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Buru Energy retains speculative buy rating from Taylor Collison

The 2019 drilling season is set to commence in May and success could deliver an upside significantly beyond the value of any oil discovered.
recent project photo
The company is cashed up and carried through $20 million of exploration spend

Buru Energy Ltd (ASX:BRU) recently completed a further oil shipment from its Ungani operations onshore Western Australia, with a lifting of 70,278 barrels by Trafigura.

Adelaide-based broker Taylor Collison has retained its speculative buy rating for Buru.

Following is an extract from Taylor Collison’s recent report:

Our View

The 2019 drilling season is set to commence in May and for Buru Energy, as a leveraged play on the potential of the Canning Basin, success could deliver upside significantly beyond the value of any oil discovered.

The company has indicated it will likely drill two wells on the Ungani Oil trend, which has been hinted at as a transformational opportunity…success lifts the prospectivity of the portfolio, however, failure could be a ‘back to the drawing board’ moment.

The company is cashed up and carried through $20 million of exploration spend which puts it in a strong financing position.

Canning Basin – a drilling campaign set to kick off

Buru Energy (BRU 50%, Roc Oil 50%) is set to commence the 2019 drilling campaign, scheduled from 1-May with a 4 + 2 programme featuring a mix of exploration and production wells on the Ungani field.

The programme is yet to be finalised but confirmed targets include production support wells at Ungani-6 and -7; and the Yakka Munga exploration well, targeting the same production horizon (the Reeves Formation) successfully completed at Ungani Far West-1.

The Reeves Formation is noted by the company to be an emerging play and is expected to be >700m thick at this location.

Whilst the entire programme has not been firmed, Buru has highlighted the Rafael, Hotdog and Butler prospects of being of interest.

Ungani-6 may be drilled as a horizontal well or in a high angle deviated configuration…it will be interesting to assess the impact of this completion style on production rates.

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