Buru Energy (ASX: BRU) Triples Ungani Contingent Oil Resource

Buru Energy has increased estimated remaining recoverable oil at its Ungani field by approximately 200%, following a reservoir and operating review.

The 2C Contingent Resource has risen from 220,000 barrels to 660,000 barrels. Ungani is wholly owned by Buru and located in Western Australia’s onshore Canning Basin.

An independent reservoir engineer conducted simulation work evaluating different production approaches. However, recovery remains dependent on commercial restart and offtake options reaching maturity.

The resource therefore remains classified as contingent under the Petroleum Resources Management System. The announcement does not represent a final decision to restart production.

Reworking Ungani’s Cost Base

Ungani has been under care and maintenance since August 2023. Its previous operating model used electric submersible pumps, while produced water was reinjected.

Crude oil was then trucked more than 1,000 kilometres to Wyndham. From there, it was exported to Asian refineries at Brent-linked prices.

That logistics chain was expensive. Buru said trucking and export contributed more than 50% of operating costs under the previous model.

The company is now assessing alternatives intended to lower costs, improve product pricing and increase remaining recoverable production. It expects operating costs per barrel to decrease, although no forecast reduction was provided.

One option involves establishing a micro-refinery to process Ungani crude into diesel and other products. These products could supply the greater Kimberley region, replacing the previous reliance on distant export markets.

Buru has not selected a final offtake model. Nor did the announcement provide expected capital expenditure or a restart timetable.

Reservoir Response Supports Upgrade

Buru expects an initial period of flush production if Ungani returns to operation. This would follow the relaxation of water coning around each well.

The oil-water contact is also expected to re-equilibrate during the field’s shutdown. Buru said this behaviour occurs in analogous reservoirs and has appeared in Ungani’s production history.

Reservoir modelling indicates careful management of this flush production could support several years of plateau output. That work underpins the higher estimate of remaining recoverable oil.

Executive Chair David Maxwell said: “The increase in the estimated Ungani 2C Contingent Resources is a significant value uplift opportunity for Buru at a time when the strategic importance of local energy security is clearly evident.”

He added that changing the operating model and reducing transport and operating costs were central to the company’s assessment.

Commercial Path Still Required

The resource increase expands the potential volume available from a restart, but commercial execution remains the deciding factor. Buru must mature both its production restart plan and its chosen route to market.

The company is assessing regional market opportunities alongside the micro-refinery concept. Its previous model exposed each barrel to substantial road transport and export expenses before sale.

The estimates were prepared under the supervision and review of Joanne Williams, a reservoir engineer with more than 25 years of industry experience. Williams is a Buru director and a member of the Society of Petroleum Engineers.