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Buru Searching for More Australian Oil After Shares Double

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Dec. 21 (Bloomberg) -- Buru Energy Ltd., the second-best performer on Australia’s energy index this year, is targeting as many as 20 oil prospects in the country’s northwest, seeking to repeat the first major discovery in the area since the 1980s.

Buru plans to drill two to four oil wells in 2013 in the onshore Canning Basin, more than 2,000 kilometers (1,240 miles) north of Perth, and to start full production at the Ungani find by the end of the year, Eric Streitberg, executive director of the Perth-based company, said in a phone interview yesterday.

“We’ve got another 10 to 20 prospects that look similar to the Ungani field,” he said. “We’ll be drilling some of the highest value potential of those in the coming year.”

The explorer’s shares in Sydney trading have almost doubled in 2012, valuing the company at A$635 million ($664 million), after finding the Ungani oil in late 2011. Buru has called Ungani the first onshore oil find in Western Australia since 2001 and the biggest in the Canning Basin since the 1980s.

The Ungani field may hold 20 million barrels of oil, according to a Dec. 17 report from JPMorgan Chase & Co.

The Australian energy company is also developing shale gas resources in the Canning Basin and formed a partnership with Mitsubishi Corp. to explore in the region. Japan’s biggest trading company agreed to contribute as much as A$152.4 million in exchange for as much as 50 percent of most of Buru’s permits.

Buru ‘Approaches’

While the size of Buru’s gas resources may dwarf the oil acreage in the basin, it will take “longer to delineate and is more complicated to commercialize,” according to the JPMorgan report by Sydney-based analysts Benjamin Wilson and Daniel Butcher, who have an overweight rating on the shares.

Buru expects to decide in the first quarter of 2013 whether to bring in another partner in the basin to develop oil and gas permits. The company has been reviewing “approaches” that it received from companies interested in investing in the region, Buru said in a presentation last month.

“We’ll do something if it’s value accretive for our shareholders,” Streitberg said. “We’re looking at all possibilities to drive value. The choice is do we do it ourselves or bring in someone early in the project.”

Buru shares have surged 89 percent since Jan. 1, lagging behind only Drillsearch Energy Ltd.’s 95 percent gain on the S&P/ASX 200 Energy Index.

The company reached an agreement last month with the Western Australia state government allowing for the development of a proposed domestic gas project and a pipeline that Streitberg said would cost an estimated A$500 million.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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