Review of Operations

Integrated New Energy Businesses

2H Resources

Natural Hydrogen Exploration and Development (2H RESOURCES, BURU ENERGY 100%)

Hydrogen from geological sources (natural hydrogen) is gaining an increasing share of exploration investment and activity in Australia and globally. If found in commercially exploitable quantities, this naturally produced resource will be cost competitive against all forms of industrially manufactured hydrogen and could potentially support the energy transition as a low to no-carbon energy source.

With Australian domestic production of helium ending in 2023, and a global forecast helium shortage, 2H Resources is also actively planning to explore for naturally occurring helium and associated gases, initially focussing its efforts in Western Australia.

2H Resources was established to apply the geological knowledge of its supporting shareholder Buru Energy in the exploration and appraisal of natural hydrogen and helium accumulations.

2H Resources has established an exploration portfolio in South Australia (Figure 2) where the regulatory framework is in place for natural hydrogen exploration, and is actively evaluating other areas where there is potential for natural hydrogen occurrences.

2H Resources has been confirmed as the preferred applicant for the granting of seven South Australian Petroleum Exploration Licences for hydrogen exploration that are geologically on trend with legacy hydrogen discoveries, and two Gas Storage Exploration Licences.

The granting of the hydrogen exploration and gas storage licences to 2H Resources is subject to the completion of land access agreements in accordance with the requirements of the Commonwealth Native Title Act 1993 over any area where Native Title interests exist, which 2H Resources is targeting to complete in in the first half of 2024.

In January 2023 an independent third-party Hydrogen Prospective Resource estimate from RISC Advisory for these Petroleum Exploration Licence application areas has confirmed the very significant potential of this acreage which reinforces 2H Resources’ view of the value opportunity associated with this venture. The results of the RISC Advisory review are as follows, noting the wide range of resources and risk factors applied to the estimates due to the early stage of the quantification of the resources.

Hydrogen Prospective Resources

 

Hydrogen Prospective Resources relate to the estimated quantities of naturally occurring hydrogen gas that may potentially be recovered by the application of future development projects to undiscovered accumulations. These estimates have both an associated risk of discovery and risk of development. Further exploration and appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable naturally occurring hydrogen gas.

Notes to the table in accordance with ASX listing rule 5.35 & 5.42:

The estimates relate to South Australian permit application areas (PELAs 705, 706, 707, 708, 710 and 711) for which 2H Resources is the Preferred Applicant. The grant of these PELs to 2H Resources is subject to reaching an agreement with relevant Native Title parties. 2H Resources has commenced engagement with these Native Title parties.

Basis on which the prospective resources are estimated:

1. The estimates are for naturally occurring hydrogen gas only. Adjustments for petroleum gases and inert gases have been made.
2. “Gross” are 100% quantities attributable to PELAs 705, 706, 707, 708, 710 and 711 (2H Resources 100%)
3. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially recoverable hydrogen.
4. The natural hydrogen resource estimates have been derived in accordance with the principles of the PRMS.
   The PRMS specifically applies to petroleum. However, the PRMS reserves committee advised in August 2022 that although the gaseous extraction of natural hydrogen is outside of the scope of the PRMS, the principles can be applied given the similarities in exploration, evaluation and exploitation.
5. The hydrogen Prospective Resources have been evaluated using probabilistic and deterministic methods.
6. No adjustment has been made to the estimates to account for fuel and flare.
7. Totals are by arithmetic summation. As a result, RISC Advisory cautions that the Low Estimate aggregate quantities may be very conservative estimates and the High Estimate aggregate quantities may be very optimistic due to portfolio effects.
8. Hydrogen mass conversion is 2,321.98 t/Bscf.
9. The risked hydrogen Prospective Resources have been adjusted for the associated chance of discovery.
   The chance of success has been estimated at between 6% and 10% using a 4-factor risk assessment and dependent on trap configuration.

Buru is not aware of any new information or data that materially affects this assessment and that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.

Further planned exploration activity include field sampling, geophysical surveys and interpretation of existing geological and geophysical data followed by exploration drilling to determine gas compositions and flow rates.

During the year 2H Resources has also applied for six Special Prospecting Authorities with Acreage Option (SPAAO’s) under the Petroleum and Geothermal Energy Resources Act 1967 (PGERA) in Western Australia (see figure 3). These applications have been accepted by the Department of Energy, Mines, Industry Resources and Safety (DEMIRS) in accordance with the PGERA as being valid and are under assessment. These applications are the result of extensive geological research undertaken by the 2H Resources technical team and follow the removal of the reservation on SPA-AO’s imposed by the Western Australian Government between 2021 and 2023.

Four of these SPA-AO’s are at 75% equity in partnership with Gehyra Flux Pty Ltd (Gehyra Flux) in an area covering ~20,000 sq km northwest of Perth adjacent to the margins of the Perth Basin where geological conditions are interpreted to be favourable for generation of helium and associated gases. A further two SPAAO’s (at 100% equity) are situated in the Goldfields area between Norseman and Kalgoorlie. These Goldfields areas are close to infrastructure and access to market and have optimal geological characteristics for the generation of helium and importantly have had previous strong indications of natural gas influxes during mineral drilling activity. Upon the completion of the Assessment stage which includes Native Title negotiations and granting of the SPA-AO, 2H Resources will have six months to undertake a soil gas sampling program which will seek to identify areas of anomalously high gas flux which will then be high-graded for future exploration.

More details on natural hydrogen and the activities of 2H Resources are available on the 2H Resources website at 2HResources.com.

CO² GEOVAULT

Carbon Capture and Storage (GEOVAULT, BURU ENERGY 100%)

Carbon capture and storage (CCS) is the process of capturing carbon dioxide (CO2) from industrial processes before it enters the atmosphere, transporting it, and storing it in underground geological formations.

CCS complements other emission reduction technologies by addressing emissions that currently cannot be avoided, including CO2 emissions from industrial processes. Since early 2021 Buru has been progressing CCS technical and commercial activities through its GeoVault subsidiary, with a focus on onshore geological greenhouse gas (GHG) storage.

Buru Energy recognises that CCS is a key component of any realisable path to net zero by 2050. Via its wholly owned subsidiary GeoVault, the company is leveraging its existing onshore petroleum acreage and in-house capabilities to explore and develop CCS potential. This is underpinned by the knowledge gained from a long history of operating exploration and production assets in Western Australia. GeoVault aims to be a pre-eminent operator in the identification, development and operation of GHG storage projects in the onshore Canning Basin.

Leveraging Buru’s considerable geological intellectual property, GeoVault is in the process of building a GeoVault-operated inventory of geologically suitable storage formations matched to projects requiring storage.

In addition to providing direct benefits to Buru and its Rafael development, this storage capacity will be made available to companies seeking to reduce their GHG emissions as part of the transition to a lower carbon future.

During the year, the in-house GeoVault team completed an assessment of the geological greenhouse gas (GHG) storage potential for areas in and around Buru’s petroleum licences and permits in the onshore Canning Basin. This work was subsequently independently validated by RISC Advisory.

This assessment is in support of the commercialisation pathway for Buru’s 100% owned, low reservoir CO2 Rafael conventional gas and condensate discovery in the onshore Canning Basin of Western Australia. The independently reviewed CO2 storage estimates prepared by GeoVault for these areas confirmed material hub scale CCS potential that significantly exceeds the estimated source CO2 emissions from a larger-scale Rafael project, thus providing a pathway to potentially significant reductions in Scope 1 and Scope 2 emissions from the planned project.

More details on CCS and the activities of GeoVault are available on the GeoVault website at GeoVault.com.au.

Battmin

Battery Minerals Exploration (BATTMIN, BURU ENERGY 50%)

Battmin, a wholly owned subsidiary of Buru, was initially formed to apply the geological knowledge that Buru had acquired in its extensive petroleum exploration activity in the Canning Basin to the exploration for minerals formed by similar processes, and often in association with, oil and gas accumulations.

Battmin’s activities remain focused on its Barbwire Terrace demonstration project in the central Canning Basin in joint venture with Sipa Resources Limited (“Sipa”), where the JV is targeting zinc/lead mineralisation in carbonate sections along a Devonian Reef Trend.

During the year, the Joint Venture continued work on the core analysis from the three diamond core holes drilled late 2022 and worked to define any future potential activity on this project.