Ungani Oilfield to be reinvigorated with new partner and planned near field exploration

Source: www.gulfoilandgas.com 6/17/2024, Location: Not categorized

Buru Energy Limited is pleased to announce that it has entered into a Farm-in Agreement (FIA) with Sabre Energy Pty Ltd (Sabre) for the Ungani Oilfield production and exploration assets in Petroleum Production Licences L 20 and L 21 in Western Australia’s onshore Canning Basin (the Transaction).

• Sabre to earn a 70% interest in the Ungani Oilfield for a consideration that includes a $6 million farm-in carry, with Buru retaining a 30% working interest in Petroleum Production Licenses L 20 and L 21.
• The Transaction includes a structured transition of operatorship from Buru to Sabre, a contribution by Sabre of $1.0 million towards the cost of restarting production from the Ungani Oilfield as well as a $5.0 million carry towards the drilling of the high potential Mars exploration well located approximately 9km north of the Ungani Production Facility.
• Planning is well advanced to drill the Mars prospect in Production Licence L 20 during the 2024 Kimberley operating season, potentially in a campaign with the planned drilling of Buru’s currently fully owned and operated Rafael Shallow clastic oil prospect in Exploration Permit (EP) 428. The timing of the 2024 drilling campaign remains subject to the completion of the current process of selecting and securing a suitable drilling rig.
• Planning is also advancing for the restart of operations at the Ungani Production Facility, potentially as early as during Q4 2024.
• Sabre will further assume an agreed proportion of the future abandonment costs in relation to the Ungani Oilfield, thereby significantly reducing Buru’s current abandonment liabilities.
• Although the Ungani assets were fully impaired by Buru in 2022, the Transaction and the Joint Venture partnership with Sabre provides Buru with an opportunity to reinvigorate its uniquely positioned asset for the benefit of Buru and Sabre shareholders and investors, the local community, the Traditional Owners and the WA Government.
• The Transaction and the commencement of the planned work program is subject to standard regulatory approvals of the Production Licence transfers to Sabre.

Commenting on the transaction, CEO Thomas Nador said:
“We are very pleased to have Sabre Energy as a future Joint Venture Partner and operator of the Ungani Oilfield. Sabre’s approach to exploration, development and production, their team credentials and experience, and entrepreneurial spirit will be a great value add for the asset.

I look forward to the months ahead as we firm up our plans for a production restart at Ungani and prepare to drill the high potential Mars prospect as future production backfill for the Ungani facility later this year.”

Commenting on the transaction, Sabre Energy Chairman, Allan Bougoure said:
“Sabre Energy is looking forward to collaborating with Buru Energy to create new points of value for the Ungani assets.

Building on the foundation project at Ungani, potential exploration success at the Mars prospect may open the door to opportunities beyond the current footprint of Ungani operations, which we believe is a worthy pursuit for the Joint Venture.”

Regie Estabillo, Managing Director of Sabre Energy further noted:
“We believe the Canning Basin represents one of the last frontiers of onshore oil and gas exploration in Australia, and Buru Energy’s assets provide a unique and exciting entry for Sabre Energy into oil exploration and production within the basin.

I look forward to working with the Buru Energy team to collaboratively develop a structured program aimed at generating near-term cashflows, and recommencing oil exploration at Mars.”

Background to the Transaction
Following the suspension of production from the Ungani Oilfield in August 2023 due to the ongoing uncertainty associated with the availability of a suitable river crossing at Fitzroy Crossing for crude transportation to the port of Wyndham for export, and the subsequent withdrawal of ROC Oil (Canning) Pty Ltd from the Ungani Joint Venture, Buru commenced marketing Production Licences L20 and L21 to domestic and international parties.

The marketing process generated robust interest, with nine parties participating in a competitive process. Of the nine parties, Sabre provided the most compelling and value accretive proposal following a period of due diligence.

Background on the Mars Prospect
The primary objective of the Mars prospect is sands within the Reeves Formation in a large fault-bounded closure located up-dip from interpreted oil pay in the Ungani North 1 well. The prospect was initially identified on the Ungani 3D seismic by the Buru-ROC Joint Venture with the structure confirmed on the reprocessed Ungani 3D pre-stack depth migration volume in 2019.

It is notable that a previous short term production test from the Reeves Formation in the Ungani Far West 1 well has confirmed the presence of high-quality movable oil within the Reeves Formation sands in that well. The Ungani Far West 1 oil has similar attributes to the Ungani Dolomite crude and is believed to be from the same source rocks.

Buru estimates the gross, unrisked Prospective Resources within the Reeves Formation of the Mars Prospect to range between 0.74 MMstb recoverable oil (low estimate) and 6.2 MMstb (high estimate), with a Best Estimate of 2.80 MMstb and a 40% geological chance of success.

Prospective Resources relate to the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s), and relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

Further information on the Mars prospect is included in Attachment 2 of this ASX release.

Ungani Production Restart
Buru and Sabre both share a common vision to restart production from the Ungani Oilfield as soon as practicable. To this end, the parties are continuing discussions and planning to bring the Ungani facilities and wells back online, potentially as early as Q4 this year.

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