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Buru to acquire Origin’s Canning Basin JV interests

13/02/2023

Highlights

  • Origin Energy Limited (Origin Energy), via its wholly owned subsidiary Origin Energy West Pty Ltd (Origin), to assign its interests in its joint venture exploration permits in the Canning Basin (including the Rafael conventional gas and condensate discovery), to a wholly owned subsidiary of Buru Energy Limited (Buru) for a future, capped reimbursement of costs linked to gas production success.
  • As part of the agreement, Origin will provide Buru with up to $4 million of the required funding for the Rafael 3D seismic survey which is planned to be acquired in the 2023 operating season.
  • Buru resumes its position as the dominant net acreage holder and operator in the Canning Basin, with ownership of a net 22,500 sq kms of permits including 100% of EP 129, EP 391, EP 428, EP 431 and EP 436; and 60% of the EP 457 and EP 458 permits it shares with Rey Resources Ltd (Rey).
  • Origin’s exit from the Canning Basin provides Buru and its shareholders with the autonomy and flexibility to aggressively pursue the commercialisation of its assets in the basin, focused on the Rafael conventional gas and condensate discovery that has been independently assessed to have the potential to hold recoverable volumes of over one TCF of gas and 20 million barrels of condensate, and including the Basin’s Carbon Capture and Storage (CCS) and natural hydrogen potential.

Buru Energy Limited (Buru, Company) is pleased to provide the following update in relation to its operated Canning Basin permits EP 129, 391, 428, 431, 436, 457 and 458 (Permits).

Background

In December 2020, Origin agreed to farm into seven Canning Basin exploration permits held by Buru and Rey, to earn interests ranging from 40% to 50%. Buru remained Operator of the permits with working interests across the Basin ranging from 40% to 100%. The terms of the farmins required Origin to majority fund a two-well drilling program and the acquisition of a regional scale seismic program.

The second well in the program, Rafael 1, drilled in late 2021, was a large-scale conventional gas and condensate discovery, with an independent expert report subsequently confirming that Rafael has the potential to hold recoverable resources of over one TCF (trillion cubic feet) of high-quality gas and over 20 million barrels of condensate (light oil).

In June 2022, Origin informed Buru that it didn’t approve the funding for a proposed 3D seismic survey over the Rafael discovery. On 19 September 2022, Origin announced its intention to exit upstream exploration activities over time, including its joint venture interests with Buru in the Canning Basin, providing the flexibility to allocate capital towards its strategic priorities. Origin’s intention to exit introduced uncertainty to the timing and form of the forward appraisal and commercialisation of Rafael and added significant impetus to resolve matters.

Since the exit was announced both parties have worked to resolve matters and find agreement on commercial outcomes, including Buru proposing independent operations. Subsequent negotiations have resulted in an agreement for Origin to exit its interests and for Buru to resume control and up to 100% ownership of the permits, protecting and enhancing the long-term strategic value of the Company’s assets in the Canning Basin.

Commenting on the transaction, Chair of Buru Energy, Mr Eric Streitberg said: 
“The original farmin agreement with Origin provided the funding and the impetus that resulted in the Rafael discovery that has now assumed even more significance given the current focus on the West Australian and international gas markets.

Although we were very disappointed with Origin’s change of investment focus and the subsequent delays to our operations, this transaction has provided us with a unique opportunity to now reset the development and appraisal process, and most importantly the commercialisation and monetisation strategy for the Rafael discovery.

We now have control over a gas and condensate resource that is potentially unique in Western Australia and look forward to moving quickly to crystallise the value this represents for our shareholders.”

Commenting further, CEO Thomas Nador said: 
“Since Origin’s decision in June last year to not support the proposed 2022 Canning Basin field work program, and then its September announcement that it intends to exit upstream exploration on strategic grounds, Buru has worked relentlessly to minimise the impact of this decision on its Canning Basin assets, and to maintain momentum for the appraisal and commercialisation of its flagship Rafael conventional gas and condensate development.

We are delighted to now be in the position to be back on ground this year to acquire the critical 3D seismic data over Rafael in support of appraisal drilling next year. We will also be finishing our assessment of the extensive seismic data acquired under the Origin farmin program that has already provided valuable insights into regional prospectivity and new play types in the Basin.

This agreement also provides Buru with strategic optionality to extract the highest value for our shareholders from our dominant position in the Canning Basin including not only the extensive hydrocarbon resources, but also the potential carbon capture and storage and natural hydrogen resources being developed through our GeoVault and 2H Resources subsidiaries.

The structure of the deal reflects Origin’s belief in the Rafael discovery, insofar as any future capped reimbursements to Origin are directly linked to future high value development and production milestones for Rafael gas.”

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