Buru Energy (ASX: BRU) and Sabre Energy have kicked off the oil well pad construction at their Rafael Shallow 1 joint venture (JV) in Western Australia’s Canning Basin.
The launch of the civil works for the project, which will be completed ahead of well spudding in late September, follows the receipt of heritage and environmental approvals and Sabre’s recent $6 million commitment to drilling and testing costs. That spend will allow Sabre to earn 50 per cent of any commercial discovery and production at the prospective Rafael Shallow oil well.
As part of the new farm-in deal, if the drilling leads to a commercial discovery, Sabre will also compensate Buru with a further $1.5 million for its prior Rafael exploration expenses.
The Rafael Shallow oil prospect, which was identified less than four months ago, has a prospective resource range of between 3.2 million stock tank barrels (MMstb) at the low end of its estimate and 79 MMstb at its highest estimate, with a best estimate of 19 MMstb. It is a resource that management believes constitutes one of the last significant, undiscovered oil discoveries in onshore Australia.
This focus and pace of delivery is well warranted by the potential of the Rafael Shallow prospect. A new oil discovery would add substantial value for Buru and an additional funding path for Buru’s 100% owned Rafael Deep Phase 1 gas and condensate project, which remains the Company’s development priority for that existing resource.
Buru Energy CEO Thomas Nador
The Rafael Shallow target sits beneath the clastic sandstone Poole and Grant oil reservoirs at less than 1200m depth. It was defined by recent interpretation of 3D Rafael data as lying well above and partially overlying the much deeper Rafael gas and concentrate reservoir and was not apparent in previously-interpreted 2D data.
The company says it is employing local Kimberley-based contractors for construction works ahead of Silver City Drilling’s “Rig 24” well spud that is expected by the end of the September quarter.
Buru says drilling in October at a second Mars prospect well will also be conducted by Silver City. The Mars prospect is part of the Ungani oilfield, a field that also falls under an JV executed with Sabre earlier this year for a 70 per cent interest in return for a $6 million outlay to Buru.
The company says the association between the two companies that began with the Ungani JV, assisted Sabre in being chosen as the preferred partner for the latest Rafael JV agreement. The Rafael phase-one gas and condensate project that sits at significantly greater depth to the Rafael Shallow prospect, is Buru’s top priority for the site.
With Sabre bankrolling the Rafael Shallow drill program, in addition to further testing taking place at the Mars prospect, Buru will be keenly watching for any significant oil discoveries that could further provide a funding boost to its fully-owned phase-one gas and condensate project.
Importantly, Buru has already experienced a significant amount of exploration success along the targeted Fitzroy Trough at its 100 per cent-owned Rafael-1 wet gas discovery in 2021, which led to the potentially game-changing identification of its Rafael Shallow prospect through new high-quality 3D last year.
Sabre is committed to progressing its drilling at both of the high-confidence Rafael Shallow and Mars prospects, the latter of which is estimated to hold 2.8 million MMstb of oil.
Buru certainly has been moving at a rate of knots to get its onshore oil prospects spudded in the near term. And it says it remains well-funded for any development opportunities should either of the two planned wells flow with any “black gold”.
The company quoted some $10.9 million in cash at last quarter’s end.
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