Buru Energy (ASX: BRU) has extended its Gas Supply Agreement with Alcoa of Australia by two years, giving it more time to appraise and prove up gas reserves in the onshore Canning Basin.
The Canning Basin specialist now has until 1 January 2015 to establish sufficient reserves to deliver up to 500 petajoules of gas to Alcoa.
Alcoa had previously made a A$40 million prepayment for gas to be delivered under the agreement, of which $24.8 million is held in escrow in partial satisfaction of Buru’s potential obligation to repay the Alcoa Prepayment should it not make a final investment decision to meet its initial delivery obligations.
That agreement is a cornerstone of Buru’s strategy as Alcoa is able to offtake the volume of gas required to provide the financial security to develop the planned Great Northern Pipeline.
It will also help satisfy Buru’s commitment to develop a domestic gas project under the State Agreement with Western Australia, that granted the company an unique 25-year tenure over five exploration permits in the onshore Canning Basin.
Buru has enjoyed a number of successes over the Yulleroo field and Valhalla accumulation and is proving up the wider Laurel Formation Basin Centred Gas Accumulation.
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