Buru Energy Limited is pleased to announce that it has entered into binding agreements with Mitsubishi Corporation (“MC”) and Apache Energy Limited (“Apache”) pursuant to which an Apache subsidiary will farm-in to a number of the joint venture’s exploration permits in the Canning Basin. The permits principally cover the Goldwyer Shale areas of the joint venture’s portfolio, and are prospective for shale oil and gas as well as for conventional sandstone reservoirs, particularly in the southern areas.
Under the agreements, subject to satisfaction of certain conditions:
- Apache will earn a 50% interest in exploration permits 390, 471 and 473 and up to a 50% interest in exploration permit 438 (“Coastal Permits”) by agreeing to fund a A$25 million exploration program to be conducted on the Coastal Permits during 2014.
- Apache will be granted an option to earn a 40% interest in exploration permits 472, 476 and 477, up to a 40% interest in exploration permit 478 and up to a 50% interest in exploration permit 474 (“Acacia Permits”).
- Apache will pay Buru and MC a non-refundable option fee equal to the greater of (a) $7.2 million and (b) 80% of the costs of the 20,000 sq km aerogravity survey currently being conducted by Buru and MC over the Acacia Permits (excluding exploration permit 474) and a 650km seismic survey planned to be conducted by Buru and MC on the
Acacia Permits (excluding exploration permit 474) in 2014.
- If Apache exercises the option at the conclusion of the 2014 seismic program to acquire interests in the Acacia Permits, it will fund 80% of the costs of the first two exploration wells to be drilled in the Acacia Permits and, in the event of success in either or both of those wells, 80% of the first two appraisal wells. Apache will also reimburse Buru for the costs of the recently completed 5,000 sq km aerogravity survey and 400km seismic survey planned to be conducted by Buru on exploration permit 474 in 2014.
Buru will remain as the operator of the Coastal Permits and Acacia Permits but under the terms of the agreements, Apache will, subject to completion of the relevant work programs, have the right to assume operatorship following a transition period. In the event that Apache elects to assume operatorship, Buru will continue to be heavily involved in the community affairs and engagement programs.
Apache’s entry into the Canning Basin provides a strong endorsement of Buru and MC’s exploration and appraisal activities to date and their shared belief in the significance of the region as a potential major energy supplier to Western Australia.
Commenting on the transaction, Buru’s Managing Director Dr Keiran Wulff said:
“Following on from the exploration success of the last few years, Buru has set out to ensure that the Company has the capability to fully explore and commercialise our extensive assets in the Canning Basin whilst also focusing the Company’s efforts on delivering value from its Ungani trend and potential gas assets in its core areas. This farmin by Apache is an excellent result and we are delighted that Apache have agreed to join us in the Canning Basin. This
farmout will provide a welcome refocus and impetus for the exploration of what is another major asset in our portfolio.
