I am pleased to present our Annual Report for the 2021 financial and calendar year.
Our activity in 2021 was again influenced by the ongoing COVID pandemic, which was particularly the case in Western Australia where our operations are concentrated. Despite the many restrictions that were in place we were able to execute a substantial exploration drilling and seismic program and continue production from our Ungani oilfield with no significant safety or environmental incidents. We were also able to advance our energy transition activities including our 2H Resources, Geovault and Battmin subsidiaries.
Our intensive field operations included the drilling of three wells, one of which resulted in a substantial conventional gas discovery at Rafael, and the acquisition of over 900 kilometres of seismic data. These programs were operated by Buru on behalf of our joint venture partners, Origin Energy and Roc Oil.
The exploration program was an outcome of the farmout agreement executed with Origin Energy in late 2020. This agreement provided for a substantial activity carry in return for the earning by Origin of a 50% interest in the majority of the Company’s Canning Basin exploration areas. This program was undertaken safely and effectively from a “standing start” and is a credit to the hard work and professionalism of the Buru operations team.
A new area of operations in the onshore Carnarvon Basin was also commenced with the offer of application area L20-1 by the Western Australian government to a Buru operated joint venture with Mineral Resources. This area has similar geology to the Canning Basin and is the first step by the Company outside its traditional area of operations. The application area is prospective for conventional oil and gas activity but also has good potential for Carbon Capture and Storage (CCS) operations. It is expected on ground activity will commence in this area during 2022 after the area is granted as a petroleum exploration permit.
The Company’s future activity will also have to take into account the limited availability of drilling rigs and oilfield services for onshore activity in Australia, and this may also be a generally limiting factor for the resurgence of exploration that is required to meet Australia’s goals for secure local energy supply.
Drilling and seismic programs
The drilling program during 2021 included two exploration wells, Currajong 1 and Rafael 1. The Currajong 1 well had initial indications of hydrocarbons, but unfortunately was not productive when tested. The Rafael 1 exploration well encountered a significant gas/condensate resource in a large structural closure. Initial testing of this resource in February and March 2022 flowed gas and condensate to surface, with evaluation and appraisal activities ongoing, including the preparation of an independent resources assessment.
Ungani 8 was the third well in the drilling program and was drilled as a planned horizontal development well on the Ungani Oilfield. Unfortunately, operational issues meant the well had to be suspended without being completed and the rig was then released. The resurgence in oil prices provides the impetus to drill a vertical well during 2022 targeting the same part of the structure using a smaller rig and a simpler well design, subject to joint venture and regulatory approvals.
The extensive seismic program was completed with no significant incidents and the full engagement of the traditional custodians of the areas where it was acquired including providing a range of services to support the program. We express our appreciation to our traditional owner stakeholders in ensuring that the cultural and heritage values of the areas were appropriately considered and protected.
Production from the conventional Ungani Oilfield continued throughout the year and was optimised by continuing maintenance and well intervention activity. The Ungani operations team are based in Broome and maintained oil production safely and efficiently despite the operational and social restrictions arising from the COVID pandemic. There is the potential for a further well in the field to both maintain production and extend field life, and this will be a focus during 2022.
Energy Transition Activity
The Company is participating in the energy transition in areas where it can leverage its core strengths in its petroleum activities.
It is also conscious of the need to minimise its own greenhouse gas (GHG) emissions from its activities and has an active GHG reduction program. Further details of these activities are set out in the Company’s inaugural Sustainability Report. This report formalises many of the ESG initiatives of the Company and presents these in a transparent and accountable way.
The three principal energy transition activities of the Company are through its subsidiaries, 2H Resources, Geovault and Battmin.
2H Resources is focused on exploring for and producing natural hydrogen. It has been successful in applying for permits that are prospective for natural hydrogen and is also monitoring the drilling activity of the Company for occurrences of natural hydrogen in petroleum wells. It is anticipated that the activities of 2H Resources will be increased during 2022 with a further objective of the company becoming independent from Buru in due course.
Geovault is focused on building capability in carbon capture and storage in geological reservoirs, particularly in relation to projects that can be developed in association with the Company’s gas resources. It has access to highly skilled and experienced experts in the field to build this business.
Battmin has used Buru’s geological expertise to identify and acquire mineral leases in the Canning Basin with potential for lead/zinc deposits that are analogous to existing deposits in outcrop on the northern edge of the basin. It is intended to test these geological concepts by a drilling program during 2022.
Financial and Corporate
The Company successfully executed a capital raising during the year which provided funding for its share of field activity during 2021. The strong oil price has also been of assistance in regard to receipts from Ungani oil production. The Company continues to exert control on its discretionary expenditure and has no debt.
Buru will continue to look at ways to enhance its strategic position and to maximise the value of its assets as part of its ongoing activity.
The Company has a wide range of stakeholders in its activities including shareholders, staff, Government, traditional owner custodians, local communities, joint venture partners, suppliers and industry associates.
All of these stakeholders contribute to the success of the Company. The Board thanks all of our stakeholders for their continued support, particularly our staff who were able to successfully and safely execute a significant field campaign under the shadow of COVID.