Buru Energy Advances Rafael Gas Project Toward FID in the Kimberley

Buru Energy Advances Rafael Gas Project Toward FID as June 2026 Quarterly Report Shows Portfolio-Wide Progress

Buru Energy Limited (ASX: BRU) has used its June 2026 quarterly report to show continued progress across its Canning Basin portfolio, led by the wholly owned Rafael Gas Project in the Kimberley. The report outlined advancement on environmental approvals, Traditional Owner negotiations, liquids and LPG market studies, and planning for a 2027 drilling programme.

Furthermore, the update highlighted a $5.3 million placement, Ungani micro-refinery feasibility work, Mars farm-out discussions, and a positive read-through for Yulleroo from the nearby Valhalla regulatory process.

For investors, the quarterly update matters because Rafael remains the central value driver. According to the report, the project's economic screening indicates a 42% to 80% internal rate of return (IRR) based on the conservative P90 resource, with average annual pre-tax cash flow estimated at more than three times Buru's current market capitalisation. The company ended the quarter with $4.5 million cash and no debt.

Executive Chair David Maxwell said: "The strategic importance and value of local energy security has been clearly illustrated in the last 6 months. The Rafael Gas Project, which Buru holds 100%, is uniquely placed to meet a significant portion of the Kimberley local gas, diesel and LPG demand, replacing imported fuels with cost-competitive local supply. Rafael is projected to deliver material long-term cash flow for Buru shareholders. In support of this our funding activities are progressing well and focussed on preserving as much equity in Rafael as possible."

Rafael Remains the Centrepiece of the June Quarterly Report

In the quarterly report, Buru described Rafael as a project designed to supply LNG, diesel and LPG into an established Kimberley market that currently depends on imported fuel. Buru owns 100% of the resource in EP 428 and is working with Clean Energy Fuels Australia (CEFA), part of the Octa Group, on the development concept.

The proposed structure is important from a capital allocation perspective. Under the model outlined in the report, Buru would own the subsurface resource and manage well activities, while CEFA would build, own and operate the processing, storage and loadout facilities. Buru would then pay a processing tariff.

That structure may reduce Buru's upfront infrastructure funding burden while allowing it to retain full ownership of Rafael. For a company with a market capitalisation of about $18 million, that is a material feature of the investment case.

The quarterly report said the plant design is based on three product streams:

• LNG for regional power generation, mineral processing and mining operations
• Diesel for remote communities and other Kimberley users
• LPG for a market currently supplied by road freight from Kwinana and Darwin

Buru stated that all LNG, diesel and LPG currently consumed in the Kimberley is imported from locations including Karratha, Darwin and Kwinana. The company's view, as set out in the report, is that Rafael could become a cost-competitive local supplier into that market.

Economic Screening Points to Strong Project Returns

The June quarterly report reiterated the economic screening metrics that have become central to investor focus on Rafael.

These figures were reported as pre-tax, ungeared and in 2026 dollars. The range in IRR reflects different commercial structures, including a model where Buru funds development itself and a model where a third party funds plant infrastructure and recovers that cost through tariffs.

The use of the P90 resource is also relevant. In resource reporting, P90 represents a conservative estimate with a high level of confidence of being exceeded. The fact that Rafael's economics are screened on that lower-case resource, rather than the larger P50 case, suggests that the project's valuation sensitivity to resource upside could be substantial if later work supports a larger recoverable volume.

Diesel and LPG are also identified in the report as adding material value beyond the LNG case alone.

June Quarter Milestones Moved Rafael Closer to FID

The quarterly update showed progress across the four main workstreams that need to advance before a Final Investment Decision (FID) can be considered.

Environmental Approvals

Buru said it continued studies and drafting for the Rafael Gas Project Referral to the Western Australian Environmental Protection Authority (EPA). According to the report, this referral is the primary environmental approval document needed to support FID. The company said it remains on track to submit the final referral in the next few months from the date of the report.

Traditional Owner Negotiations

The report stated that negotiations with Traditional Owners progressed during the quarter. Buru is aiming to finalise an agreement in the December 2026 quarter.

For investors, this is one of the key near-term project milestones. Resource developments onshore in Western Australia require land access and community agreements to move forward in an orderly way.

Liquids and LPG Market Studies

A new development in the quarter was the commencement of liquids and LPG market studies. These studies are intended to help define the best marketing route for Rafael's diesel and LPG output.

According to the report, the Kimberley diesel and LPG market is significantly larger than the volumes Rafael plans to produce. In addition, Buru noted that diesel pricing is typically linked to the Broome Terminal Gate Price, which may allow Rafael to benefit from shorter transport routes compared with imported supply.

2027 Drilling Programme Planning

Subsurface planning also continued during the quarter. The report said the Rafael development plan is based on two production wells capable of delivering up to 14 TJ/day of gas to produce as much as 300 tonnes per day of LNG, plus associated liquids.

Buru is seeking an investment partner to help fund the planned 2027 drilling programme, with several parties conducting commercial and technical due diligence. That matters because partner funding could reduce equity dilution while helping move Rafael toward the next stage of appraisal and development.

Does Flying Fox Add a Second Layer of Upside Below Rafael?

One of the more interesting aspects of the quarterly report is the possible value in the Flying Fox prospect, which lies directly beneath the main Rafael field.

Buru said Flying Fox, identified from the 2023 Rafael 3D seismic survey, sits at about 4,015 metres TVDSS. In simple terms, 3D seismic is an imaging method used to map underground rock layers, while TVDSS means true vertical depth below sea level.

The prospect has the following reported prospective resources:

According to the report, the P50 best estimate is similar in size to the contingent resources already assigned to the primary Rafael reservoir. That implies Flying Fox could materially increase the overall resource base if successfully tested.

The attraction is that Flying Fox may be tested by drilling roughly 500 metres deeper than the planned Rafael 2H target, potentially providing a relatively efficient way to assess a second target during a development-related well programme.

Ungani and Mars Provide Additional Portfolio Optionality

While Rafael dominates the current investment narrative, the quarterly report also showed movement in Buru's oil assets.

Ungani Micro-Refinery Feasibility Work

The Ungani Oilfield, which is also 100% owned, remained in care and maintenance during the quarter. However, Buru said it is reviewing restart options and undertaking feasibility studies that may involve installing a micro-refinery at the existing production facility.

The proposed focus would be diesel supply into the broader Kimberley region. The report referenced the Western Australian Government's 20 million litre strategic diesel stockpile, including 4 million litres stored in Wyndham, as background showing the importance of regional fuel security.

If feasibility work is positive, a micro-refinery could complement Rafael's liquids strategy and expand Buru's role in local fuel supply.

Mars Prospect Farm-Out Discussions

Buru also reported active negotiations with third parties on a farm-out for the Mars oil prospect, located around 9 kilometres north of Ungani.

A farm-out is a common funding structure in exploration where another company funds some or all of the work programme in exchange for an interest in the asset. The report outlined the following key features at Mars:

• A large fault-bounded anticlinal closure mapped on modern 3D seismic
• Location up-dip from interpreted oil pay in Ungani North 1
• 17% porosity measured from sidewall core at 1,765 metres
• Strong oil shows in the Reeves Formation sands
• Internal 40% chance of success
• Potential tie-in to existing Ungani infrastructure with minimal additional capital expenditure

In accessible terms, porosity refers to the amount of open space in a rock, which helps determine whether oil can be stored and flow through it.

Yulleroo Remains a Longer-Dated Gas Option

The quarterly report also highlighted Yulleroo as a major longer-term asset within Buru's portfolio. Buru described it as a large unconventional gas accumulation in the Laurel Formation.

The report pointed to the EPA's January 2026 recommendation for approval of the nearby Valhalla Gas Exploration and Appraisal Program as an important development for the broader basin. Yulleroo's reported resource base is substantial:

According to the report, Yulleroo is relatively close to the Dampier to Bunbury pipeline, which means it could potentially target larger Western Australian gas markets than the more regionally focused Rafael Gas Project.

Understanding IRR and Why Rafael's Numbers Stand Out

What Is IRR?

Internal Rate of Return (IRR) is a common project finance measure used to estimate the annual return a project may generate on the money invested in it. In simple terms, it helps investors compare how attractive one project may be relative to another.

Why Is Rafael's IRR Relevant?

The quarterly report stated Rafael screens at 42% to 80% IRR depending on commercial structure. In energy and resource project assessment, returns in that range are generally viewed as high, although outcomes remain dependent on approvals, funding, execution and future market conditions.

The screening is based on the P90 resource, not the larger P50 case. Furthermore, the report also stated that Buru has more than $200 million in tax losses, which may have future value but are not included in the pre-tax IRR figures.

For investors, the key point is that Rafael's reported economics appear strong even before considering higher resource cases or broader portfolio optionality.

Cash Position and Capital Structure

Buru ended the quarter with $4.5 million in cash and no debt, following completion of the $5.3 million placement announced in April 2026. The quarterly cash summary was as follows:

The Appendix 5B showed 1.75 quarters of funding available based on current expenditure. However, Buru noted that several large costs in the period were one-off items relating to Rafael Traditional Owner negotiations, EPA approval activities, Ungani annual payments and annual licence fees.

On capital structure, the report listed:

• 1,358,660,440 shares on issue
• $18 million market capitalisation
• $4.5 million cash
• Nil debt
• 12-month trading range of 1.1 cents to 2.7 cents

Why Investors Are Watching the Next Few Quarters

The June 2026 quarterly report presents Buru as a small-cap energy company moving multiple assets forward, with the Rafael Gas Project clearly the near-term focus. The main catalysts identified in the report include:

• The EPA referral submission
• Progress toward a Traditional Owner agreement
• A potential investment partner for Rafael drilling
• Developments around Mars farm-out negotiations

At the same time, Flying Fox offers deeper exploration upside from the Rafael programme, Ungani provides a possible liquids restart path through micro-refinery studies, and Yulleroo remains a large-scale longer-term gas option.

For investors assessing ASX energy stocks, the core question is whether Rafael can continue to de-risk along the timetable outlined in the quarterly report. If the next approvals, agreements and funding steps are achieved, Buru may move materially closer to an FID decision on a project that the company says could deliver substantial long-term cash flow from a conservative resource base alone.

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