Buru Energy Limited Provides Ungani 6H Weekly Drilling Update

Buru Energy Limited (ASX: BRU) is in the business of exploration and production of oil and gas. Part of the energy sector, the company is based in Australia with headquarters in Perth. The company aims to explore and develop petroleum resources from the Canning Basin.

On 14th May 2019, BRU provided weekly drilling report update on its operations at the Ungani 6H well. This report commenced on 4th May 2019. The Ungani 6H well is located in Production Licence L20 in the Canning Basin of north western Australia and is 97 kms east of Broome. The well is located adjoining to the Ungani Production Facility. The surface location is almost 160 metres north of the Ungani 1ST1 well. L20 is the operator of the well and the company holds 50% interest in the well.

Since its last report, the drilling of the well has progressed up to a recorded depth of 945m in the Nura Nura Shale Formation. Post this drill, a 194 mm casing was cemented in place. Another progress as stated was to commence drilling in the 171 mm hole, with 140 mm casing. This would be after the BOP’s current rig operation, after the Ungani Dolomite reservoir is dealt with. There was no hint of the presence of the Hydrocarbons.

The rig’s performance was good except a few minor issues at the beginning of the operation.

A detailed report of the Initial well operations of Ungani 6 was published on 6th May 2019. The recorded depth as of 6th May 2019 was 420 metres. The operation was drilling ahead to section TD of approximately 960 metres. The hole size was 244 mm with a 194 mm casing drilling string.

On 16th April 2019, the company published its quarterly activities report and its cash flow report for the quarter ending 31st March 2019. The Ungani oil production for the quarter came up to ~93,000 bbls. Yakka Munga exploration well, Rafael prospect, Additional wells in Lennard Shelf, Butler Sand prospect were amongst the other few projects that witnessed activities in this period.

BRU also acquired an additional interest in EP 457 and EP 458 from a subsidiary of Mitsubishi Corporation. The deal’s final settlement took place in March and $720,000 was paid by Buru and all government approvals were received for the same. As per the agreement, the company owns a 60% interest in each of EP 457 and EP 458. The other 40% is owned by Rey Resources Ltd.

On the corporate side, in January, an additional $0.5 million was paid to Alcoa as part of the loan owed. The remaining liability of $4.5 million is due to be paid in two tranches, with $2.5 million to be paid in December 2019 and the remaining to be paid in December 2020.

Below are the financial highlights of the company:

Particulars Amount ($m) in March 2019 Forecast ($m) for June 2019
Cash outflow from operations 1.3 7.4
Total cash outflow 2.5 7.4
Closing cash 61.5 54.1

Share Price Information:

As on 14 May 2019, the stock closed the day’s trade at A$0.240, down -5.882% compared to its previous closing price. It has a market cap of A$110.18m.


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