Lennard Shelf Royalty Deed – Western Australia

This royalty deed, dated 5 September, 2006, covers a royalty paid by Buru Energy on all petroleum recovered from its (as licence holder) three WA permits. The licences are:-

EP129 (9 blocks, expiry 31.1.16);
L6 (L6 R1 expires May 2027 and includes Blina and Boundary oil fields); and
L8 ((R1 expires May 2027 and includes Sundown and West Terrace oil fields and Lloyd oil field (depleted).

The royalty rate is 3% of Well Head Value, defined as the price that an arm’s length buyer would pay for petroleum at the well head being the same price as accepted by the WA State Government under the State Royalty less the amount calculated as ‘Allowable Deductions’.

EP 129

On 27 January 2015 Buru announced that it had commenced drilling operations on the Sunbeam 1 well located on EP 129 and on 29 January 2015 announced that the will had reached 568 metres of a maximum total depth of 1,200 metres. Fitzroy will continue to monitor the progress of the drilling campaign.

Backreef Area of EP 129 and L6

Fitzroy is monitoring the activities on the ‘Backreef Area’ of L6 and EP 129, particularly those of Oil Basins Ltd. It is understood that Buru holds 100% of the Backreef Area on trust for Oil Basins Ltd and other parties due to the completion of the drilling of the East Blina-1 well on 31 October 2012 in accordance with the ‘Backreef Play Agreement’ dated 30 October 2008. As previously announced, Fitzroy had some negotiations with Buru during 2013 regarding the terms of a deed of covenant proposed to be entered into by the beneficial owners of the Backreef Area, to support Fitzroy’s royalty interest. The contractual relationship governing the 3% royalty obligation (which is registered against L6 and EP 129) is between Fitzroy and Buru alone.

L17

In April 2013, a new petroleum production licence L17 was granted to Buru. L17 is over a single block (block 6275, which was formerly part of EP129). L17 constitutes a ‘Replacement Permit’ under the Royalty Deed. In July 2013 Fitzroy applied to register the Lennard Shelf Royalty against L17 and this is being done as part of Fitzroy’s routine title maintenance activities (ensuring royalty dealings are and remain registered under Section 75 of the Petroleum and Geothermal Energy Resources Act (WA) against relevant permits). On 19 May 2014 the registration application was approved.