Buru Energy Limited

BRU Details

Business Update: Buru Energy Limited (ASX: BRU) is engaged in the business of oil & gas exploration and production in the Canning Basin. In a recent announcement, the company has provided an update on its Canning Basin Rafael 1 well drilling operations.

• The group has reported that wireline logs have been acquired over the 6-inch hole section below the 7-inch casing shoe. The well is being prepared for testing with a 60mm tubing string.
• It has also reported that decent quality wirelines logs have been obtained over the interval from the 7-inch casing shoe at 3,868 metres measured depth to the total depth of the well at 4,141 metres.
• Petrophysical interpretation and image logs imply the net reservoir section is similar to the highly productive conventional dolomite reservoir at the Ungani Oilfield.

30 September 2021 Quarter Update:

• During the period, Currajong-1 exploration well was drilled and tested. The Group also reported decent reservoir development in the Ungani Dolomite.
• Oil production from the Ungani Oilfield stood at ~73,500 bbls.
• Oil lifting of ~74,000 bbls was reported in July, and further lifting of ~74,000bbls occurred in October.
• It ended the period with cash & equivalents of $32.9 million as of 30 September 2021.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The Group’s activities are under the strict purview of the regulatory bodies, and any interference can impact the continuity of its operations.

Outlook: The interpretation of the reservoir quality & thickness suggests that there is potential for significant accumulation of wet gas in the Rafael structure. In this regard, the management plans to conduct a production test in order to gather information on reservoir fluids and other important parameters.

Stock Recommendation: As per ASX, the stock of BRU is trading above its 52-weeks’ average levels of $0.086-$0.225. The stock of BRU gave a positive return of ~37.50% in the past one month. Considering the current high trading levels, recent rally in the stock price, negative profitability and the key risks associated with the business, we recommend ‘Sell’ rating on the stock at the current market price of $0.170, as on 23 November 2021, 11:45 AM (GMT+10), Sydney, Eastern Australia.

Technical Insights:

BRU prices are sustaining below the horizontal trend line resistance level at AUD 0.18 and continuously facing the resistance of the same on the daily chart. The leading indicator RSI (14-period) is trading at ~61.56 level. An important support level of the stock is placed at AUD 0.145 while resistance level is at AUD 0.18.

BRU Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings.

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