Buru Energy Ltd (ASX:BRU, OTC:BRNGF) has entered into a farm-in agreement (FIA) with Sabre Energy Pty Ltd for the Ungani Oilfield production and exploration assets, aiming to “reinvigorate” the field with the new development deal.
The FIA concerns Petroleum Production Licences L 20 and L 21 in Western Australia’s onshore Canning Basin,and will see a structured transition of operatorship from Buru to Sabre over time in exchange for offering Sabre the opportunity to acquire a 70% interest in the assets.
Buru will retain a 30% working interest and enjoy a $6 million farm-in carry from Sabre, starting with $1 million to restart production from the Ungani Oilfield and a further $5 million towards drilling the high potential Mars exploration well about 9 kilometres north of the Ungani Production Facility.
Buru estimates the gross, unrisked Prospective Resources for the Mars prospect to range between 0.74 million stock tank barrels of oil (MMstb) and 6.2 MMstb, with a Best Estimate of 2.8 MMstb and a 40% geological chance of success.
“Great value add for asset”
“We are very pleased to have Sabre Energy as a future joint venture partner and operator of the Ungani Oilfield,” Buru Energy CEO Thomas Nador said.
“Sabre’s approach to exploration, development and production, their team credentials and experience, and entrepreneurial spirit will be a great value add for the asset.
“I look forward to the months ahead as we firm up our plans for a production restart at Ungani and prepare to drill the high potential Mars prospect as future production backfill for the Ungani facility later this year.”
Planning is well advanced at the Mars prospect – located on PL20 – to drill the well during the 2024 Kimberley operating season, potentially as part of a campaign already planned for Buru’s Rafael Shallow clastic oil prospect in Exploration Permit (EP) 428.
The timing of the campaign will depend on selecting and securing a suitable drilling rig.
The company is also working toward the restart of operations at the Ungani Production Facility, potentially as early as the fourth quarter of this year.
“Sabre Energy is looking forward to collaborating with Buru Energy to create new points of value for the Ungani assets,” Sabre Energy chair Allan Bougoure said.
“Building on the foundation project at Ungani, potential exploration success at the Mars prospect may open the door to opportunities beyond the current footprint of Ungani operations, which we believe is a worthy pursuit for the joint venture.”
Reinvigorating exploration
Buru says that although the Ungani assets were fully impaired by the company in 2022, the FIA and joint venture partnership with Sabre offers an opportunity to reinvigorate its Ungani Oilfield asset for the benefit of both company’s shareholders and investors, as well as the local community, traditional owners and the Western Australian Government.
“We believe the Canning Basin represents one of the last frontiers of onshore oil and gas exploration in Australia, and Buru Energy’s assets provide a unique and exciting entry for Sabre Energy into oil exploration and production within the basin,” Sabre Energy managing director Regie Estabillo said.
“I look forward to working with the Buru Energy team to collaboratively develop a structured program aimed at generating near-term cashflows and recommencing oil exploration at Mars.”