D.J. Carmichael Pty Limited
ABN 26 003 058 857
Australian Financial Services Licence No: 232571
Level 14, Parmelia House,
191 St Georges Terrace, Perth, Western Australia 6000
PO Box Z5186, Perth, Western Australia 6831
: +61 (0)8 9263 5200 F: +61 (0)8 9263 5280
[email protected]
www.djcarmichael.com.au
Research
Company Update
Date:
Recommendation:
5 June 2017
Not Rated
Company Information
Code
Last Price
Shares on Issue
Market Capitalisation
Daily Volume (m)
BRU.ASX
A$0.18
340m
$61.2m
0.346m
Directors and Management
Eric Streitberg
Executive Chairman
Eve Howell
Non-Exec Director
Robert Willes
Non-Exec Director
Shane McDermott
Co-Secretary
Major Shareholders
Birkdale Enterprises Pty Ltd
HSBC Custody Nominees
Coogee Resources Pty Ltd
Chemco Pty Ltd
Eric Streitberg
Flexiplan Management Pty Ltd
Stephen Jones
8.59%
4.05%
3.92%
3.92%
3.27%
2.45%
2.08%
Summary Key Points
BRU has swapped permits with Mitsubishi to focus on oil production: BRU
recently announced a deal where it has swapped permits with its long-term
Canning Basin partner; Mitsubishi. BRU now own and operate 100% of the
Ungani oil permits and Mitsubishi own 100% of the Valhalla/Asgard gas permits.
This allows BRU to rapidly develop its oil assets without any constraint from
Mitsubishi.
BRU are working on the restart of Ungani production to generate cash flow:
BRU are in the process of restarting production from the Ungani oil field which
was shut in due to low oil prices. BRU announced at the AGM that it expects to
initially produce ~1,250 barrels per day using natural lift. By the end of the year
BRU is planning to install downhole ESP’s to lift production to circa 3,000 barrels
per day. It is expecting to make $25 to $30 per barrel including the cost of
transport to Wyndham. As BRU now own 100% of the Ungani field it will receive
100% of the field cashflow and as part of the permit swap, Mitsubishi will also
contribute $1.5m to the restart of production.
BRU will ship to its existing export point at the Port of Wyndham where it is in the
process of a vendor-financed tank capacity upgrade allowing for bigger tankers
thereby improving the field economics. The tank upgrade is also being vendor
financed. The longer-term plan is to export via Broome port which is only circa
100km from the field. Currently, there are no suitable facilities and tanks and
infrastructure will have to be developed from scratch. This will take a substantial
cash injection to develop and BRU needs ongoing production to secure financing.
Hence the more expensive Wyndham export route is an interim step until a
suitable financing package can be worked out.
Share Price Performance
0.30
0.25
0.20
0.15
0.10
0.05
0.00
Volume
Buru Energy (BRU): Worth Another Look?
Price
Drilling upside: BRU has no large-scale drilling plans for this financial year but
is looking at drilling a side-track on Ungani-3. Ungani-3 was the step out appraisal
well that unexpectedly intersected a tight portion of the Ungani dolomite reservoir.
Post further analysis BRU believe a fault may be to blame and side-tracking the
well could intersect the productive portion of the reservoir. If this fails, BRU is
planning to use the well as a water injector as the need for efficient formation
water handling increases. BRU is planning a comprehensive drilling program
from next year and is exploring funding options for a number of targets.
Unconventional gas appraisal on hold while enquiry is ongoing: The new
labour government is about to embark on another fracking review which will make
it the 15th enquiry in Australia.
Analyst Details
Michael Eidne
+618 9263 5213
[email protected]
Ongoing cost reduction: BRU has aggressively moved to reduce expenditure
in line with its level of activity. BRU currently has ~$19.8m cash on hand but it
still owes Alcoa $12.5m which is due in June next year.
Our View
BRU has refocussed its business to take advantage of low cost opportunities to
earn cash flow from its oil resources. Over time we can expect an increase in oil
drilling activity as BRU ramps up exploration and ties in other discoveries. The
Ungani trend is very promising and BRU’s strategy of producing from proven
wells while looking for more oil upside across the trend makes economic sense.
DJ Carmichael Pty Limited | ABN 26 003 058 857 | AFSL 232571
Telephone: +61 8 9263 5200 | Email: [email protected] | Webpage: www.djcarmichael.com.au
Research
Oil and Gas
Flash Not
Private Client Dealing
Email
Telephone
Hugo McChesney
Institutional Advisor
[email protected]
+61 8 9263 5214
Chad South
Head of Retail Advisory
[email protected]
+61 8 9263 5225
Tim Bennett
Private Client Adviser
[email protected]
+61 8 9263 5351
Matthew Blake
Executive Director - Private Client Adviser
[email protected]
+61 8 9263 5248
Eve Broadley
Private Client Adviser
[email protected]
+61 8 9263 5324
Gregory Chionh
Private Client Adviser
[email protected]
+61 8 9263 5302
Gerry Connolly
Private Client Adviser
[email protected]
+61 8 9263 5265
Andrew Cox
Private Client Adviser (Equities & Derivatives)
[email protected]
+61 8 9263 5237
Toby Jefferis
Private Client Adviser
[email protected]
+61 8 9263 5217
Chris Jones
Private Client Advisor
[email protected]
+61 8 9263 5232
Michael Marano
Private Client Adviser
[email protected]
+61 8 9263 5238
Derek Steinepreis
Private Client Adviser
[email protected]
+61 8 9263 5292
James Titcombe
Private Client Adviser
[email protected]
+61 8 9263 5254
Zac Paul
Private Client Adviser
[email protected]
+61 8 9263 5272
Jason Murray
Dealers Assistant
[email protected]
+61 8 9263 5260
Ben Osborne
Dealers Assistant
[email protected]
+61 8 9263 5251
Email
Telephone
Wealth Management
Brad Clarke
Wealth Adviser
[email protected]
+61 8 9263 5224
Paul Elkington
Wealth Adviser
[email protected]
+61 8 9263 5285
Domenic Macri
Wealth Adviser
[email protected]
+61 8 9263 5263
Mark Meacham
Wealth Adviser
[email protected]
+61 8 9263 5247
Danial Fonseca
Wealth Adviser
[email protected]
+61 8 9263 5296
Nick Casale
Portfolio Administration Manager
[email protected]
+61 8 9263 5215
Email
Telephone
Research
Paul Adams
Director - Head of Research and Natural Resources
[email protected]
+61 8 9263 5234
Michael Eidne
Director - Research
[email protected]
+61 8 9263 5213
Michael Ron
Research Analyst
[email protected]
+61 8 9263 5264
Email
Telephone
Corporate Finance
Davide Bosio
Managing Director & Head of Corporate Finance
[email protected]
+61 8 9263 5210
Scott Robertson
Director – Corporate Finance Executive
[email protected]
+61 8 9263 5218
Adam Russo
Associate Director - Corporate Finance Executive
[email protected]
+61 8 9263 5290
Matthew Hall
Associate Director – Corporate finance Executive
[email protected]
+61 8 9263 5291
Carly Circosta
Manager - Corporate Finance Executive
[email protected]
+61 8 9263 5268
Julie Martino
Executive Secretary
[email protected]
+61 8 9263 5257
Email
Telephone
Administration
Cadell Buss
Chief Executive Officer
[email protected]
+61 8 9263 5204
Belinda Roychowdhury
Administration Manager
[email protected]
+61 8 9263 5216
Gabrielle Bouffler
Head of Compliance and Risk
[email protected]
+61 8 9263 5221
Janelle Whyte
Chief Financial Officer
[email protected]
+61 8 9263 5241
Michelle Perrett
Assistant Accountant
[email protected]
+61 8 9263 5220
Kerry Morrice
Administration Assistant
[email protected]
+61 8 9263 5279
Brenda Woodenberg
Reception
[email protected]
+61 8 9263 5200
2
5 June 2017
Research
Oil and Gas
Flash Not
Disclosure Disclaimer
RCCAN 1405
This Research Report, accurately expresses the personal view of the Author(s).
At the date of this report, DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise
that they may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks
mentioned in this report.
DJ Carmichael Pty Limited is a wholly owned subsidiary of DJ Carmichael Group Pty Limited ACN 114 921 247.
In accordance with Section 949A of the Corporations Act 2001 DJ Carmichael Pty Limited advises this document contains general financial advice only.
In preparing this document, DJ Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs
(‘particular circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess whether
the advice is appropriate in light of your own particular circumstances or contact your DJ Carmichael Pty Limited adviser. DJ Carmichael Pty Limited, its
Directors employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of acting upon this
information. DJ Carmichael Pty Limited, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage
and other benefits or advantages, either directly or indirectly, from client transactions. DJ Carmichael Pty Limited believes that the advice herein is
accurate, however no warranty of accuracy or reliability is given in relation to any advice or information contained in this publication and no responsibility
for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any
persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or employee of DJ Carmichael Pty Limited. This
message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and
exempt from disclosure under applicable law. If you are not the intended recipient or employee or agent responsible for delivering the message to the
intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication and its attachments is strictly prohibited.
The Author(s) of this report made contact with Buru Energy Ltd for assistance with verification of facts, admittance to business sites, access to
industry/company information. No inducements have been offered or accepted by the company.
Recommendation Definitions
SPECULATIVE BUY – Potential 10% out-performance, but high risk
BUY – Potential 10% or more out-performance
ACCUMULATE – Potential 10% or more out-performance, buy on share price weakness
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months. Stocks included
in this report have their expected performance measured relative to the ASX All Ordinaries Index. DJ Carmichael Pty Limited’s recommendation is
made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.
© 2017 No part of this report may be reproduced or distributed in any manner without permission of DJ Carmichael Pty Limited .
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5 June 2017