Buru Energy Limited (ASX:BRU) is receiving a healthier return on its sales of high-quality crude from the Ungani Oilfield Joint Venture onshore Western Australia due to the firming oil price.
Increases in the Brent price during May have resulted in the payment for the JV’s May lifting from the port of Wyndham increasing by approximately US$200,000 for Buru Energy’s 50% share.
This encouraging news comes as the Ungani JV between Buru and Roc Oil finalises arrangements for the next lifting.
Sold on a spot basis
The lifting, which is expected in mid-July, has been sold on a spot basis and this process will remain in place for future liftings while the JV reviews the potential for entering into another longer-term offtake agreement.
Buru's executive chairman Eric Streitberg said: “We are very pleased and relieved to see the firming oil price that gives us a healthier return from our oil sales.”
“A good market”
“Although we are facing higher shipping charges and tightening refinery terms, there is still a good market for our particular high-quality crude from Ungani,” he said.
The recent lifting of Ungani crude from Wyndham was the final lifting under the previous Petro-Diamond Singapore Pte Ltd (PDS) offtake contract.
Consistent with previous sales, the July lifting has been sold two months ahead of delivery ‘Free On Board’ (FOB) at Wyndham.
The received price will be based on the average dated Brent oil price for the month of July, less an agreed discount predominantly reflecting marine transport charges to a refinery in South East Asia, which have increased from previous liftings.
“Strong cash position”
Streitberg said: “Our strong cash position and our high-quality exploration portfolio puts us in a good position to weather the current storms and it has also been very pleasing to see the share price improving.
“Although like many other companies our share price is still near historic lows, it is at least now reflecting a value greater than our cash position.”
Shares have increased from 6.2 cents on March 23 to 12 cents last week and last traded at 10 cents.
Well optimisations planned
The JV is maintaining field production at Ungani at approximately 1,250 barrels of oil a day with all wells on production.
This rate is expected to increase with a series of well optimisation activities planned.
Preparations to install an electric submersible pump (ESP) in Ungani 7 to increase production from the well are well advanced with all long lead items on-site and surface equipment installed.
The installation of ESPs is a routine operation and ESPs have been proven to be very reliable and effective in the Ungani 1ST1 and Ungani 2 wells.
Buru is also making progress with its farm-out process and various parties have accessed the virtual data room.
With the COVID-19 related restrictions being progressively relaxed, locally-based interested parties are now able to physically attend Buru Energy’s office to access the geophysical database.
The company also continues to review new venture opportunities with both corporate and asset acquisitions being assessed.