Mitsubishi commits to Canning basin 2011 program

Japan’s Mitsubishi Corp. has exercised an option to participate in Buru Energy Ltd.’s 2011 exploration program in the Canning basin of Western Australia.

Dec 3rd, 2010

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Dec. 3 -- Japan’s Mitsubishi Corp. has exercised an option to participate in Buru Energy Ltd.’s 2011 exploration program in the Canning basin of Western Australia.

Mitsubishi joined Perth-based Buru earlier this year by committing to spend $22.4 million (Aus.) to fund 80% of the 2010 work program (OGJ Online, June 15, 2010). It had until Nov. 30 to decide whether to take the partnership further.

Under the extended deal, Mitsubishi has committed to fund $40 million (Aus.) of a planned $50 million (Aus.) exploration program in the Canning region next year and up to $50 million (Aus.) of Buru’s development costs for any major oil and gas development infrastructure.

The 2010 program has seen a successful appraisal of the Yulleroo gas discovery and lent credence to Buru’s broader vision of a Canning Superbasin as a significant supplier of energy.

The 2011 program is still subject to review, but is likely to include appraisal of the Pictor oil and gas discovery in permit EP431, two more wells in the Yulleroo exploration province as direct appraisals of Yulleroo-2 or wildcats on the Yulleroo trend. There will also be two wells in the Acacia field exploration area targeting oil prospects and a well to evaluate one of Buru’s unconventional play types in the region.

As well as earning an equal interest to Buru in the majority of Buru’s permits, the new deal also gives Mitsubishi the right to earn an interest in the unconventional program by carrying out a further $40 million (Aus.) of unconventional exploration costs in 2012.

In addition, Mitsubishi has the right to acquire a 50% interest in Buru’s production permits in exchange for another cash payment priced by an independent expert and based on proved and probable reserves.

Buru will continue as operator in all its permits, but Mitsubishi will lead any LNG commercialization plans.

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