Hey Jop, again, great analysis and appreciate your reply.
Firstly, regarding 5000bopd, its a great target, but a few things have to happen to reach that goal. Firstly, we need to have U4&5 come in, then we need Broome option to actually be built, plus we will need U4 & 5 to have sub pumps installed, plus in all likelihood, have Ungani FW tied in. These are not small or cheap endevours, especially when BRU simply does not have the financial muscle to do it at this time. Yes, by the end of the year, BRU could be capable of doing it all (obviously a large capital raising would increase the chances of all this occurring, but... Eric has shown he is not keen on further dilution). Also, realistically, getting to 5000bopd won't occur until next year. So... it would again take time to build up the cash balance required to then finally undertake exploration on the main Ungani trend, or to the north, or south (which for now it would seem is off the cards due to lack of cash).
You do make a great point about the negatives on a farmout if BRU gave away perhaps 40-50% of its main Ungani Trend tenements, however, from Peter Strachans reports, he seemed to imply that Eric will be trying hard to ensure that a farmout will be on a target by target basis, do you think that sort of farmin is more acceptable? As BRU would still retain huge upside with all the targets under its control, but.. have OPM to fund the initial exploration, with the added advantage of sharing the funding costs for development if discoveries were made. The paperwork would surely be able to include some reasonable terms for both BRU and any J/V partners. Without doubt, BRUs upside is magnified if they drill on targets that are 100% their own, but so is the risk, and as you point out, some wells have been very expensive.
Great point about Ungani FW, a relatively inexpensive well on that field would allow for production from both formations. Still have U4 as well, but again... these could be the focus internally, while OPM funds external exploration (with higher risk).
I also think you make an excellent point about future Ungani field wells like U6 and perhaps a U3/5 appraisal well which could add significantly to the fields reserves and life. You are right, at 5000bopd, it would mean that the fields current reserves would be chewed up relatively quickly, but... hopefully soon, the reserves will be more like 10m barrels, giving almost 6 years of production at 5000bopd. Then you will likely have another 10m barrels at 3P which could eventually be produced with more wells, giving BRU closer to 12 years of production. That is long life field. BRU are not wanting to find more discoveries to only increase their production rates, they are drilling prove up Erics belief that the Canning is a monster oil and gas province, and the clock is ticking. I very much understand if you discount my view on Eric and his eventual stepping down, but we also have Twiggy watching on. BRUs days are numbered a large discovery would give BRU all sorts of leverage that it currently does not really have, namly financial muscle and more discoveries to remove what you point out correctly, is that its costly to find commercial discoveries in the Canning so far... but I have to say that I totally disagree with you about the 300 wells, almost all of which were true wildcats (or even rank wildcats), so much so that most of them were drilling on a prayer... not even with any seismic in some... just prayers. As I understand it, every single one of BRUs wells on the Ungani trends have been successful in proving up the Ungani trend as a highly prospective play. Not exciting to the market, but def exciting to BRUs team (and hopefully potential partners).
It has been said by those much more knowledgeable than myself, that Ungani was a dream discovery, the field is amazing. Yes, we have Ungani FW, and Ungani North, but.. they are not proven producers yet, so.. BRUs scorecard is technically one field, when... with a bit of testing and a nice big bean pump, it would be 3 fields (potentially 4 if you include U3/5, but.. I will leave that to the Geo's to debate) being produced from. I would be extremely happy if BRU focused the next 12 months on just UFW, U North and U6, then Broome, pipeline to highway, loadout etc. When I look at even that relatively small list, it adds up $$$.
I sincerely hoping you are right about U4 flow rates etc etc. Hard to believe the plan was to have all this done by Xmas, early Jan. Sigh.... bloody weather! Speaking of which, still at least 2 more weeks of clear skies. I also hope your expectations for the share prove accurate, I would be overwhelmed if got back above the old highs, very possible if a big target came in a success, but... would be happier with much less as I am slowly, I think, becoming more focused on capital preservation over just making a motza. In the end, if BRU give up most of the trend for $20m, I will be quickly in your frame of mind though!
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