Buru Energy was sitting on a $32.4m pile of cash at the end of 2019 with $5.4m worth of oil net production cash flow still expected in the current quarter, representing a three-fold increase on the previous two quarters. The forecast is due to the favourable timing of oil liftings out of the port of Wyndham and the recent successful development drilling at its Ungani oil field in WA’s Canning Basin.
Buru Energy is set to cash in on the successful upgrading of its Ungani oil field in WA’s Canning Basin after a particularly active field season last year.
Buru is now forecasting a three-fold plus increase in net production cashflows from $1.6m per quarter in the previous two quarters to an impressive $5.4m in the March quarter of 2020. Whilst the company is still spending heavily on development and exploration, the 3.4 times jump in net cashflows just from production represents a significant payday for the company’s prior exploration and development activity last year.
The new forecast comes on the back of the successful completion of the Ungani-7H horizontal oil production well to the east of Broome. Ungani-7H has helped raise production rates from an average 1,130 barrels of oil per day during the December 2019 quarter to the current rates averaging 1,400-1,500 bopd. The company said further production increases are expected during the quarter when the Ungani-6 horizontal well is completed and tied back to the production facilities.
Buru is currently sitting on a $32.4m pile of cash, despite a busy drilling campaign during the 2020 dry season and $2.7m worth of debt repayments to Alcoa which includes about $200k in interest. The company also reported during the quarter that oil shows were encountered in the Adoxa-1 exploration well and testing of the zone of interest is being considered for the coming dry season program.
One of the most important developments however for the quarter for Buru, was the workover and re-completion of the Blina-4 oil well that produced strong initial oil flows of up to 700 bopd. This result has the potential to open up a new production hub for Buru that is closer to the exporting port of Wyndham, potentially reducing operating costs.
Buru is preparing to test a number of gas zones in the Yulleroo-3 appraisal well to gauge the potential for conventional gas production from the Yulleroo gas field. The gas in the Yulleroo field is rich in condensate which means that any positive results from this testing program could set the Perth based company off on a new direction. Any condensate liquid production from Yulleroo would most likely be processed at the nearby Ungani oil production facilities.
Buru has a lot of balls in the air right now in the Canning Basin and is rapidly bringing its net production cashflows up to meet and then exceed its exploration and development spending. With so many lucrative looking opportunities in the Canning, it doesn’t look like it will be long before Buru’s net production cash flow and the exploration and development graph lines will meet and then cross.
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