- Buru Energy and Origin Energy have executed an agreement for an extensive exploration program at the Canning Basin.
- Drilling will also cover the world-class Rafael Prospect.
- In a separate transaction, Buru Energy is farming out the EP457 and EP458 permits to Origin
Stock of Buru Energy Limited (ASX: BRU) traded higher by around 29% on 21 December 2020 (AEDT 2:17 PM) to $0.120, post announcing a slew of significant market updates.
Buru Energy has entered a farm out transaction with Origin Energy Limited (ASX:ORG) for an exploration program at the Canning Basin, covering the renowned Rafael conventional oil prospect.
Additionally, Buru has entered a farm-out transaction through a binding agreement with ORG for exploration on two permits (EP457 and EP458).
Source: BRU ASX update, dated 21 December 2020
Agreement 1: Buru Permits - Canning Basin & Rafael Prospect
Both parties have agreed on an extensive exploration program at the Canning Basin that will include the drilling of Rafael Prospect.
- Origin will earn a 50% interest in Buru’s five wholly owned permits (Buru Permits) in lieu of funding the agreed exploration program. Buru will retain the exploration permits’ operatorship.
- The preliminary work program includes a commitment to drill the Rafael 1 and Kurrajong 1 wells as early as in 2021 following the northern Australian wet season. Origin will provide $16 million to cover the well costs, in addition to paying $1 million to Buru towards the previous exploration activities.
- The preliminary work program will include the acquisition of regional and prospect-level seismic programs at the Buru Permits in 2021. Initially, Origin will invest $3 million towards the seismic acquisition.
- Origin will bear the initial expense of $4 million if the JV plans to acquire a 3D seismic program at Rafael following the drilling program at the Rafael 1 well.
- Origin holds the option to withdraw or fund any further activity in two out of the five Buru permits. If fully exercised, Origin will be required to fund an additional $10 million towards exploration at these two permits to retain its 50% stake.
Agreement 2: EP457 and EP458 permits
Buru and its current JV partner Rey Oil and Gas Pty Ltd have agreed on the farm-out transaction for exploration permits (EP457 and EP458). These permits are located south of Buru’s wholly owned tenements, which are part of the above discussed transaction with Origin.
- Origin will earn a 40% interest in the permits with 20% each from the existing partners Buru and Rey.
- Following the farm out agreement, the permits will be 40% owned by Buru, 40% by Origin and remaining 20% by Rey. Buru will retain the exploration permits’ operatorship.
- The preliminary work includes a 2D seismic acquisition survey to target the potentially large-scale drilling prospects at the EP457 and EP458 permits for a cost of ~$3 million. The survey is planned to be conducted during the 2021 field season along with the seismic surveys by Buru on the adjacent permits.
- Origin will be required to pay the initial $3 million towards the acquisition of the Celestine seismic survey.
- Under the options, Origin can either withdraw or fund further activity in the permits. If fully exercised, it will be liable to pay $6 million towards exploration drilling expenditure to retain its 40% stake.