Special report: Brookside Energy is pretty happy with itself this quarter after getting its ‘land and leasing’ model underway and wells starting to make money.

Brookside (ASX:BRK) managing director David Prentice says they’re seeing strong outcomes from the leasing campaign in the SWISH oil and gas play through to initial production from new wells in the STACK and SCOOP plays.

“We continue to work hard executing our ‘land and leasing’ business model; importantly the production and cash flow results achieved in this quarter will support more high-quality oil and gas reserves and ultimately be the catalyst for higher per acre values for our Anadarko Basin holdings – this is key to success in building value per share for our shareholders,” he said.

But there are seven highlights from the quarter that the company is most excited about.

  1. Brookside has continued to execute the company’s “land and leasing” business model.

The model which generates returns by buying undeveloped oil and gas leases in the Anadarko Basin, defining the oil and gas reserves, and that being the catalyst for seeing the lease revalued.

  1. The leasing program has now secured an interest in 21 sections in the SWISH oil and gas play, a section within the larger SCOOP play. The sections are 640 acres each, a total of about 13,000 acres.

During the quarter Brookside focused on the SWISH area in south western Oklahoma.

The areas where Brookside has and is buying up leases.
  1. Brookside successfully sold its RA Minerals Acreage package in the STACK Play for $US15,300 per acre, making them a total of $US1.5 million.

It was Brookside’s second strategic acreage sale.

They bought the 96.5 acre area in March 2016 for about $US878,000.

This price per acre represented about 80 per cent of the estimated “fully developed” PV10 — present value with a 10 per cent discount — value per acre.

“The sale of this acreage package was another very strong endorsement of how the company’s business model is working, generating value for shareholders and providing working capital that can be leveraged into new holdings with the world class Anadarko Basin,” the company said.

  1. In the September quarter Brookside was able to release production results for six wells in which it holds a working interest.

There was the record-setting Kevin FIU well which was producing 5400 barrels of oil equivalent (boe) — oil and gas — a day and the Bullard well which delivered 1828 boe/day.

The Bullard well in the STACK play is located five miles from the company’s SWISH area.

These initial production results provide further confirmation of the productivity of the Woodford Shale in this part of the SCOOP play and validate the SWISH acreage acquisition strategy.

The results achieved in Bullard enable Brookside to book significant proved undeveloped reserves in this development unit.

  1. The wells in which Brookside has a working interest generated net revenue of just over $US1m, their total share equalling 375 boe/day.

6. A significant piece of news was that the Landreth BIA 1-14H well had paid off its costs in just 11 months.

Brookside owns 2.5 per cent of the well, which has deliver it $US23,000 in 12 months, but the company is now set to receive 75 per cent of future net revenue from this well now that drilling and completion capital has been returned to the drilling joint venture.

Importantly, about 70 per cent of the total net revenue forecast for this well is generated in the first 28-months of its operation.

  1. Brookside also has a new substantial shareholder in Casey Capital, and chairman Mark Casey has joined the advisory board.

The advisory board will help communicate the ‘real-estate’ aspect of Brookside’s business model to investors in Australia, who are more familiar with property returns.


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