Buru Energy Ltd (ASX:BRU, OTC:BRNGF) has inked a farm-in deal with Sabre Energy Pty Ltd to fund drilling of the high-impact Rafael Shallow oil target in licence EP 428, part of Western Australia’s onshore Canning Basin.
Sabre will full carry Buru for $6 million in drilling and testing costs to earn a 50% interest in a commercial discovery and subsequent production licence, with Buru maintaining a 50% interest and control over operations on-site.
Should the two companies identify a commercial discovery, Sabre will pay an additional $1.5 million to Buru based on previous exploration expenditure.
Buru has assessed the Rafael Shallow target to have prospective resource volumes of recoverable oil between 3.2 million stock tank barrels (MMstb) and 79 MMstb, with a best estimate of 19 million barrels.
Excellent value, strong synergies
“This latest transaction with Sabre Energy further demonstrates the strong alignment between our respective organisations and our common belief in the prospectivity of the onshore Canning Basin,” Buru Energy CEO Thomas Nador said.
“Buru received strong interest from the market for participation in the drilling of the high-impact Rafael Shallow prospect.
“Sabre’s proposal provides Buru with excellent value for the Rafael Shallow prospect farm-out and also offers significant strategic synergies with the Ungani partnership established earlier this year.”
Read: Buru Energy inks farm-in agreement to “reinvigorate” Ungani Oilfield assets
Developing multi-asset operation
BRU says an oil discovery at Rafael Shallow could add substantial value for both Buru and Sabre, and an additional funding path for the 100%-owned Rafael deep Phase 1 gas and condensate project, which remains Buru’s core focus.
“This transaction shows that, like Buru Energy, we are enthusiastic about the onshore Canning Basin and are prepared to invest in the drill bit to create value for our venture with Buru,” Sabre Energy managing director Regie Estabillo said.
“We are looking forward to the drilling program planned for later this year and are quickly building our own organisational capability to support Buru as operator of Rafael Shallow, and our future operatorship of the Ungani Oilfield.”
Negotiations for a drilling contract are well advanced, with drilling equipment and materials already secured and on-ground preparations and approvals underway.
BRU is targeting drilling for late in the third quarter this year, as part of a two-well program that will include the Mars 1 well.
Investors have welcomed the farm-in with shares as much as 11.77% higher on the ASX this morning to $A0.095.