Buru Energy (ASX:BRU) has advanced its operations on a number of fronts with imminent coring of the primary target at the Ungani Far West 1 well in Western Australia's Canning Basin and re-perforation and testing of the Ungani North 1 well recovering oil.
Coring operations have begun at Ungani Far West 1 with a wireline retrievable coring system and the current operation is coring the casing shoe track.
Coring of the prognosed Ungani Dolomite reservoir section - the project's primary target - is expected to begin shortly.
This follows quickly on confirmation of an oil column in the shallower Anderson Formation of at least 14 metres of which 5 metres is net pay. Buru tested oil to surface from this zone which is well above the Ungani Dolomite and has potential for good flows.
Preparation for coring at the Ungani FW well and testing at the Ungani North 1 well has paralleled production from the Ungani Oilfield which will fulfil the next contracted sale of a cargo of crude to a south-east Asian refinery, with the lifting scheduled for 26 January. The field will then be shut in while the joint venture reviews more cost effective options for export of the oil.
Also, the Valhalla North 1 and Asgard 1 wells at the company's Laurel Formation tight gas pilot exploration program have continued their strong production performance constantly unloading stimulation fluid and flowing hydrocarbons.
Along with the favourable clean-up response of the wells, flowing well head pressure has been increasing with increased fluid recovery.
These wells will also now be shut in because of the encroaching wet season and the data will be analysed by an independent reserves certifier.
Ungani North 1 testing
Buru's 50/50 joint venture with Diamond Resources is also undertaking a further test of the Ungani North 1 well involving a re-perforation of the interpreted oil zone.
Initial results have seen the influx of oil with a field measured gravity of 41.5 deg API.
This is a very encouraging result as this is the first oil recovered from the well which has an interpreted oil column in the Ungani Dolomite section.
The previous testing of this zone had recovered interpreted drilling fluid.
Further testing operations including pressure build ups and recovery of additional oil samples will now be undertaken.
Portfolio update
Buru has also received confirmation by the WA Department of Mines and Petroleum that its relinquishment of the Coastal and Acacia blocks and the eastern application areas has been accepted.
This move represents part of the company's strategy to focus its activity on its core holdings in the Canning Basin.
Also, Buru has entered a conditional agreement to sell the Yakka Munga pastoral lease.
The sale is subject to a number of conditions including due diligence, government approvals and the completion of a further agreement regarding Buru Energy’s ongoing access to the pastoral lease area for petroleum activities.
The sale is at a price that reflects the increase in value of the pastoral properties in the Kimberley since Buru purchased the property.
Analysis
The start of coring at the prognosed Ungani Dolomite reservoir section represents the potential cusp of an important discovery for Buru which could deliver a price catalyst.
The oil discovery made ahead of this level earlier in the month has heightened expectations for the target and broader ambitions of opening up a new play fairway in an area with other leads and prospects.
Although the oncoming wet season will result in the temporary suspension of some activities at the Ungani Oilfield and the Laurel Formation, progress at these operations has been encouraging.
This momentum has notably included increasing gas flow and recovery metrics at Laurel and the scheduling of an Asian crude delivery later this month from Ungani.
Buru also stands to benefit from a tightening of its focus as these developments unfold, with the shedding of non-core assets such as its Coastal and Acacia acreage and the Yakka Munga pastoral station.
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