Hey CEO, Finally got time to take a deeper look at the deals metrics. Not overly easy to get my head around initially, at least from a $$ perspective. Plus, it basically being 2 farm-ins.
The smaller one is easier to gauge - EP457 & EP458 $3m on 2D seismic (the purple area shown below). Basically an extension of the Ungani Trend, which will likely include the Victory prospect. Potentially $6m carry on a well within one of the permits, which if they don't undertake/agree to, means they reduce their % of the acreage to 20% (down from 40%), by an unspecified date (my hope is that it would be 2021, but... I wonder if they have a longer window...)
Definitive - $3m Potentially $6m Total $9m
Main farmout which includes the 'Deeps', or unconventional gas as well as conventional targets (something which ROC did not have.....)
$16m to drill the two wells (Kurrajong & Rafael) $3m on seismic within the 5 permits farmout - which I assume means one or more of the areas above (1, 2 or 3). $1m cash.... because they threw us a bone.
The seismic is interesting - because it could quite easily go towards the Laurel gas play in the East... or conventional targets nearer to Ungani.
Potentially a further $4m on seismic if Rafael comes good, or.. they find something good enough to justify a large 3D seismic program. EP129 (which holds the majority of the Butler prospect - $6m to drill a well by a set date. EP431 - which has the Pictor wet gas discovery (plus other targets) $4m to drill a well by a set date
Definitive - $20m Potentially $14m Total - $34m
Total Definitive - $23m Total Potential - $20m Grand total - $43m.
That's how I read it anyway. Perhaps I have missed something. I think many of the 'potential wells', are simply part of making sure that upcoming work commitments are met, though, if REY has proven anything, you can basically do nothing in the Basin for a decade, and keep your Permits.
Overall, I think it is a good deal in the current climate, however, I cannot deny thinking that this deal does give the Laurel play to Origin for peanuts, whilst basically being a fair deal for the conventional prospects being drilled. The big kicker, is that ORG is not going to walk away like ROC did. The wells will be drilled, they will be drilled as well as any can be onshore in OZ, and a huge amount of funding risk has been removed from Buru. The terms regarding the Laurel are a bit loose, as in, ORG will likely get to choose what is spent and where going forward, but then, the market has basically valued the play at ZERO anyway, so.... at this point, just drill some wells..
I assume that ROC/BRU will piggyback of the 2 exploration wells, to drill on Ungani (likely only 1 well, unless of course, we see success at Raf/Kurra). Hard not to be optimistic about 2021. BRU has kept hold of Blina, perhaps because ORG simply did not want it, but either way, if POO does fly, then having the option of restarting it is a nice little addition. No doubt about it, Yulleroo is a wild card, particularly with the new mine now approved nearby. Though I guess, it won't be valued at anything until something is actually signed off with a deal.
Good luck to all holders, especially the LT ones. Been a rocky ride, and I am sure, there are still bumps to come!
BRU Price at posting:
13.5¢ Sentiment: Hold Disclosure: Held
