Sabre thrusts sword into Canning Basin oil hunt with Buru

Sabre Energy has agreed to stump up $6 million in drilling and testing costs at Buru Energy’s Rafael Shallow oil well in Western Australia’s onshore Canning Basin to earn 50 per cent of any commercial discovery and production.

As part of the new farm-in deal, if the drilling leads to a commercial discovery, Sabre will also compensate Buru for its prior Rafael exploration expenses with a further payment of $1.5 million.

Buru says its evaluation of the prospective resource volumes of oil recoverable from the Rafael Shallow well points to a 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. Prospective resources relate to the estimated quantities of petroleum that may potentially be recovered by the application of future development projects.

The Rafael Shallow target sits beneath the clastic sandstone Poole and Grant oil reservoirs at less than 1200m depth. It was defined from 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.

Rafael Shallow is estimated have an area of about 18 square kilometres and is confined within a three-way dip closed structure with more than 125m of vertical closure where the thick, regionally-extensive organic-rich shales of the Noonkanbah Formation provide the top and cross fault seals. The company says the style represents a new prospect type for that part of the Canning Basin and it is considered to have potential for regionally-significant volumes of fluid.

An additional benefit of undertaking an early assessment of Rafael Shallow is that it does not require a heavy rig and can be tested with a relatively small, more mobile and lighter machine.

After it had identified Rafael Shallow, Buru undertook a marketing campaign to invite interested parties to submit bids to participate in drilling its novel target this year. The company says its campaign prompted strong local and international interest and resulted in Sabre’s bid being selected as being the most compelling – not only from the aspect of value, but also in light of its established farm-in associations with that company on its Ungani oilfield that also lies within the Canning Basin.

Both companies figure the Rafael transaction could offer a fast and practical way forward and provide a potential funding path for the development of Buru’s primary interest at the site, which is its 100 per cent-owned Rafael deep phase-one gas and condensate project that sits at considerably greater depth.

Buru Energy chief executive officer Thomas Nador said: “This latest transaction with Sabre Energy further demonstrates the strong alignment between our respective organisations and our common belief in the prospectivity of the onshore Canning Basin. Sabre’s proposal provides Buru with excellent value for the Rafael Shallow prospect farmout and also offers significant strategic synergies with the Ungani partnership established earlier this year.”

Sabre managing director Regie Estabillo says the transaction shows that both companies are enthusiastic about the onshore Canning Basin and are prepared to invest in the drill bit to create value for the joint venture (JV). He added that Sabre is quickly building its own capability to support Buru as the operator of Rafael Shallow and also for its own future operatorship of the Ungani oilfield. 

As part of the transaction, Buru has also granted Sabre a time-limited right of first refusal to acquire an interest in the underlying permit that contains the Rafael deep phase-one gas and condensate project, with a view to also joining that venture and to acquire additional exploration scope on the back of drilling Rafael Shallow.

Any costs incurred on the farm-in well in excess of the $6 million are to be paid by the parties in accordance with their respective JV participating interests.

Drilling at Rafael Shallow is scheduled to kick off late in this year’s third quarter as part of a two-well exploration drilling campaign for 2024 that will include the proposed Mars 1 well.

Buru is in advanced discussions with a rig provider to drill Rafael Shallow in conjunction with the planned campaign at Mars. It says drilling equipment and materials have been secured and on-ground preparations and approvals are underway.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au