To say I’m excited about the next two years is an...

To say I’m excited about the next two years is an understatement. A combination of up to a three year wait for drilling on some prospects and intense curiosity is about to be satisfied one way or the other. Here are some of the reasons I’m so excited by the conventional prospectivity of the area.

Scattered throughout the basin there are signs that a big strike is in the making. Whether it’s oil this year or gas next year the important thing is that we are hunting some of the best porosity reservoirs it’s possible to have which is a very different prospect to what people thought of the Canning only 5 years ago.
And although as Ungani proves, porosity distribution isn’t always even, where it’s good, it’s really damn good and it doesn’t get a lot better than cavernous porosity. When the drill encountered “no resistance” and literally plunged through caverns of oil we knew we had something special here. And let’s be specific, we’re talking the kinds of caverns you could move around in if they were full of air. As in our ancestors camped in ones closer to the surface hiding from Saber Tooth tigers. A human being able to enter the space is the definition of "cavernous". You cannot core them because there is no core!
It had been speculated that Ungani dolomite is a Mississippi Valley Type which is why there has been lead drilling surveys along the trend as there is a relationship between the brine action that creates this dolomitic porosity and the heavy metals in oil that help create lead and zinc sulphide deposits.
Here is some MVT porosity:



However the reservoirs are complex because the porosity is a function of the heat of the rocks,  distance from the brine source, composition of the fluid, composition of the carbonate, flow characteristics etc. Depending on the mineral constituents, and which of the half dozen dolomitizing fluid actions has taken place, from what I can tell, too close to the brine source and the recrystallization process “over dolomitizes” because the precipitation of the dolomite cements occludes the porosity close to the source as well as along the “front” (where the dolomite is replacing new rock like the edges of greyscale replacing fresh skin on Jorah Mormont’s wrist as it grows).

Ungani was always described as a complicated reservoir and I think U3 made a lot of people re-evaluate their faith in it but you need to look at the bigger picture to understand the significance. Ungani to me was never about one field but about the rough 10% of the 3 billion barrels they thought might be commercial in the trend. In a VERY simplified way, finding oil is like your stereotypical slot machine with the three cherries except we need an intact trap, charge and flow. We find those things lining up perfectly in U1 and U2 and almost kind of if you hit the side of the machine in U3 and UN but what interests me the most is what we find elsewhere in the places where things don’t line up. What that does is show that the basin is littered with promise. That Ungani 1 and 2 are some localised sweet spots seems ridiculous when taking this view. Even if we forget for a second the probability of hitting the only perfect prospect in a trend with the first drill, look at the corporate action. Buru paid $32M to control REY's share of the trend. They only forked out $3.5M to control half of Derby for the unconventionals (although I believe there are similar dolomites in fewer and smaller prospects on the north of the trough as well).
The reality is it’s highly probable other even larger discoveries are sitting out there. Whether they are under our drills is another thing of course but the reason I say this is you just have to look at the distribution of oil and porosity in the area.

In the far east of REY's tenements is Camelgooda-1 which is down dip of where the Senagi drill will be taking place they found Ungani dolomites with minor oil shows.



Now this was a lead drill so they didn’t have a chromatograph or specifically flow test the top of that interval or do anything more advanced a hydrocarbon explorer would do other than looking at the odour of the cores and looking at the samples under a UV light. But it provides hope for something further updip.

During the last year of delays and a low oil price this is the information that has kept me optimistic on the trend. - that there are oil shows and Ungani dolomitic porosity 130km and two bloody permits away. It's not just talk and conjecture.
Whether or not it is commercial is one question but it begs another: With proven hydrocarbons and porosity so far along the trend, how many of the prospects in between can we expect to have a seal, charge and porosity in a commercial combination? To me it’s less about worrying the trend is good and more about worrying whether we can drill enough prospects so the odds are we will find those other Unganis or (mega-Unganis) hiding in there. To me it’s improbable with the number of prospects and proven characteristics at either end of the trend that a jackpot or multiple jackpots aren’t waiting there somewhere, we just have to have a bit of luck and find them with a few throws of the dice.

In saying that probably the most astonishing part of Camelgooda-1 besides showing the scientific proof that the proposed trend actually exists, is the Nullara. I’m going to assume that we explore the Nullara more next year with a deeper rig but the Nullara appears to form a one-two punch along the trend as well. In Camelgooda-1, while the Ungani dolomites were encouraging, it was actually the Nullara that had the cavernous porosity and obvious flow. It was an uncorable crumbling void with an 11m cavern at one point and they didn’t reach the bottom of the formation.



Will it host gas or oil further updip at Senagi? Does it have these characteristics underneath Ungani North? Is it prospective under most of the Ungani dolomite targets in the trend? 2015 and 2016 will go some way towards answering those questions.

Look at Stoke’s Bay and Blina. The Nullara was cavernous at Stokes Bay AS WELL (although not at Point Torment).



They immediately lost thousands of barrels of mud to the formation when they drilled it and thought they might be onto something big and certainly it became more exciting than the primary target of the drill which they didn’t even test. In Blina the Nullara was the primary producer with 905bbl/d on initial drill stem test. It too had a dolomitic zone although permeability was more from vertical fracturing than connected vugs as it wasn’t overly porous there.

So what I’m getting at is that this year and next are exciting because of the geological probabilities. We have some very educated guesses about what is happening and some small level of calibration. They're not complete and utter wildcats with totally unknown geological parameters. And although of course they are still risky and technically wildcats if you use the distance from existing drills definition, it's not like drilling at Olympus-1 - outside of a proven trend.



Not only that, they’re exciting because of the sizes of the damn accumulations. I’ve zoomed in and vectored up an old prospect map Buru published here http://www.buruenergy.com/wp-content/sharelink/20131112-2013-agm-presentation-75885344559695112.pdf . Bear in mind this has some level of interpretation as to which pixels to trace around and Ungani had the word “ungani” partially over it, but it’s as close as I could feasibly get it. It shows the potential based on what Ungani is (3c) or was initially thought to be pre-U3 (p10) but it's only based on areal extent relative to Ungani given I have no idea of vertical relief of any of the other prospects.
For a rough sizing, Wright and Victory together could be more than ten times as big as Ungani was thought to be at the beginning. That's pretty damn good as far as I'm concerned. It would be hard to tell me we wouldn't break previous all time highs on the smallish chance we have success at both of those together (although just one is fine by me )



I haven’t included an estimate on Praslin as the company has specified it’s a smaller target in an area of smaller prospects so the aeromagnetic delineation here might actually be more like a string of close “islands” on the 3d.

However they state that Wright and Victory are large so I don't mind trying to get a crude measurement.
As you can see, some of the rough sizes are quite impressive. They could easily make Phoenix South look like a runt whose mother smoked while she was pregnant and with nice cheap onshore shallow drilling too. I think if there is similar vertical relief and we start talking at least close to 100mmbbl for a couple of drills the market will have to take a bit more notice when spud is imminent too.

It's also very interesting to see REY has possibly three drills happening this year and maybe one next year. It's like Buru is jumping right into their patch and stomping all over it doing twice the drilling they were going to. or was in the minimum work commitment. So good for them after a long wait and it's much nicer seeing their second drill turned from an unconventional Laurel well into a conventional oil one. Also good for REY is that we're testing Victory first instead of Rafael which would have been a bit cheeky to use a commitment drill to target something mostly on Buru's side of the permit! looks like we're properly in it together now (although we still get most of Rafael if it's drilled next year )

Now I must reiterate, none of this means we're going to make a big strike this year or that estimates will match the crude areal comparisons here. This is just some research to explain my excitement over the last couple of years and why I just wanted them to get out there and drill. It's a game of probabilities, we need a lot of drilling to uncover those probabilities and maintain sentiment and finally I think we are about to do that.

I can't believe this is finally happening. In 3 months time we'll probably be drilling the biggest target Buru has ever gone after! I have some fingers and toes crossed .