Buru Energy Announces Quarterly Report

Source: www.gulfoilandgas.com 10/28/2021, Location: Not categorized

Buru Energy Limited is pleased to provide the quarterly report for the period ended 30 September 2021.

Executive Chairman Eric Streitberg’s comments on the report:
“It has been another very active quarter with simultaneous oil production, oil lifting and sales, exploration well drilling, well testing and seismic acquisition operations, together with our routine field activities. We have also been rapidly advancing our integrated energy activity through our 2H Resources, Geovault and Battmin subsidiaries.

The exploration drilling results have been mixed with initial positive indications from the Currajong 1 exploration well not being borne out by production testing. Importantly, while obviously disappointing, the results have validated an extension of the Ungani Dolomite reservoir development to some 30 kms to the west of the Ungani Oilfield.

Drilling at the Rafael 1 well has been slow due to very hard and abrasive formations, but these are now behind us and with the intermediate casing set and some earlier encouraging hydrocarbon indications the well is now drilling into the main reservoir objective.

We also completed the regional seismic survey over the highly prospective Celestine, Willare and Paradise exploration areas with very encouraging initial results. The survey was completed on budget and incident free.

The very strong oil price with our benchmark Brent crude above US$85 a barrel has resulted in the strong financial performance from our crude sales and we are working hard to keep production levels as high as possible.

We look forward to another strong quarter and positive results from our exploration and energy transition activities.”

Highlights

Exploration drilling and seismic
• Currajong 1 exploration well drilled and tested. Good reservoir development in the Ungani Dolomite but testing failed to recover hydrocarbons.
• Rafael 1 exploration well drilled to section depth of 3,500 metres and intermediate casing set. The forward program is to drill through the anticipated reservoir section.
• Major regional seismic program of 990 kilometres completed on budget and incident free.

Oil Production from Ungani Oilfield
• Quarterly oil production of ~73,500 bbls
• Oil lifting of ~74,000 bbls in July, Buru’s 50% sales revenue ~$3.4 million
• Further lifting in October of ~74,000bbls, Buru’s 50% sales revenue ~$3.7 million
• Field production rate with all wells on production currently ~800bopd
• Ungani 8 development well planned to be drilled as the third well in the current 2021 drilling program with the Ensign 963 rig.

Energy Transition Projects
• Integrated energy projects in hydrogen, CCS and battery minerals advanced through dedicated business units.

Oil Exploration
Currajong 1 Exploration Well (Buru 50% and Operator)
Currajong 1 is located some 30 kilometres to the west of the Ungani Oilfield and some 70 kilometres east of Broome. The well is in Exploration Permit 391 in the Canning Basin in northwest Western Australia.

The Currajong 1 exploration well was drilled with the Ensign 963 rig and spudded on 1 July. It was drilled to a measured depth of 2,340 metres and wireline logs were acquired prior to running and cementing 7” casing to 2,335 metres.

Petrophysical interpretation of the wireline logs indicated porous zones with interpreted oil saturations at the top of the Ungani Dolomite equivalent section and potential oilbearing zones in a lower dolomite section equivalent to the porous dolomite interval seen in the nearby Praslin 1 well. Accordingly, the decision was made by the joint venture to complete the well for testing of these potential hydrocarbon indications.

In late September, the completion was installed in the well, and in early October four zones were individually flow tested by swabbing. Although good reservoir quality was confirmed in all zones, no oil was recovered and pressure data acquired during the swabbing operations indicates that the zones are water bearing. The well has now been suspended while the data are examined and the wireline log indications correlated with the test results.

A specialised hydrogen mud gas detection unit was installed for the Currajong 1 drilling operation and this unit detected a zone of up to 6% hydrogen percentage in mud as over an interval of approximately six metres from 2,014 metres measured depth. This result is encouraging in confirming the presence of natural hydrogen in the Canning Basin.

Rafael 1 Exploration Well (Buru 50% and Operator)

Operations
Rafael 1 is the second well in the 2021 exploration program and is currently being drilled with the Ensign 963 rig. The well is located some 50 kilometers to the east of the Ungani Oilfield and some 150 kilometres east of Broome in Exploration Permit 428 in the Canning Basin in northwest Western Australia.

The Rafael 1 well was spudded on 22 August and has now been drilled in 12¼ inch (311 mm) hole to the intermediate section depth of 3,500 metres, above the anticipated main reservoir objective section, and wireline logging was completed to that section depth.

The well is now being drilled ahead in 8½ inch (216 mm) hole to the prognosed principal reservoir objective to a planned final total depth of some 4,000 metres. Drilling operations to the intermediate casing point have been consistent with no significant rig related downtime, but the rate of penetration was slower than anticipated due to hard and abrasive sandstones in the Anderson Formation which was substantially thicker than prognosed.

Geological
The basal section of the Anderson Sandstone had elevated mudgas indications of some 10 times over background (average 2% and up to 4%), over the gross interval from 3,285 metres to 3,429 metres drill depth. However, no material increases in drill rate were seen, and subsequent wireline logging has confirmed the section is generally tight.

The specialised hydrogen mudgas detection unit on the rig has also detected up to 4.9% hydrogen over small intervals shallower in the well, and in the zone with mudgas hydrocarbon shows it detected hydrogen up to 2%. It also detected helium at low concentrations but significantly above background.

The significance of these hydrogen indications needs to be further evaluated, but together with a number of legacy wells that encountered hydrogen, they demonstrate the widespread occurrence of natural hydrogen in the Canning Basin.

2021 Seismic Program (Buru 40%/50% and Operator)
As part of the 2021 exploration program a multi-permit 2D seismic acquisition program was undertaken by Buru on behalf of its Canning Basin joint venture partners to delineate additional exploration targets for subsequent drilling campaigns. The seismic has been acquired over highly prospective areas of the Joint Ventures’ extensive acreage holdings in the Canning Basin, and was principally funded by Origin Energy under the terms of the December 2020 farmin agreements.

The acquisition contractor, Terrex Pty Ltd, commenced the program during the quarter and it was completed on 21 October. A total of some 990 kilometers of data was acquired over three separate surveys: Celestine (~630 line kilometres across EP457 and EP458), Willare (~240km in EP428), and Paradise (~120km in EP428). The proposed Great Northern 2D seismic survey has been deferred for potential inclusion in future seismic campaigns.

The program was completed within budget with no reportable HSE or environmental incidents.

The survey was designed to have minimal environmental and cultural impact. All lines were initially surveyed on foot with an anthropologist and two traditional owner monitors, and where possible existing tracks were utilized with, in particular, 76% of the Paradise survey being acquired on existing tracks and firebreaks. Where it was necessary to traverse across country low impact line preparation methods were utilized, and the recording system used a low impact nodal geophone system.

In collaboration with the Australian National University, multi-component geophones for both seismic survey recording and passive listening experiments were deployed in parallel to the active seismic acquisition crew. This technology is used for deep crustal and earthquake research and in monitoring carbon sequestration projects and provides another layer of data to assess the prospectivity of the Canning Basin. These data will also be made fully available to the scientific community.

Ungani Oilfield (L20/L21 - Buru 50% and operator)

Production and Development
Production from the Ungani Oilfield for the quarter totalled ~73,500 bbls (gross) at approximately 800 bopd (June quarter ~70,500 bbls) and Ungani continues to produce at a stable rate of some 800 barrels of oil per day.

Oil Sales
Oil sales are facilitated by secure trucking, storage and export contracts, with the oil being trucked from the Ungani Oilfield 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.

There was one lifting during the September quarter, with the MT SCF Pechora lifting approximately 74,000 bbls (gross – Buru’s share 50%) from Wyndham Port on 8 July 2021. Buru’s 50% revenue share from the lifting was approximately A$3.4 million.

Subsequent to the end of the quarter the MT SCF Pechora returned to Wyndham with some 74,000 bbls (gross - Buru’s share 50%) again being lifted on 12 October. Based on the current very strong Brent price, Buru’s 50% revenue share from the lifting is currently estimated at approximately A$3.7 million, with the price to be finalised at the end of October and payment to be received in November.

Ungani 8 well
The proposed Ungani 8 well is planned as a horizontal well targeting the interpreted undrained section of the Ungani reservoir that was the objective of the unsuccessful Ungani 6H well. Current planning is for the well to be drilled at the conclusion of the Rafael 1 well and further details on the well design and objectives will be provided in due course.

Other Oil and Gas Assets
Yulleroo Gasfield (Within EP 391 & EP 436 - Buru 100%)
The Yulleroo Gasfield accumulation is defined by four wells and a 3D seismic survey and has had a successful fracture stimulation operation on the Yulleroo 2 well. It contains a substantial 2C tight gas resource that has been independently certified. It also forms part of the much larger prospective tight gas resource in the wider Canning Basin.

During the quarter the reprocessing of the Yulleroo 3D seismic survey was completed with very encouraging results. The objective of the reprocessing and the mapping of the new data set is to quantify the potential of the conventional sand from which gas was recovered on borehole testing in the Yulleroo 3 well at 3,200 metres drill depth. Analysis of the sidewall core data from this sand suggests that the porosity has been preserved by a similar grain coating mechanism to that seen in the Kingia Sandstone in the Perth Basin.

The objective of this detailed technical review is the drilling of a further well on the accumulation targeting conventional reservoir development.

Blina Oilfield (L6 - Buru 100%)
Technical review of the data from the field has continued, and a process to engage an independent expert to advise on the secondary recovery and CCS projects is underway.

The potential for activity on Blina to interface with the Geovault projects is also being actively pursued.

Carnarvon Basin (L20-1 Buru 50%)
During the quarter work continued on the assembly and validation of the existing technical data on the block with the joint venture aiming to commence field work during 2022. The area is prospective for conventional hydrocarbon exploration and also has potential for future carbon capture and storage operations.

The requisite Native Title agreements required for the grant of the permit are also being progressed with meetings with the appropriate parties.

Integrated Energy Projects
The Company is progressing a number of initiatives to ensure it is part of the energy transition both through internal Buru activity and through three subsidiaries, 2H Resources (natural hydrogen), Geovault (Carbon Capture and Storage) and Battmin (Battery Minerals).

The Company is leveraging its core strengths to advance these projects as it also advances its core activities in oil production, exploration, and geotechnical evaluation.

2H Resources
2H Resources is aiming to be a leading explorer for natural hydrogen (Gold or White Hydrogen) and associated helium.

Natural hydrogen is produced from underground accumulations in the earth and not manufactured, so it has the potential for supply of low cost and low carbon intensity hydrogen.

Acreage acquisition
2H Resources initial focus is in South Australia where it has recently been a successful applicant for over 29,000 sq km of permits that are on geological trend with legacy natural hydrogen discoveries (noting that Buru’s tenements in the Canning Basin cover a gross 22,000 sq kms).

2H Resources plans to undertake on-ground initial prospecting work on these South Australian permits using in-house capabilities and technology, including hydrogen measuring equipment, once appropriate approvals are in place.

Regional and development work 2H has developed internal geological expertise in the search for natural hydrogen, and is engaging with globally recognized specialists and consultants.

Opportunities both onshore Australia and globally are currently being assessed, and this may lead in due course to the establishment of activity in international jurisdictions that have established a regulatory framework for the exploration and production of natural hydrogen. 2H Resources is also in discussions with potential partners to further expand its activities and technical capabilities.

Current drilling activity:
In addition to routine mudlog hydrocarbon gas detection and logging on current Canning Basin wells, a specialised hydrogen mudgas detection unit has been installed to monitor hydrogen and helium and the unit has measured a number of intervals of hydrogen and helium concentrations in these wells.

The significance of these hydrogen indications needs to be further evaluated, but together with a number of legacy wells that encountered hydrogen, they demonstrate the widespread occurrence of natural hydrogen in the Canning Basin.

Carbon Capture and Underground Storage (Project Geovault)
All credible paths to net zero by 2050 require utilisation of carbon capture and storage (CCS). The only method of CCS that has the potential to provide the necessary scale is Carbon Capture and Underground Storage.

Geovault has been formed with the intention of participating in the CCS industry through the provision of geological sequestration services for major carbon emitters.

It has established a highly experienced technical team to progress the identification and development of viable CO2 storage sites, especially where these may support development of Clean Hydrogen Industrial Hubs or clean LNG production facilities. The immediate focus of the team is on feasibility and geological studies to identify and quantify new potential CO2 storage locations.

Geovault is also progressing relationships with complementary service providers to ensure it is able to provide an integrated CCUS service.

Battery Minerals (Project Battmin)

General activity
Battmin has been formed with the objective of identifying mineralised areas that can add value as an adjunct to its petroleum exploration activity.

Initial activity was aimed at following up substantial lead/zinc mineralisation in dolomitic sections of Buru oil exploration wells. This activity led to a joint venture with Sipa Minerals which has resulted in a substantial exploration program as set out below.

Battmin has also applied for a number of mineral exploration areas in its own right through its association with consultants who are highly experienced in both carbonate hosted mineral deposits and in the Canning Basin.

Battmin has also applied for a block of mineral tenements that are proximal to the large area of the Canning Basin that has been pegged by Fortescue Metals Group as shown on the following map. These applications cover areas of the Kidston sub-basin that have substantial thicknesses of Ordovician aged salt (>800 metres in the Nicolay 1 well). The attraction of substantial salt thickness is its potential for storage of hydrogen gas, hydrocarbons, and carbon dioxide. In addition, there is substantial potential for the salt to contain late stage evaporite horizons that have high lithium content.

Early stage work including XRF examination of well cuttings and detailed geological interpretation has been commenced to quantify this potential.

Barbwire Terrace Project (Buru 50%/Sipa Minerals 50% and operator)
Sipa as operator is undertaking exploration in the Barbwire Terrace project on behalf of the Joint Venture targeting MVT style lead-zinc deposits. The Barbwire Terrace is interpreted tobe an attractive regional location where carbonate sequences are relatively shallow (<500m) and potentially have access to mineralising fluids from deep seated regional faults.

The most effective remote sensing method for identifying blind MVT targets is detailed gravity surveys, and during the quarter a gravity survey over target areas identified from existing Buru regional gravity data has been completed, and planned drilling locations have been defined.

The necessary heritage surveys will commence shortly ahead of drilling. Future drilling will be supported by an Exploration Incentive Scheme (EIS) grant that is supported by the Western Australian Government.

Additional tenement areas have also been applied for within the Barbwire Terrace Area of Mutual Interest (AMI) with Sipa to cover areas of prospectivity similar to the current granted tenements.


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