Buru Energy has announced a major change in its Canning Basin exploration program after disappointing early results, saying today it was looking to release the specially-built rig it had contracted to use this year.
The Perth-based company said it was undertaking a detailed cost review as it considered the best options for its exploration program for 2014.
It said further appraisal drilling planned at the Ungani oil field, inland from Broome, has been put on hold.
Buru also disclosed that it would proceed with two coastal wells, funded under the farm-in agreement it signed in November with Apache Energy.
“A lower cost smaller rig is being sourced due to their shallower targets and lower technical requirements,” the company said.
“These wells are scheduled for the third quarter.
“Accordingly, Buru is in negotiations with the operator of the Crusader rig in relation to the rig’s release.”
Buru signed a contract last August with Perth drilling company Advanced Energy Group, for an initial four wells with an option to extend at Buru’s election.
The contract underpinned Advanced Energy’s decision to bring the Crusader 405 rig into the WA market.
The Crusader has so far been used for just the Ungani 3 appraisal well, which was completed in March.
Ungani 3 had disappointing results, with Buru managing director Keiran Wulff saying last month “unfortunately the reservoir doesn’t seem to have the same well developed vugular porosity we saw in the first two wells, and consequently this particular well is unlikely to be a significant producer”.
The Crusader rig is owned by NewGen Drilling, a subsidiary of MidAmerican Energy Holdings, but is operated and maintained by AEG. MidAmerican is part of legendary US investor Warren Buffet’s expansive Berkshire Hathaway group.
Buru said its entire Ungani 3D seismic data set is being reprocessed ahead of any new drilling of the Ungani structure.
This followed reprocessing of the data at a specialist processing centre in the US.
Buru said the reprocessed results provide much greater definition at reservoir level and an ability to be substantially more predictive.
Today’s news added to a slide in Buru’s share price, which slipped 8 cents to a 9-month low of $1.195.
The stock had been trading as high as $2 in January, when the market was optimistic about results from the Ungani 3 well.
