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New financial boost for Australian shales

Mitsubishi buys 50% interest in all Buru Enengy's Canning Basin unconventionals

Mitsubishi is betting on Buru Energy’s unconventional patch in the Kimberley region of Western Australia (WA). The Tokyo-based trading house is exercising its option to buy a 50% interest in all the unconventional resources, across 13 exploration permits, operated by Buru in the Canning basin. In return for the rights, Mitsubishi will fund A$40 million ($39 million) of next year’s planned A$50 million exploration campaign.

Mitsubishi was one of the first foreign players to take a foothold in Australia’s nascent shale-gas scene, hooking up with Buru in June last year. It has since been followed by the US’ ConocoPhillips, which has an initial deal with New Standard Energy, as well as the UK’s BG Group, which has formed a strategic alliance with Drillsearch Energy.

Mitsubishi’s commitment to the Canning Superbasin – Australia’s most prospective area for unconventional hydrocarbons, according to the US Energy Information Agency (EIA) – provides Buru with the financial strength and long-term partnership needed to unlock the potential of the shared acreage, says Buru’s executive director, Eric Streitberg.

Since the Japanese company’s initial investment in Buru’s conventional interest’s in the basin last year, the pair have made a significant oil discovery at Ugani-1 – considered to be the biggest for 10 years – and uncovered a potentially multi-trillion cubic feet (cf) tight-gas accumulation with the Valhalla-2 well.

Next year’s unconventional exploration programme will focus on charting and appraising the Valhalla and Yulleroo gas finds in the Laurel formation.

Buru has identified four key unconventional plays – Laurel, Noonkanbah, Frasnian and Nita-Goldwyer - across its permits in the Canning Superbasin. The plays have combined mid-range gross prospective recoverable resources of 66 trillion cf of gas and 4 billion barrels of oil, says Buru.

The most prospective is the Laurel tight-gas play, which has a mid-range, gross prospective recoverable resource of 50 trillion cf of gas.

The duo will consider development options for any significant gas reserves, including supply to the domestic WA gas market and to existing, or new, liquefied natural gas (LNG) export projects.

Mitsubishi says it has plans to invest a total of more than A$100 million in the project.

And, positively for Buru, its share price has been on a seemingly unstoppable upward trajectory since the initial tie-up with the Japanese firm. The explorer, which has a market capitalisation of around A$231, has seen its share price jump by 120% in just under six months. It is now up by nearly 200% for the year to date, at A$1.34.

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