Buru Energy Limited (Buru) is pleased to provide the quarterly report for the period ended
31 December 2022.
Chief Executive Officer’s comments on the report:
Buru finished the 2022 calendar year with a focus on protecting and enhancing the value of
its hydrocarbon assets whilst building the value of its complementary new energy businesses.
During the quarter, Buru supplied ~73,000 bbls of oil into the SE Asian market from its
Ungani Oilfield, contributing $3.7 million in sales revenue to the company.
Unfortunately, the impact of ex-Tropical Cyclone Ellie on road infrastructure in the Kimberley
has meant that production at Ungani had to be suspended in the first week of 2023, with the
forward production plan under assessment as the timing of repairs to the damaged
infrastructure is quantified by Main Roads.
Buru worked closely with Origin during the quarter to minimise the impact of Origin’s
strategic decision to exit upstream exploration on the timely commercialisation of our largescale Rafael conventional gas and condensate discovery.
Although Canning Basin work was restricted to non-field activities during the quarter,
preparations to recommence field activities as and when the situation is resolved were
progressed and work has also continued on investigating other commercialisation options for
the Rafael discovery.
The Company is providing its geological and commercial expertise to act as an incubator for
its integrated energy subsidiaries that are focused on creating value in energy expansion and
transition businesses.
This incubation process will ensure that Buru is an active and innovative part of the
transformation of the energy sector and will be well placed to generate shareholder value
from the rapidly evolving energy economy. Particularly encouraging is the progress made
during the quarter by our 2H Resources subsidiary, focused on natural hydrogen exploration
in South Australia.
I look forward to an exciting 2023 and thank our shareholders for their continued support.
Highlights
Ungani Oilfield Production
• Quarterly oil production of a gross ~50,000 bbls, Buru’s share 50%,
• Buru’s 50% sales revenue of $3.7 million received for ~73,000 bbls of Ungani crude
lifted on 16 November 2022, and
• Average field production rate during the quarter was 540 bopd.
Exploration and Appraisal
• Buru’s primary focus during the quarter was working with Origin to protect the value of
its Canning Basin permits, particularly its Rafael gas condensate discovery, by ensuring
Origin’s timely and orderly exit from the Canning Basin joint ventures,
• Non-field activities covering permit evaluation, prospect inventory maturation and
permit maintenance activities were advanced, and
• Commercialisation studies continued during the quarter, including the commencement
of a pre-feasibility study for a potential Kimberley based compact marinised LNG plant
for early monetisation of Rafael gas and condensate.
New Energy Projects (via wholly owned subsidiaries of Buru)
• 2H Resources continued to progress its geological assessment of its South Australian
permit application areas in preparation for field work with a focus on monitoring and
identification of naturally occurring hydrogen. The company also commissioned an
independent external assessment of the hydrogen potential of its South Australian
exploration application areas, the very encouraging results of which were received in
January 2023, and
• GeoVault continued with detailed technical reviews of the potential for Greenhouse Gas
storage in its jointly held areas the onshore Canning Basin and Carnarvon Basin.
Subsequent key events (January 2023)
• Operations at the Ungani Production Facility (UPF) were suspended on 5 January 2023,
due to the widespread flooding event in the central and west Kimberley region cutting
the oil transportation road route to the export facility at Wyndham (refer ASX
announcements on 5 January and 10 January 2023),
• Buru was confirmed as the successful applicant for two exploration areas in the onshore
Carnarvon Basin (L22-2 and L22-4) with its partner Energy Resources Limited (refer
ASX announcement 16 January 2023),
• Buru received an independent third-party Hydrogen Prospective Resource estimate from
RISC Advisory for its South Australian petroleum exploration licence applications (refer
ASX announcement on 23 January 2023), and
• Sipa Resources, Operator of the Barbwire Terrace exploration project, announced that
the assay results from the three diamond drill holes were not in line with initial
observations, with the results returning low levels of zinc and lead (refer ASX
announcement 18 January 2023).
Ungani Oilfield (L20/L21 - Buru 50% and operator)
Production
Production from the Ungani Oilfield for the quarter totaled a gross ~50,000 bbls (September
quarter ~48,000 bbls).
Ungani average field production is dependent on well uptime, maintenance and other
operational matters but averaged 540 bopd for the quarter. Immediately subsequent to the
quarter, operations at the Ungani Production Facility (UPF) were suspended on 5 January
2023, due to the widespread flooding event in the central and west Kimberley region cutting
the oil transportation road route to the export facility at Wyndham (refer ASX announcements
on 5 January and 10 January 2023.) The resumption of export is dependent on the reopening
of the Great Northern Highway and the river crossing at Fitzroy Crossing.
Oil Sales
Oil from the Ungani Oilfield is trucked via the Great
Northern Highway to a storage tank at the Port of Wyndham
where it is then sold FOB under the marketing agreement
with BP Singapore Pte Limited (BP), primarily to SE Asian
refineries.
One lifting from Wyndham Port by the crude tanker Grand
Ace 10 was completed on 16 November for a total of some
73,000 barrels (gross – Buru’s share 50%). Buru’s 50%
share of sales revenue from the lifting was A$3.7 million.
Ungani Development
Technical and commercial analysis of the potential for additional wells or workovers of
existing wells at Ungani during the 2023 Canning Basin field operational seasons remains in
progress. Any field activity is subject to further technical and commercial analysis,
equipment availability, and relevant joint venture and regulatory approvals. This analysis is
also taking into account current and forecast operational factors and constraints from the
impact of ex-Tropical Cyclone Ellie.
Exploration and Appraisal
Proposed Appraisal Program of the Rafael Gas and Condensate Discovery
Following Origin’s announcement in September 2022 that it intends to exit its upstream
exploration permits, including its joint venture interests with Buru in the Canning Basin due
to its changing strategic imperatives, Buru’s primary focus during the quarter was on
resolving the situation which had led to the suspension of planned field operations.
In parallel with ongoing discussions with Origin, Buru continued with non-field activities
covering permit evaluation, Canning Basin prospect inventory maturation and permit
maintenance.
On 11 November 2022, Origin announced that it received a non-binding indicative offer to
acquire Origin by a consortium of Brookfield Asset Management Inc. and MidOcean Energy
(a company formed and managed by EIG). This event provided another layer of uncertainty
to the timing and form of the forward appraisal and commercialisation of Rafael and added
significant impetus to resolve matters.
Commercialisation activity
As part of the continuing work on the commercialisation of the Rafael discovery, Buru entered
into an agreement with Transborders Energy (Transborders), to conduct a pre-feasibility
study for a Kimberley based compact marinised LNG plant solution.
This solution potentially provides a faster, more capital efficient, and less complex regulatory
LNG production pathway for Rafael gas than a concept involving transporting Rafael gas to
the North West Shelf (NWS) for liquefaction and export. The results of the study are expected
in Q1 2023.
Buru has continued other pre-commercialisation activities for the Rafael discovery during the
quarter, including development option screening, economic analysis and continued
engagement with Government and regulators.
Origin Joint Venture Exploration work program (Buru 40%/50% and Operator)
In line with the farmin arrangements for Origin to earn its interests in the Buru Canning Basin
assets, Buru provided Origin with a proposed exploration and evaluation work program and
budget for the next three years. The comprehensive work program focuses on the systematic
evaluation of the Rafael structure, any potential follow-ups, and the large areas of the
permits that were covered by the 2021 seismic acquisition program.
As at quarter end, Joint Venture approvals had been received only for CY 2023 non-field
activities associated with permit evaluation, Canning Basin prospect inventory maturation,
and permit maintenance activities.
Other Oil and Gas Assets
Yulleroo Gasfield (Within EP 391 & EP 436 - Buru 100%)
Further activity on this asset was deferred during the quarter pending the resolution of
Origin’s exit from the Canning Basin joint ventures.
Lennard Shelf including Blina Oilfield (L6 & L8 - Buru 100%)
Decommissioning of the legacy Lennard Shelf assets has progressed during the quarter with
Sundown 3H and West Terrace 2 successfully decommissioned. Any future production from
Lennard Shelf fields including the Blina Oilfield and any new discoveries will require
installation of new equipment meeting current regulatory and environmental standards.
Carnarvon Basin (EP 510 Buru 25%, EnRes 75% - a wholly owned subsidiary of Mineral
Resources Limited)
During the quarter, the joint venture continued planning activities in support of commencing
drilling operations of two exploration wells in CY 2024. These exploration wells will target
highly prospective Palaeozoic aged structures geologically analogous to Buru’s discoveries in
the Canning Basin. Under the terms of the farmin agreement between the parties, Buru will
be carried for its share of these well costs.
Immediately subsequent to the quarter, the Buru/EnRes joint venture was successful in its
application for two additional highly prospective petroleum exploration areas L22-2 and L22-
4 in the Northern Carnarvon Basin and the Merlinleigh Sub-basin. These areas lie immediately
to the south of EP 510 (refer ASX Announcement on 16 January 2023 for further details).
Integrated Energy Projects
Buru is actively developing three energy expansion and transition focused businesses via its
wholly owned subsidiary companies 2H Resources (natural hydrogen and helium exploration
and development), GeoVault (Carbon Capture and Storage) and Battmin (battery minerals
exploration.)
Balancing its short-medium term returns via its hydrocarbon focused business with its
longer-term business drivers and licence to operate, Buru is carrying out work both through
internal Buru Energy activity and through these subsidiaries, with the objective of these
subsidiaries becoming independent entities in due course.
Natural hydrogen exploration and development – 2H Resources
Hydrogen from geological sources (natural hydrogen) is gaining an increasing share of
exploration investment and activity globally. If found in commercially exploitable quantities,
natural hydrogen will be cost competitive against all forms of industrially manufactured
hydrogen and could potentially support the energy transition as a low to no-carbon energy
source.
2H Resources was established to apply the geological knowledge of its supporting
shareholder Buru Energy in the exploration and appraisal of natural hydrogen accumulations.
2H Resources has established an exploration portfolio in South Australia where the regulatory
framework is in place for natural hydrogen exploration and is actively evaluating other areas
where there is potential for natural hydrogen occurrences.
2H Resources has been confirmed as the preferred applicant for the granting of six South
Australian Petroleum Exploration Licences for hydrogen exploration that are geologically on
trend with legacy hydrogen discoveries, and two Gas Storage Exploration Licences. The
granting of the hydrogen exploration and gas storage licences to 2H Resources is subject to
a valid land access agreement executed in accordance with the requirements of the
Commonwealth Native Title Act 1993 over any area where Native Title interests exist.
Accordingly, 2H Resources has commenced engagement with Native Title groups covering
the application areas as a precursor to the formal granting of the licences, and in parallel is
conducting further geological and geophysical analysis of the licence application areas to
improve the understanding of hydrogen trap mechanisms and prospectivity.
Subsequent to the end of the quarter, Buru received an independent third-party Hydrogen
Prospective Resource estimate from RISC Advisory for its South Australian petroleum
exploration licence applications (refer ASX announcement on 23 January 2023). This
estimate illustrated the potential scale of these resources and is most encouraging for 2H
Resources future activity.
Carbon Capture and Storage (CCS) - GeoVault
Carbon capture and storage (CCS) is the process of capturing carbon dioxide (CO2) before
it enters the atmosphere, transporting it, and storing it in underground geological formations.
CCS complements other emission reduction technologies by addressing emissions that
currently cannot be avoided, including CO2 emissions from industrial processes.
Since early 2021 Buru has been progressing CCS technical and commercial activities through
its GeoVault subsidiary, with a focus on onshore geological greenhouse gas (GHG) storage
in the Carnarvon Basin (EP 510) and in the Canning Basin.
Work is continuing with Energy Resources Limited (EnRes, a wholly owned subsidiary of
Mineral Resources Limited) on the EP 510 area to progress technical maturation and
engagement with Government to ensure appropriate legislative frameworks are in place for
onshore GHG geological storage projects. GeoVault is also continuing with detailed technical
reviews of the potential for GHG storage in the Buru Energy held areas in the Canning Basin.
GeoVault understands that a revised round of Commonwealth grants will be made available
to industry in 2023 under a new government Carbon Capture Technologies program, and
Geovault will aggressively pursue this opportunity to provide additional funding to accelerate
technical, commercial and business development work to scale GeoVault as a business.
Battery Minerals Exploration - Battmin (Buru 50%, Sipa Resources 50% and operator)
Battmin, a wholly owned subsidiary of Buru, was initially formed to apply the geological
knowledge that Buru had acquired in its extensive petroleum exploration activity in the
Canning Basin to the exploration for minerals formed by similar processes, and often in
association with, oil and gas accumulations.
Battmin’s activities are currently focused on its joint venture with Sipa Resources Limited
(“Sipa”) where during the quarter, the joint venture successfully demobilised its exploration
drilling program following the completion of three diamond core holes targeting zinc/lead mineralisation on the Barbwire Terrace in the central Canning Basin, and commenced
assaying of the cores. This activity was co-funded by the Western Australian government’s
Exploration Incentive Scheme, with up to $180,000 provided to the JV towards drilling costs.
Both zinc and lead are used in clean energy applications including in large scale energy
storage systems, battery manufacturing, solar panel manufacturing and general electronics.
Although base metal sulphides were observed in all three holes within large thicknesses of
variably altered Pillara Limestone, and initial geological observations and elevated readings
in handheld XRF confirmed the presence of lead and zinc sulphides, subsequent to the end
of the reporting period Sipa announced on 18 Jan 2023 that the assay results from the three
diamond drill holes were not in line with initial observations, with the results returning low
levels of zinc and lead. The JV will conduct a detailed review of the assay results prior to
finalising its plans for any potential follow-up exploration at the project but is encouraged
that the results validate the geological concept that the carbonate sections are fertile for lead
and zinc mineralisation.
Other permits held by Battmin are being systematically high graded or relinquished as
appropriate.
Corporate
Buru Management Restructuring
As announced in the September quarterly report, the Executive Chairman, Mr Eric Streitberg,
was proceeding with a structured handover of his executive responsibilities to Chief Executive
Officer Mr Nador. This transition to the non-Executive Chairman role was completed on 31
December 2022, with the appointment of Mr Streitberg as Non-Executive Chair detailed in
the ASX announcement on 3 January 2023.
Financial
As at 31 December 2022, the Company had ~$17.9 million in cash and cash equivalents,
with no debt.
Production: Sales proceeds of $3.7 million was received for one lifting of
approximately 73,000 bbls (gross barrels – Buru’s share 50%) of
Ungani crude which was completed on 16 November 2022. Due to
major flooding in the Kimberley from ex-Tropical Cyclone Ellie and
consequent impact of the weather system on roads and
infrastructure, operations at the Ungani Production Facility have
been suspended while the Company investigates alternate oil
transportation routes and methods.
Exploration: Exploration cash outflows included asset integrity and
decommissioning costs, expenditures relating to desktop
geological and geophysical work, as well as integrated energy
transition projects and other new ventures.
Corporate and Admin: Corporate and admin cash outflows were consistent with the prior
quarters.
This ASX announcement has been authorised for release by the Buru Board of Directors.
