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Buru Energy expects next lifting of 60,000 barrels from Ungani Oilfield this month

The company forecasts that it will have more than $60 million in cash by the end of the year.

Loading a tanker with crude oil at Wyndham port
Crude from CGL storage Tank 10 being lifted at the port of Wyndham

Buru Energy Limited (ASX:BRU) expects the next Ungani Oilfield sale lifting of approximately 60,000 barrels gross by Trafigura from the WA port of Wyndham later this month.

Oil from Buru and Roc Oil’s joint venture project in the Canning Basin about 100 kilometres east of Broome is trucked to Wyndham where it is stored in CGL storage Tank 10 before being picked up by a Trafigura vessel.

Trafigura sales agreement

Trafigura buys Buru oil free-on-board at the port town at a fixed discount to Brent oil price to account for the shipping costs of visiting regional refineries.

This month’s lifting will boost Buru’s healthy balance sheet.

The company forecasts that it will have more than $60 million in cash at year-end after the lifting and repayment of the next tranche of the Alcoa debt in late December.

READ: Buru Energy oilfield production drill campaign underway

Buru’s is averaging around 1,150 barrels of oil per day gross from the Ungani Oilfield.

The drilling program for 2018 has been completed and the company is preparing for the 2019 campaign.

Contract for NGD Rig 405

A contract with NewGen Drilling Pty Ltd for the hire of NGD Rig 405, a 5,000-metre depth capacity containerised automated rig, is expected to be signed shortly.

The 2019 drilling program is targeted to start as soon as practicable after the wet season, and this is expected to be mid-April to early May.

The NGD Rig 405 will be used for the 2019 drilling campaign.

Range of prospects being considered

A range of exploration prospects are under consideration for drilling, some of which have been upgraded by the recent 3D seismic reprocessing program.

These prospects are being reviewed and ranked by the JV.

The 2019 program will focus on the wildcat conventional oil exploration program and on drilling further wells at Ungani, potentially including horizontal wells.

Ungani area prospects under consideration for 2019 program.

This will require a rig with considerably more capability than the DDGT1 rig used for the 2018 program, which has been demobilised.

As such, the NGD Rig 405 has been chosen and rig contract negotiations with NewGen are close to completion.

The fully automated modular rig also has the capacity to drill high angle and horizontal wells.

Up to four wells for JV

It is expected that the 2019 program will include up to four wells for the JV and the rig may also be used to drill wells on Buru operated acreage outside the Roc Oil JV.

As well as finalising the 2019 drilling program, during the wet season, the joint venture partners will evaluate the results of the 2018 drilling and testing program.

Results of the recently drilled wells and further production data and testing will be incorporated into the static and dynamic reservoir models to revise the resource potential of the field.

This will also guide the further drilling program in the field that may include the drilling of horizontal oil production wells.

A program of well interventions and optimisations over the last few months has identified an ongoing program of work to maintain and increase production.

The JV’s particular focus of this ongoing program will be the Ungani 1ST1 and Ungani 2 wells that are being produced using high rate electric submersible pumps.

Production facility and transport operations have been running smoothly with a program of de-bottlenecking and optimisation of the production facilities being undertaken.

Acquisition of additional interest in Canning Basin Permits

Further to continued negotiations with Mitsubishi as part of the asset swap transaction of May 2017, Buru entered into an agreement to purchase Mitsubishi’s 37.5% interests in exploration permits EP 457 and EP 458.

Under the terms of the permit JV agreements, the other participant in the permits, Rey Resources Limited, exercised its pre-emptive rights.

Consequently, the interests in the permits will now be Buru 60% and Rey 40% after settlement of the transactions, which is expected early in 2019.

The permits are prospective for conventional oil in a number of formations with the Victory 1 well drilled by Buru recovering oil from the Laurel Formation.

The JV will now review the prospectivity of the permits with the objective of maturing stand-alone drilling targets as soon as possible.

The forward program is likely to include the reprocessing of existing 2D seismic data and potentially the acquisition of new seismic data in 2019.

Location of EP 457 and EP 458.

Quick facts: Buru Energy Ltd

Price: 0.089 AUD

Market: ASX
Market Cap: $38.45 m

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