Buru Energy managing director Keiran Wulff has moved to ease investor concern about Buru's flagship project, the Ungani oilfield, declaring that development and production plans remained unchanged despite an unsuccessful drilling exercise.
Buru yesterday lodged a company interview with Dr Wulff, signalling the first expansive commentary by the company on the Ungani-3 well, which was drilled to further assess the Ungani field reservoir. Although analysis from Ungani-3 interpreted an oil column similar to the previous Ungani wells, Ungani-3 suffered poor porosity.
"Consequently this particular well is unlikely to be a significant producer," Dr Wulff said.
"We are not sure why the reservoir isn't as well developed at this location. We are confident from what we have seen at the two existing wells and from their production behaviour to date that we have a significant oilfield but it is likely this well (Ungani-3) has reduced the potential upside."
Buru had been telling investors Ungani had a gross potential resource of 10 million barrels, with upside to 20 million barrels.
Dr Wulff said Ungani-3's impact on reserves was unclear.
"There is no doubt the upside we had estimated needed Ungani-3 to be at least as good as the two existing wells, so that is now unlikely," he said. "The important thing for us is to make sure we get our production rates up and our costs down to generate as much cash as we can."
Buru is targeting year-end production of 5000 barrels a day.
Buru shares added 0.5Â¢ to $1.385. They fell from $1.97 when Buru announced Ungani-3's failure two weeks ago.