Buru Energy Ltd (ASX:BRU, OTC:BRNGF) notched up “another very active period” during the June quarter, according to chief executive officer Thomas Nador, who said “significant technical, commercial and pre-operations readiness work” dominated the period.
In the company’s quarterly report, Nador said that the June quarter had seen the conclusion of a farmout process with Sabre Energy which secured more than $6 million in funding to reinvigorate the Ungani Oilfield.
READ: Buru Energy inks farm-in agreement to “reinvigorate” Ungani Oilfield assets
This included the planned drilling of the high impact Mars oil exploration well later this year, with the potential to provide backfill to the Ungani Production Facility.
“Exciting new chapter”
He said: “This is an exciting new chapter for the Ungani Oilfield and has the potential for a significant uplift in value of the asset.”
The farm-in agreement includes Sabre taking a 70% interest in the Ungani Oilfield production and exploration assets in Petroleum Production Licences L 20 and L 21.
This transaction includes a contribution by Sabre of $1 million towards the costs of restarting production from the Ungani Oilfield and a further $5 million towards the drilling costs of the high impact Mars exploration well in Production Licence L 20, with the potential to provide backfill to the Ungani Production Facility (UPF).
Rafael Shallow
The quarter had also seen “the identification of a potentially high impact, shallow oil prospect in EP 428, partly overlying the Rafael 1 gas and condensate accumulation with Buru’s assessment of prospective resource volumes of between 3.2 MMstb (low estimate) and 79 MMstb (high estimate) of recoverable oil, with a Best Estimate of 19 million barrels”.
READ: Buru Energy identifies high potential Rafael Shallow prospect on 3D seismic; drill planning underway
Rafael Shallow is targeting reservoirs in the Poole Sandstones and Grant Formation at a depth of less than 1,200 metres. The structure is of considerable size (18 square kilometres) with more than 125 metres of vertical closure.
During the period, Buru began discussions with third parties who have expressed an interest in farming into the prospect, with discussions expected to be concluded subsequent to the quarter.
Drilling planned
The CEO said that material progress had been made during the quarter to be able to drill the prospect later this year, in campaign with the drilling of the Mars well.
This included progressing well design, procurement, approvals and securing a funding partner for the drilling of the well.
“An oil discovery would provide a rapid development path that would add substantial value for Buru and an additional funding path for Buru’s 100%-owned Rafael deep gas and condensate project, which remains the company’s development priority,” Nador said.
Rafael Phase 1
With this strategy in train, during the quarter the company continued engineering and commercial work to refine the Rafael Phase 1 project, incorporating a smaller footprint and cost competitive concept identified as part of pre–Front End Engineering Design phase of development.
“Capital allocation discipline and cost control remain a priority for the company,” Nador said. “To this end, additional controls on commitments and expenditure have been implemented across the business during the period.”
The CEO concluded his quarterly comments by saying: “And finally, during the quarter Eric Streitberg announced his intention to retire as non-executive chair and director of Buru Energy after a period of 16 years at the helm of the company, with recruitment of a new non-executive chair currently nearing conclusion.”
Integrated energy projects
Buru also continued to progress integrated energy projects via its wholly owned subsidiaries. This work included:
2H Resources continued its discussions with key native title parties in relation to land access agreement for its South Australian permit application areas.
2H Resources also commenced trialing of specialist spot sampling equipment in preparation for its soil gas sampling program associated with the Special Prospecting Authorities with Acreage Options (SPA-AO’s) applied for in Western Australia.
GeoVault continued its assessment of CO2 storage formations in the onshore Canning Basin.