- Buru Energy (BRU) has a grim start to the trading week after flagging some delays and challenges at its Canning Basin well operations in WA’s Kimberley region
- The oil and gas explorer has had to delay planned test work at its Rafael 1 well due to an extension of WA’s hard borders by the state government
- Meanwhile, a drill string got stuck at Buru’s half-owned Ungani 8H well, meaning joint venture partner Roc Oil will now take on a side-track program as a sole-risk operation
- The challenges mean planned work at both wells, which lie in the Kimberley region of Western Australia, will face delays of several weeks
- Shares in Buru Energy are down 13.8 per cent to 17.3 cents each at 11:46 am AEDT
Buru Energy (BRU) has had a grim start to the trading week after flagging some delays and challenges at its Canning Basin well operations in WA’s Kimberley region.
The oil and gas explorer this morning told shareholders it was working through delays at its Rafael 1 well following Western Australia’s extended hard border.
Meanwhile, the company’s drill string got stuck during a program at its Ungani 8H well, so it has now had to come up with an alternate plan alongside joint venture (JV) partner Roc Oil.
The Rafael 1 delay
Last week, Western Australian Premier Mark McGowan backflipped on a plan to open WA’s borders on February 5.
Buru said it had mobilised equipment at the Rafael 1 well before Christmas as it anticipated being able to fly specialised operators in from Queensland and South Australia in early February to conduct the well test program.
Buru said it is working with the supplier of the equipment, SGS, to land needed approvals and exemptions from the WA government for the contractors to travel to WA and then quarantine for 14 days before stepping on to the Rafael 1 site.
Buru said it hoped to have the operators flown out on February 5 as planned, but given the quarantine requirements, it’s likely the Rafael 1 work will only begin in the third week of February.
“The further delays to the Rafael 1 well test imposed by the continuation of the WA hard border closures are unfortunate and also have a knock-on effect on other operators who want to use the SGS testing package,” Buru Executive Chair Eric Streitberg said.
The Ungani 8H well lies in the L20 Production Licence, which Buru half owns in a JV with Roc Oil.
Drilling at the well has been tracking along as planned, with the well having reached a total measured depth of 2605 metres over the past few weeks.
Buru said as the drill string was being retrieved from the well ahead of casing, it got stuck. Despite Buru’s efforts, it was unable to free and recover the drill string, meaning it has now been backed off at 2206 metres deep.
Roc will now take on a side-track to complete the well as a sole risk operation, though Buru will remain the well’s operator as per the two companies’ JV deal.
The side-track work, which is expected to take up to 28 days, comes with some amendments to the Buru-Roc deal: because Roc is taking on the work as a sole risk operation, Buru will be given the right for up to six months after first production to participate in the well at its original 50-per-cent interest.
In order to exercise this right, however, Buru will need to pay back 2.5 times its share of the costs that Roc will pay as part of the sole risk operation, and any net revenue earned from the well before Buru exercises this right will stay on Roc’s books.
“The difficulties we have been having with the Ungani 8 well are very disappointing given the first part of the program was well executed with an intersection of the Ungani Dolomite substantially as planned,” Mr Streitberg said.
“The sole risk operation going forward is an appropriate sharing of risk and costs that will hopefully provide a satisfactory outcome for both parties.”
Shares in Buru Energy were down 13.8 per cent to 17.3 cents each at 11:46 am AEDT.