Apache to Farm-in to Buru-Mitsubishi JV's Canning Basin Exploration Permits
Buru Energy Limited, an Australia-based oil and gas exploration and production company, announced Monday that it has entered into binding agreements with Mitsubishi Corporation (MC) and Apache Energy Limited (Apache) pursuant to which an Apache subsidiary will farm-in to a number of the joint venture’s exploration permits in Western Australia's Canning Basin. The permits principally cover the Goldwyer Shale areas of the joint venture’s portfolio, and are prospective for shale oil and gas as well as for conventional sandstone reservoirs, particularly in the southern areas.
Under the agreements, subject to satisfaction of certain conditions:
- Apache will earn a 50 percent interest in exploration permits 390, 471 and 473 and up to a 50 percent interest in exploration permit 438 (Coastal Permits) by agreeing to fund a $23.78 million (AUD 25 million) exploration program to be conducted on the Coastal Permits during 2014
- Apache will be granted an option to earn a 40 percent interest in exploration permits 472, 476 and 477, up to a 40 percent interest in exploration permit 478 and up to a 50 percent interest in exploration permit 474 (Acacia Permits)
- Apache will pay Buru and MC a non-refundable option fee equal to the greater of (a) $6.85 million (AUD 7.2 million) and (b) 80 percent of the costs of the 7,722 square mile (20,000 square kilometer) aerogravity survey currently being conducted by Buru and MC over the Acacia Permits (excluding exploration permit 474) and a 403 mile (650 kilometer) seismic survey planned to be conducted by Buru and MC on the Acacia Permits (excluding exploration permit 474) in 2014
- If Apache exercises the option at the conclusion of the 2014 seismic program to acquire interests in the Acacia Permits, it will fund 80 percent of the costs of the first two exploration wells to be drilled in the Acacia Permits and, in the event of success in either or both of those wells, 80 percent of the first two appraisal wells. Apache will also reimburse Buru for the costs of the recently completed 1,930 square miles (5,000 square kilometers) aerogravity survey and 248 miles (400 kilometers) seismic survey planned to be conducted by Buru on exploration permit 474 in 2014
Buru will remain as the operator of the Coastal Permits and Acacia Permits but under the terms of the agreements, Apache will, subject to completion of the relevant work programs, have the right to assume operatorship following a transition period. In the event that Apache elects to assume operatorship, Buru will continue to be heavily involved in the community affairs and engagement programs.
Further details of the transactions are set out in the attachment.
Apache’s entry into the Canning Basin provides a strong endorsement of Buru and MC’s exploration and appraisal activities to date and their shared belief in the significance of the region as a potential major energy supplier to Western Australia.
Commenting on the transaction, Buru’s Managing Director Dr Keiran Wulff said:
“Following on from the exploration success of the last few years, Buru has set out to ensure that the Company has the capability to fully explore and commercialize our extensive assets in the Canning Basin whilst also focusing the Company’s efforts on delivering value from its Ungani trend and potential gas assets in its core areas. This farmin by Apache is an excellent result and we are delighted that Apache have agreed to join us in the Canning Basin. This
farmout will provide a welcome refocus and impetus for the exploration of what is another major asset in our portfolio.
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Company: Buru Energy Limited more info
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