Brookside’s profits position it for rerate

Near term production outlook for Brookside Energy is healthy as analyst MST Access gives the thumbs up
Brookside announced $3.17m in profits from its latest half year report
The company is also weighing its options to dual list on the NYSE

Special Report: Following its recent interim financial result for the June Half, Brookside Energy has placed itself in a rare sweet spot for greater production, profitability and growth, prompting MST Access to reiterate its valuation at more than five times the current share price.

Analyst MST Access notes Brookside Energy’s (ASX:BRK) near term production is forecast to lift by a hefty ~230% over Q2 CY24 levels. This will bring it up to ~2,500 barrels of oil equivalent per day (BOEPD) as early as Q4 CY24, with commensurate boosts to revenue and cash-flow.

Production is then expected to hit a peak of 6,300 BOEPD of primarily oil and natural gas liquids.

And with its assets in Oklahoma’s prolific Anadarko Basin, track record of profitability and executive team with 20 years’ in-country experience, there’s much more growth to come for Brookside over 2025-2028.

Based on his research, MST analyst Stuart Baker has valued the company at $0.057, unchanged from when he initiated research in June, but still a ~560% premium on the company’s current share price.

The latest from Brookside

In its latest half year report, Brookside announced profits of $3.17m from revenue of $15.4m, making it one of the few junior resources companies on the local bourse making a healthy profit.

The company is also debt and hedge-free with $21.8m in the bank versus a market capitalisation of about $35m.

The strong balance sheet and positive cashflow stem from Brookside’s assets in the SWISH Area of Interest (AOI) in the SCOOP Play of the Anadarko Basin, where it’s been building its acreage since 2015. Those assets are now underpinning a major scale-up in development activity.

First up, the company will complete drilling in CY2024 of four wells in its SWISH area Flames Maroons Field Development (FMDP), which will derisk and improve understanding of the next phase of development in 2025.

Operations at these four wells have already been highly successful and Brookside has set its sights on more than doubling their production from the current ~1,200 BOEPD to ~2,500 BOEPD.

This is forecast to result in a revenue lift to US$70m, and NPAT US$26m, in FY2025.

Brookside will then start the SWISH full field development, with 16 new development wells over the next three years from 2025, targeting production of an average of 4,500 BOEPD in FY2028 and a peak level of 6,300 BOEPD.

By that time, Brookside’s forecasts full year revenue of US$104m and net income of US$51m, at a WTI oil price of US$70/bbl.

Meanwhile, as the SWISH project unfolds, MST sees operating cashflows exceeding US$80m in 2027.

Brookside is also responding to significant interest from US investors by pursuing a listing on the New York Stock Exchange, while maintaining its primary ASX listing.

This article was developed in collaboration with Brookside Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.