Buru snatches up two new WA licences alongside Chris Ellison’s EnRes

Buru Energy (ASX:BRU) on Monday revealed its receipt of two new oil and gas exploration licences in WA’s Carnarvon Basin.

An area spreading from onshore to offshore, Carnarvon Basin is regarded as a mammoth formation by Geoscience Australia. Its northern offshore extent is the premier hydrocarbon basin for operations on the state’s North West Shelf (NWS), where operators such as Woodside (ASX:WDS) and Chevron are present. 

For clarity: Buru is focusing on onshore exploration. 

The two permits (L22-2 and L22-4 respectively) were applied for by Buru in the latest WA government-run acreage auction. 

Native Title agreements with relevant Aboriginal Corporations must be executed before works can commence, but the company expects this to go off without a hitch.

Compliance risk mitigated by partnership 

For anyone encouraged to feel risk-off with regards to pending compliance deliverables (Native Title), consider that Buru is partnering with Mineral Resources’ (ASX:MIN) energy subsidiary Energy Resources (“EnRes”). 

Mineral Resources is run by billionaire Chris Ellison whose extensive corporate network is firmly defined by strong relationships in the WA sector broadly. 

“We are very pleased that our strong relationship with EnRes has resulted in a 100% success rate with our joint exploration permit applications,” Buru CEO Thomas Nador said.

The partnership explained 

Buru and EnRes will act as a Joint Venture (JV) on the two licences, with EnRes holding a 75% interest and Buru Energy 25%. The two licences acquired today are adjacent to the existing EP-510 permit, which is already held by the JV. Two additional wells also require drilling in 2024. Depending on variations of licences, many WA permits require operators to drill wells as part of the acquisitions. 

Buru points towards its long term strategy of leveraging its extensive database on WA energy geology in supporting the move. 

“These areas substantially advance Buru’s strategy to leverage our considerable inhouse geoscience expertise to grow our exposure to future onshore energy developments,” Nador commented. 

Another factor behind the decision: Australian Gas Infrastructure Group’s (AGIG) Dampier-Bunbury pipeline, which services a major corridor of industrial sites into WA’s southwest over its 1,500km length, is located immediately east of the new permit areas. 

Considerations 

A look at Market Index’s free company performance data for Buru Energy offers a number of initial considerations, including:

• Buru’s share price is 10.5c*

• Shares are up 6%*

• Market cap of $62.5m 

• One year returns are down -54.3% 

• Year to date performance up 10.5% 

• Average 4 week volume of 175,635 shares 

• Ranked 69 of 173 constituents in the Energy sector 

• Buru had $18.6m in cash at the end of the September quarter 

• It spent $285,000 in opex over the same period 

*As at 13:30 AEST Monday 16 January 2023

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