nice points bhutos. The exploration potential is amazing..but although it is amazing..Ungani really does protect the stocks SP. If we are to come across future exploration failures wouldn't you think we could take the hit of a failure and move onto the next prospect with minimal damage to the SP?...THATS IF Ungani is up and running. Buru is the only Canning Basin play that has a bit of protection due to Ungani. NSE had amazing potential on it's first drills but they didn't hit pay..look what happened.
When it comes to Ungani it is extremely important to get it into production as we all know drilling is expensive. I'm certain that's why Keiran has mentioned mid 2014 for full production. Dilution can also heavily damage the value of a share. I'm interested to see what the Capex figures will be. If they can get a nice operation up and running bringing in a fair amount of cash flow it will help us significantly down the track. There aren't that many stocks out there on the market that can offer you this kind of exploration potential with the addition of being able to self fund large portions of their own exploration. A stock that can do this will limit dilution as they move to ramp up exploration. That's why I'm Long on Buru. I'm confident Ungani will come in with the goods. My opinion may change slightly if Ungani doesn't meet the expectations currently set by management.
If we were just going to target Yakka Munga or the Laurel without having any form of cash flow coming in then I would be quite concerned. For me Ungani is extremely important as we move forward. I'm sure you agree.
Back in May an article was released showing the potential of BRU. It was clearly stating that Ungani underpins the SP. Future exploration potential was being "thrown in for a song" is what was said by the writer of the article. The ones following the stock closely have all been aware of this right down to 1.20. Lets just say that again..1.20..what da????? How could we of got that low? I stopped watching as I was disgusted. haha. Anyway see below.
Buru shares have trebled since early 2011, but are down a whopping 50% over the past 12 months, making the company the second worst oil and gas sector company in the S&P / ASX 200 Index (Index:^AXJO) (ASX:XJO) over the past year.
For those investors willing to look a little further ahead, and through the volatility, at these levels Buru could be make for a interesting investment opportunity.
The company’s Ungani oil field discovery is due to begin production in the first half of 2014, at a rate of 5,000 barrels of oil per day (bopd). Buru estimate this will be strongly cash flow positive when in production, generating $60m per year net cash flow to the company.
That just about justifies the market capitalisation of $380m, which includes net cash of around $45m, with the exploration upside thrown in for a song."
In May light sweet crude was trading at roughly $90 USD. Currently at $106 USD. Will it move higher? Not sure. But if they were predicting 60 million per year net cash flow in May then we are looking pretty good. The drop in the AUD will only help the cause also.
BRU Price at posting:
$1.84 Sentiment: LT Buy Disclosure: Held
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