Buru Canning will obtain Origin’s 50% participating interest in exploration permits EP 428, EP 129, EP 391, EP 431, and EP 436, and Origin’s interests in the EP 457 and EP 458 permits, together with Rey Resources
Buru to buy Origin Energy’s Canning Basin interests. (Credit: WORKSITE Ltd. on Unsplash)
Buru Energy has agreed to acquire Origin Energy’s joint venture exploration permits in the Canning Basin, including the Rafael conventional gas and condensate discovery.
As agreed, the Australian oil and gas company’s fully owned subsidiary Buru Canning Gas will obtain Origin’s 50% participating interest in exploration permits EP 428, EP 129, EP 391, EP 431, and EP 436.
This will make Buru and Buru Canning 100% owners of the permits.
Origin will also withdraw from the EP 457 and EP 458 joint ventures and return its interests in the permits to the joint venture between Buru and Rey Resources.
Buru will make capped staged contingent reimbursement payments of up to $34m to Origin, based on achieving development and production milestones in future.
The company will become the dominant net acreage holder and operator in the Canning Basin, with permits covering a net area of 22,500km2.
Origin has also agreed to contribute up to $4m to support the 3D seismic survey programme at Rafael discovery, which is now planned for 2023 operating season.
The survey will provide information to support the structured appraisal of the Rafael discovery and realising any potential future transactions on the asset.
Buru Energy chair 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.”
In December 2020, Origin signed a farm-in agreement for interests in seven Canning Basin exploration permits held by Buru and Rey, while Buru remained operator.
Under the terms of the farm-in agreements, Origin was required to majority fund a two-well drilling programme and undertake a regional scale seismic programme.
The second well drilled under the programme led to Rafael gas discovery.
According to an independent expert report, Rafael holds recoverable resources of more than one TCF of high-quality gas, and more than 20 million barrels of condensate (light oil).
In September last year, Origin announced its intention to exit upstream exploration activities at the Rafael discovery, including its joint venture interests with Buru in the Canning Basin.
According to Buru, Origin’s exit from the Canning Basin enables the company to pursue the commercialisation of its assets in the basin, focused on Rafael conventional gas.
Buru Energy CEO Thomas Nador said: “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 programme that has already provided valuable insights into regional prospectivity and new play types in the Basin.”