Buru Energy has entered into an agreement with ASX-listed Sipa Resources Ltd to progress mineral exploration at Sipa’s Barbwire Terrace project immediately south-east of Buru’s own Canning Basin oil and gas leases. Buru will earn a 50 per cent interest in Sipa’s tenement by funding the first $250,000 of on-ground activities which will barely make a dent in its $25m June 30 cash at bank figure which should be boosted even further by another $1.6m from Buru’s latest 74,819 barrel Canning Basin oil lifting.
Sipa’s Barbwire Terrace project covers the southern margin of the Fitzroy Trough where historic drilling has confirmed the potential for mineralisation similar to the well-known Mississippi Valley Type, or ‘MVT’, lead-zinc deposits of the Lennard Shelf, located along the northern margin of the Fitzroy Trough. The Lennard Shelf deposits have historically produced high-purity concentrates and are highly sought after by smelters, making this a high value exploration target, according to Buru.
The company said the joint venture deal with Sipa will form a unique exploration alliance, bringing together both mineral and petroleum exploration capabilities to unlock the future value along the Barbwire Terrace.
Buru Energy’s Executive Chairman, Eric Streitberg commented: “We have made a synergistic exploration move with our core geological and geophysical capabilities being brought to bear on mineral exploration targets that are complementary to our oil and gas targets.”
Under the terms of the JV agreement, after the first $250,000 has been expended on exploration by Buru future activities are to be funded by the parties in accordance with their respective participating interests.
Both companies have also entered into an “Area of Mutual Interest” agreement for further exploration activity, chasing hydrothermal lead-zinc deposits in the central Canning Basin.
Buru said a previous petroleum well drilled by the company encountered approximately 15m of mineralization over depths from 2,160m to 2,300m downhole. Although these specific zones are too deep to be economically mineable, the company said its interpreted hydrothermal origin provides a valuable insight into mineralisation in the basin and the location of much shallower targets.
Sipa said it has partnered with Buru because of its sophisticated basin modelling skills and vast data sets developed over years of petroleum exploration and production along the Barbwire Terrace. This experience is directly applicable to the identification of the carbonate host units and base metals mineralisation of the type being targeted by the two explorers.
Buru said Sipa will be the operator of the JV during the minimum commitment period which is likely to include up to six 500m deep diamond drill holes.
Elsewhere in its portfolio, Buru said its Yulleroo gas field is being touted as an energy source for an integrated solar and gas -field electricity project, targeting local customers on WA’s ‘top end’, such as Sheffield Resources’ proposed mineral sands mine. It is conceivable that any lead-zinc deposits uncovered by the Buru-Sipa joint venture could also become future customers of Buru-sourced energy and/or electricity generation.
The Ungani oil field continues to produce at an average rate of 1,250 barrels per day for the Buru-Roc Oil joint venture, with the next crude oil lifting from the port at Wyndham due later this month.
Management said it had now settled into a new, longer-term marketing contract with BP Singapore for the remainder of this financial year, after its last couple of sales were done at spot prices.
Buru has continued to optimise production at the Ungani field with the successful installation of an electric submersible pump, or “ESP”, on the Ungani-7 production well. ESP’s typically allow for higher fluid rates than more traditional bean pumps, or ‘nodding donkeys’ as they are affectionately known in the back blocks of west Texas.
Buru said it has returned to the Ungani Far West-1 well where oil was discovered in the Ungani Dolomite reservoir below 2,400m and 85,000 barrels of oil was produced. The company’s technical team is now investigating a 5m net reservoir zone at around 1,500m in the top of the Reeves Formation where oil was recovered from the original discovery well. The company plans to test the new, shallower zone over coming weeks once equipment is mobilised from the Dongara area of Western Australia.
Buru also noted exploration activity in the region is likely to heat up into 2021 as it plans new exploration wells in its own right, but more importantly, as its neighbours start to get into the field.
The Fort Worth, Texas-based Black Mountain has a heritage agreement in place now and is ramping up its planning to get on the ground and test the Valhalla and Asgard gas discoveries, previously owned and tested by Buru.
ASX-bound, small-cap oil player, Theia Energy now has a native title agreement in place with the Karajarri people as it too heads towards drilling and testing of the oil potential of its Goldwyer Shale play south of Buru’s ground.
Twiggy Forrest’s Squadron Energy will no doubt be watching all this activity too, as it moves toward its own Barbwire Terrace oil exploration activity on a lease located just to the southeast of the new Buru-Sipa ground.
Presumably Buru would benefit from any equipment and rig sharing opportunities to fall out from the planning of these other operations if they can be locked down.
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