Buru Energy (ASX:BRU) has reached an agreement with the Energy Resources (EnRes) subsidiary of Mineral Resources (ASX:MIN) to restructure each party’s interests in Block L20-1 in the onshore Carnarvon Basin in Western Australia .
Under the terms of the agreement, Buru will cede 25% of its total 50% stake in the permit to EnRes and relinquish operator rights once it is granted.
Consequently, EnRes will increase its stake in block L20-1 to 75% and will assume the role of operator.
In return for the agreement, EnRes will lead Buru through an exploration program on the first two wells, which should meet minimum work requirements during the first two years of the permit.
The wells will target highly prospective Paleozoic structures similar to the Buru discoveries in WA’s onshore Canning Basin.
EnRes has also agreed to match an Australian federal government grant to Buru for a three-year carbon capture and storage (CCS) feasibility study in the Carnarvon Basin.
The grant was designed to facilitate the development of hydrogen production and greenhouse gas storage centers in WA and recognized Buru’s wholly-owned subsidiary Geovault as a leader in the field.
The equity of the CCS joint venture will be aligned with that of the L20-1 joint venture, with Buru holding a 25% stake and EnRes holding 75% and operator rights.
Buru executive chairman Eric Streitberg said the L20-1 farmout would benefit both companies.
“This transaction will allow EnRes to bring the expertise of its Perth Basin operations team to the L20-1 zone and allow us to focus on our very exciting Rafael gas condensate discovery in the Canning Basin as well than on our energy transition activities,” he said. .
“CCS’s work will also help us to more fully develop our technical and commercial expertise for the canning pond gas marketing business, where CCS has the potential to be a significant project enabler by decarbonizing our developments. planned gas stations.”
Block the application
In October 2020, Buru and EnRes applied for block L20-1 on a 50/50 joint venture basis with Buru as operator.
The block covers the land portion of the Peedamullah Plateau, which is a geological unit bordering the main oil and gas producing area of the Carnarvon Basin.
Oil and gas infrastructure in the region includes the Tubridgi gas storage field and the Wheatstone LNG gas processing plant and associated pipelines.
Since early 2021, Buru has undertaken technical and commercial CCS activity through Geovault, focusing on onshore geological greenhouse gas storage in the L20-1 area and the Canning Basin.
In April, Buru was offered a grant from the federal government, which aims to match funds of up to $7 million for a technical review and feasibility study of field activities assessing the CCS potential of the area L20-1.
EnRes agreed to contribute up to $7 million to the CCS feasibility study to match Buru’s grant.
All feasibility study costs in excess of the combined $14 million will be allocated to the joint ventures based on their ownership interests.
Buru will carry out the CCS feasibility study as an operator on behalf of the CCS joint venture.
EnRes will be the operator of the CCS joint venture for all future greenhouse gas permits that will be granted to the partners on all or part of block L20-1 with interests at 75% EnRes and 25% Buru.