in North America, and in the coming years the Endeavour will play a significant role in realizing that potential,” said Jim Watt, President. “The Endeavour will not only revitalize Cook Inlet exploration and development, but with this recent round of upgrades and refitting, the Endeavour is now suitable to support exploration and development operations in the Arctic waters such as the Chukcki Sea.”

Permitting

As previously announced, Buccaneer initially planned to use the Endeavour earlier this year to drill at its North West Cook Inlet prospect. Necessary permitting and approvals for operations at North West Cook Inlet had largely been secured before the Endeavour arrived in Alaska. However, as a result of the delays outlined above, Buccaneer had to adjust its schedule for operations. Buccaneer will now initiate its exploration drilling program at the Cosmopolitan prospect, which is located in an ice free zone in lower Cook Inlet.

Buccaneer acquired the Cosmopolitan prospect from Pioneer Resources at the end of August 2012 and immediately began the submission process for all necessary permitting and approvals shortly thereafter.

“Previous drilling at Cosmo confirmed significant oil and gas potential at the prospect, and the Endeavour is ideally suited for exploring that potential,” said Mark Landt, VP Land & Business Development. “Since acquiring the Cosmo prospect, Buccaneer has been working diligently to secure all necessary regulatory approvals for drilling operations, and once permitting is secure, the Endeavour will immediately embark for its new location.”

Starting this winter, Buccaneer plans to drill vertical offshore wells to evaluate the shallow gas formations known to be present at the Cosmopolitan prospect. According Ralph E Davis, the gas prospect has been estimated to have gas with a proved and probable reserve estimate of 90 BCF. If the gas formations are determined commercial during our winter drilling program this year, new gas supplies could be flowing into the South Central Alaska market in 2014.

In the coming months, Buccaneer plans to drill wells to evaluate the oil potential of the prospect after the Department of Environmental Conservation completes its review and approval of Buccaneer’s comprehensive oil spill response plan.

“Buccaneer is working through the regulatory approval process, and we appreciate the guidance we have received from state and federal regulators,” said Watt. “Buccaneer has made a long-term commitment to Alaska. We see a real future here for the company, and we are intent on working cooperatively will the state to establish a long-term business that will support good jobs, provide tax and royalty revenues to the state and local governments, and, most importantly, meet the energy demands of Alaska in a safe and environmentally friendly manner.”

About Buccaneer

Buccaneer Energy Limited is an energy exploration and production company traded on the Australian Stock Exchange (ASX:BCC). Through its wholly owned subsidiaries, Buccaneer Resources and Buccaneer Alaska, the U.S. headquartered independent is focused on acquiring significant working interests in undervalued, low-risk development properties that possess significant undeveloped upside potential. The Company places a premium on bringing both regional and local expertise to each opportunity, and as a result, its opportunistic approach to finding hydrocarbons, is not limited by geographic considerations. Buccaneer Alaska focuses on developing opportunities in the Cook Inlet of Alaska which includes the Kenai onshore project and several offshore opportunities. Buccaneer Resources is focused on the Gulf of Mexico, onshore opportunities in the lower 48, and certain international opportunities.

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