Special report: Brookside Energy has sold another US oil and gas lease – this time for around $1.5 million, or nearly double what it paid for it.

The oil property developer sold a further 96.5 acres of its “STACK” projects in Oklahoma for an average of $US15,300 ($20,651) per acre.

The so-called STACK and SCOOP plays in Oklahoma’s Anadarko Basin have been described as two of the “hottest new areas” for oil development in the US.

Brookside (ASX:BRK) bought the RA Minerals Royalty Acreage package in March 2016 for $US878,000.

The price per acre achieved from the sale represents about 80 per cent of the estimated “fully developed” PV10 value per acre.

This compares to 72 per cent of estimated PV10 value per acre achieved in the previously announced sale – which fetched Brookside 10 times what it originally paid.

PV10 is the present value of estimated future oil and gas revenues net of estimated direct expenses and discounted at an annual discount rate of 10 per cent.

Merger and acquisition activity over the last two years has meant leases have gone for an average of $US16,000 an acre — indicating how fast prices have been moving upwards.

Brookside buys cheap undeveloped oil leases in Oklahoma, gussies them up by proving the underlying oil reserves, then looks to sell the acreage for a tidy profit.

“The sale of the RA Minerals Royalty Acreage has provided further validation of our business model,” managing director David Prentice said.

“The proceeds from this sale can now be re-invested in our ongoing leasing efforts in SWISH where we believe we can create very significant value; the investment capital generated from the sale of ~100-acres effectively leverages us into the acquisition of ~1,000-acres.”

Brookside is producing about 300 barrels of oil equivalent (BOE) a day from its Anadarko Basin properties in Oklahoma. The 130,000 sq km Anadarko Basin is among the most productive oil and gas regions in the US.

The company plans to reinvest the proceeds into acquisitions in the SCOOP Play and drilling and completion activity in the STACK Play.

Brookside and its partner and manager of US operations, Black Mesa, are on a leasing campaign targeting about 8,000 acres in the newly named SWISH play that includes at least 10 drilling units.


This special report is brought to you by Brookside Energy.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice.

If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a disclosure document, a Product Disclosure Statement or an offer document (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.