Production
Ungani Oilfield Production and Sales (L 20 & L 21 – BURU ENERGY 100%)
It was a challenging 2023 for Ungani production, with unprecedented flooding in the Kimberley early in the year significantly impacting operations and revenue.
Oil production at the Ungani Production Facility (UPF) was suspended on 5 January 2023, due to the impact of ex-Tropical Cyclone Ellie on sections of the Great Northern Highway and the Fitzroy River bridge at Fitzroy Crossing, resulting in the closure of the oil transportation road route from the UPF to the export facility at Wyndham Port.
Following the construction by Main Roads WA of a temporary low-level crossing of the Fitzroy River at Fitzroy Crossing that was suitable for heavy vehicles, Buru recommenced trucking operations in May 2023 to clear the oil inventory at the UPF, with production operations restarting at the UPF shortly after.
In July 2023 Buru suspended operations again for one week due to unseasonal rain in the Kimberley and the closure of the temporary low-level river crossing at Fitzroy Crossing.
Operations at the Ungani Production Facility were suspended again in August 2023 following the removal of the temporary dual lane causeway that was being used by Buru to transport Ungani crude oil across the Fitzroy River. A subsequent risk assessment determined that a temporary replacement barge facility proposed by Government at the time would not be suitable for the safe and reliable transportation of crude oil via road trains across the Fitzroy River prior to the construction of a permanent river crossing.
The suspension involved the orderly and staged termination of key contract arrangements associated with the trucking and storage of Ungani crude oil, as well as employment contracts with Ungani operations personnel to significantly and appropriately reduce fixed and monthly operating costs.
In August 2023 Buru entered into an agreement with Roc Oil (Canning) Pty Limited (ROC) pursuant to which ROC withdrew from, and has assigned to Buru its 50% joint venture interests in Production Licences L 20 and L 21, containing the Ungani Oilfield.
Following the completion of customary assignment and transfer documentation, Buru regained 100% ownership of the Ungani Oilfield from 30 September 2023.
In December 2023 a new permanent bridge across the Fitzroy River was opened six months ahead of schedule. This, combined with the full ownership of the Ungani Oilfield provides Buru with the opportunity to revisit its operating model for the field, and to this end, Buru has commenced analysis of potential paths to extract maximum value from this late life asset.
Production from the Ungani Oilfield for the year ended 31 December 2023 totalled ~47,175 bbls at an average rate of ~458 bopd (Buru Energy’s 50% share ~23,588 bbls).
Gross sales of Ungani crude during the year totalled approximately 72,000 bbls from one lifting at Wyndham Port, these sales include oil inventory volumes measured at the beginning of the reporting period. Buru Energy’s share of revenue from the Ungani Oilfield for the year totalled ~A$4,733,000 at an average received price of ~A$129/bbl (2022: ~ A$13,893,000 at an average received price of ~ A$127/bbl).
Cost of sales totalled ~A$3,464,000 at A$145/bbl (2022: ~ A$7,308,000 at A$76/bbl) giving a gross profit from sales of Ungani crude net to Buru Energy of ~A$1,269,000 before inventory adjustments and amortisation charges, at an average annualised loss of ~A$16/bbl (2022: cost of sales ~ A$6,585,000 at ~ A$51/bbl). The increase in costs per barrel is reflective of the suspension of production operations at the UPF between January and May 2023. The field was on production for approximately three months during the reporting period before operations at the Ungani Production Facility were suspended on 27 August 2023 following the removal of the temporary dual lane causeway across the Fitzroy River.