Buru Energy “in excellent shape to emerge strong and more efficient”, says chairman

Buru Energy Limited (ASX:BRU) (FRA:BUD) is in excellent shape to weather these turbulent times and emerge stronger and more efficient, the company’s executive chairman Eric Streitberg told yesterday’s annual general meeting via webcast. Providing an optimistic outlook during turbulent times owing to volatile commodity markets and COVID-19 restrictions, the chairman said, “the Board and management have the experience and capability to deliver for the future.” He said one of the defining characteristics of the oil and gas industry was that it was innovative and quick to embrace appropriate technology. Able to adapt “The current circumstances have seen us able to quickly and easily adapt to working in a primarily digital environment, including today’s mostly virtual meeting. “We have also been very fortunate to have a State Government that has taken a pragmatic and measured approach to the control of the COVID-19 pandemic. “This has allowed us to continue our operations in a controlled and effective way and we thank the Premier and his team for their handling of the crisis.” “As a Board and a company, we are also used to volatile commodity markets and to the currently rapidly changing face of the energy industry,” he said. “So, this turmoil in the oil markets is nothing new for us. We are used to making sure we are always prepared to ride out these changes, and Buru is in an excellent position to do just that. “We have had a prudent and deliberate strategy to ensure we have maintained a healthy balance sheet with minimal debt and that we do not have commitments on our acreage that would force us into unwanted or unnecessary activity.” “Excellent asset base” In addressing the current volatile oil markets, Streitberg said Buru was one of the few listed small Australian oil & gas companies that had solid cash reserves, “an excellent asset base and no material exploration commitments”. He said: “This strong position reflects the long-term strategy of Buru, we don’t overextend and we prepare for all eventualities. “Although this preparedness is not reflected in the current share price, the company is well-positioned to ride out the storm and take advantage of strategic and high-value opportunities that will inevitably arise.” Next lifting shortly With its operations, Buru continues to produce from its conventional Ungani oilfield JV at a steady rate of around 1,500bopd with the next lifting from the CGL storage tank in Wyndham in a few days. The company expects to receive a payment in line with the average Brent price for this month of May, less the buyer’s normal fixed discount under the current contract. Streitberg said: “The joint venture is carefully monitoring the current oil market and shipping constraints and will make a decision in the third quarter as to whether a temporary suspension of production from Ungani would be prudent. “We are in a fortunate position of being able to suspend production with no material operational consequences, as we have done on occasions in the past.” Looking to the future, the chairman said Buru was inviting interested parties to participate in its exploration acreage. “We have done a very thorough technical evaluation of the prospectivity of the acreage and have been delighted to not only confirm the original prospectivity but also to have identified a number of new play concepts with high potential. Ongoing farm-out process “The farm-out progress is ongoing with interested parties now accessing the virtual data room. “These processes take time to complete given the level of due diligence undertaken by incoming parties,” he said, “and we are aiming for completion of any potential transaction later this year as a prelude to activity next year.” Streitberg said: “These are realistic time frames and expectations and are partly driven by our ability to drill exploration wells in this dry season being severely limited by the very high level of disruption the pandemic has caused to exploration operations, and the consequent shortage of drilling rigs and associated contracting equipment and services. “It is also appropriate for Buru to defer exploration until there is some stability in the oil and equity markets.” Opportunities will arise He continued: “However, as the Sage of Omaha and various Chinese philosophers have noted, in times of trouble and disruption, opportunities arise. “Those like Buru who are well prepared for these times will find that both corporate and asset opportunities will indeed arise. “These will be both in our core business activity, and also in value-adding businesses that may include, for example, local value-adding to Ungani crude and the establishment of a renewable energy precinct backed up by conventional gas resources. “We have formed an internal business unit from existing staff to specifically focus on the opportunities.” In thanking the staff for their commitment and shareholders for their perseverance, the chairman said, “We are hopeful that we will emerge stronger and more robust from these current circumstances.”