West Australian oil and gas company Buru Energy (ASX: BRU) is poised to embark on a major exploration program in the Canning Basin aimed at expanding its operations and extending the life of its producing Ungani Oil Field.
Buru executive chairman Eric Streitberg described the drilling program as the most wide-ranging in the Canning Basin in years, and investors agree. The company’s share price jumped 18.5% since the announcement to close the week at 16¢ per share.
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The announcement of the drilling program comes off the back of a recent farm-in by Origin Energy Group (ASX: ORG). Under the terms of the farm-in agreement, agreed in December last year with Buru, Origin will pay a combined $16 million towards the cost of the drilling of the two exploration wells in the program.
Buru ended 2020 with approximately $21 million in cash, with Mr Streitberg explaining that the strong financial position was preserved through oil production at its 50% owned and operated Ungani Oil Field, as well as measures taken to reduce costs following the COVID-19 pandemic and the resulting falls in the oil price.
The drilling program includes two large conventional oil prospects and a development well on the Ungani Field in what is interpreted to be an undrained part of the field.
It is understood that Buru is close to securing a large modern rig to complete the program. The company has said further details will be provided in due course.
The drilling program is targeting large conventional oil prospects at Kurrajong – west of Ungani – and Rafael, which sits to the east of Ungani.
Kurrajong 1 is being drilled on a large structure that is well defined by 3D seismic surveying. Mr Streitberg said it is expected to have a similar good quality reservoir to the Ungani Oilfield and is at comparable depths.
The Rafael 1 well is being drilled on a large structure that is well defined by a modern 2D seismic grid.
It is a large regional structure interpreted to have similarities to Devonian-aged carbonate structures in Western Canada proven to be very large and prolific oil producers.
“Our exploration program is on track, with a lot of hard work and attention to detail paying off,” Mr Streitberg said.
“We are planning to use a large rig run by an experienced contractor and have put in place a very experienced drilling team to run the program.
“We are drilling two of the largest onshore oil exploration targets in the country at a time of rising oil prices and critical domestic oil production declines.”
In addition, Buru has selected a preferred contractor – Terrex Pty Ltd – for a seismic acquisition program, with approximately 1,200 kilometres of surveys planned. It is anticipated that the seismic program should take some 50 days.
The seismic program is being acquired with efficient state of the art nodal systems that have minimal environmental impact.
Mr Streitberg said the Celestine 2D survey across the EP 457 and EP 458 area is planned as the first and largest part of the program to further define a new geological concept that has the potential for large, conventional oil accumulations.
“In parallel with the drilling program, we will be acquiring a major seismic program that will help us fill our prospect inventory and set us up for a continued drilling program next year,” Mr Streitberg said.
“This is the largest and most exciting exploration program in the Canning Basin for many years and we are very keen to get started.”