Buru Energy Ltd (ASX:BRU) has the potential for large value delivery from both its oil and tight gas assets in the Canning Basin located in northwest Western Australia.
The Ungani Oilfield was discovered in 2011 and represents the first new field oil discovery in the Canning for 30 years.
Ungani has produced 600,000 barrels to date and was suspended at minimal cost due to the collapse in the oil price in January 2016.
This new trend oil discovery is positioned for an easy restart subject to further oil price recovery and ongoing work to reduce operating and transport costs.
Thanks to its funding agreement with its major international partner, Mitsubishi Corporation, Buru’s share of any field improvements is carried through to the end of 2016 up to $9 million.
Buru is also close to completing its evaluation of over 1,000 sq km of onshore 3D seismic data over the very prospective Ungani trend.
Preliminary results are very encouraging with a large number of high impact conventional oil prospects being defined.
Any oil exploration is expected to be funded internally from the Buru’s healthy cash balance, which was $38 million at the end of the June quarter.
Within Buru’s strategic land position of a gross 33,200 square kilometres in the Canning Basin, it is also developing a world scale tight gas continuous resource, the Laurel Formation.
The resource has been independently confirmed and a frac program has confirmed the Laurel accumulation’s production potential and led to a contingent resource classification, the next step toward commercialisation.
The Laurel Formation is a basin centred tight gas accumulation defined by numerous historic wells and 8 wells drilled by Buru and the current joint venture.
It is a thick and extensive tight gas system containing shales, sandstones and limestones, similar to the Montney Formation in Canada.
Buru also recently signed another landmark native title agreement that will give it the ability to move to a production licence in due course.
A farm-in partner is currently being sought to progress the tight gas assets to the commercialisation and development phases.
The 2016 calendar year has witnessed a dire oil market, budget cuts, exploration stemmed and contractors going insolvent.
Buru has made the necessary changes to its business to weather these difficult times and during this last year has delivered:
- a successful frac program;
- a new landmark native title agreement;
- an oil discovery at Ungani Far West;
- restructured its balance sheet;
- cut cash costs; and
- set a path back to profitable oil production.
With a sustainable business model and defined commercialisation pathway for its Canning Basin assets, Buru is well positioned to deliver value from its large strategic land holding and asset base.
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