Buru Energy to partner with Sabre Energy at Rafael Shallow oil prospect in WA’s Canning Basin

Buru Energy (ASX: BRU) has completed an extensive hunt for a partner for the drilling of its onshore Rafael Shallow prospect in northwest Western Australia with the announcement that it has signed a farm-in agreement with Sabre Energy.

The privately-owned Sabre will now partner with Buru in the high-impact oil target in WA’s Canning Basin.

Under the agreement, Sabre will carry Buru for $6 million of the costs associated with the drilling and testing of the exploration well to earn a 50% interest in a commercial discovery and subsequent production licence.

Drilling cost carry

It is estimated that Sabre’s $6m will provide Buru with a full carry of the well.

Subject to a commercial discovery being declared over the well, Sabre will pay Buru a further $1.5m in recognition of prior exploration expenditures incurred.

Buru has estimated that Rafael Shallow contains prospective resource volumes of between 3.2 million barrels and 79MMbbl recoverable oil, with a best estimate of 19MMbbl.

Strong alignment

Buru chief executive officer Thomas Nador said there are rapid development path opportunities if an oil discovery is made at Rafael Shallow.

“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 farm-out and also offers significant strategic synergies with the Ungani partnership established earlier this year.”

Two-well program

Sabre Energy managing director Regie Estabillo stated that negotiations for a drilling rig contract are well advanced, drilling equipment and materials have been secured and on-ground preparations and approvals are underway.

It is expected that spud of the Rafael Shallow will commence late in the third quarter of 2024 as part of a two-well exploration drilling campaign that includes the Mars 1 well.

“We are looking forward to the drilling program planned for later this year and are quickly building our own organisational capability to support Buru as operator of Rafael Shallow and our future operatorship of the Ungani oil field,” Mr Estabillo said.

Marketing campaign

Following the identification of the Rafael Shallow prospect, Buru undertook a marketing campaign to invite interested parties to submit bids to partner with Buru in drilling this significant prospect during the 2024 Canning season.

Mr Nador said the campaign generated strong interest from Australian and international companies, with Sabre’s bid being selected as the most compelling in terms of value and synergies with its recent farm-in transaction for the Ungani oil field and associated licences.

Mr Nador confirmed that Buru’s 100%-owned Rafael Deep Phase 1 gas and condensate project remains the company’s development priority.