Buru Energy Ltd (ASX:BRU) remains on-track at its wholly-owned Ungani Oilfield for the first lifting of crude from the 80,000 barrel Wyndham storage tank in early September.
Free flow production from the Ungani 1 and Ungani 2 wells has now produced 650,000 barrels since the start of production from the field in 2012, including around 50,000 barrels since the production restart in late June this year.
Buru has an FOB Wyndham sale agreement with Trafigura, priced at a fixed discount to Brent to account for shipping costs, with payment terms of three days after lifting.
Buru said that the wells are performing in line with predictions, with wellhead pressures and water cuts consistent with the dynamic modeling data.
Production has been constrained to ~1,000 bopd while the transport and operational systems are fine tuned.
New funds flow as well
Buru recently opened a 1:5 non-renounceable rights issue priced at $0.15, which puts the offer in-the-money by about 22% compared to the 15 day VWAP of 19 cents.
Funds are to be used to accelerate the development at Ungani, including the drilling of two oil wells in 2017, with the aim of increasing production capacity and recoverable oil resources.
The company is currently conducting a roadshow through Australia and Southeast Asia highlighting recent transformational transactions including the asset swap with Mitsubishi and the profitable restart of Ungani production, and has had an excellent response from investors so far.
Eric Streitberg, executive chairman, commented:
"We are very pleased with the positive response to the capital raising and the company’s new strategy, from both existing shareholders and from potential new investors.
"The Ungani wells are performing well and we are very much looking forward to our first sale of oil from the new Wyndham tank.
"We are focused on ensuring that the upcoming workover and drilling program is undertaken as safely, efficiently, and cost effectively as possible, and after a period of limited operations we are very excited to be getting back out in the field and adding value through the drill bit."
Two of Buru’s largest shareholders have each confirmed their support for this capital raising and have confirmed to the company that they intend to take up their full entitlements.
This intended support would account for a total subscription of circa A$1.7 million.