Brookside Energy rejoices in ‘outstanding’ oil production from Oklahoma wells
Both the Herring #1-33 1513MH and Kevin FIU #1-20-17XH wells are set to achieve payout in less than 2.5 years.
Oil and gas developer Brookside Energy (ASX: BRK) has announced more “outstanding, sustained” production results from its acreage in the world-class Anadarko Basin in Oklahoma, US.
The US-focused company had requested a temporary pause in trading before making the announcement this morning that the Herring #1-33 1513MH and Kevin #1-20 17XH wells had produced a combined total of around 860,000 barrels of oil equivalent over the last 10 months.
This output has generated US$860,000 in net revenue for the company over the same period.
According to Brookside, the wells are projected to make an additional combined future net revenue of about US$2.4 million. This forecast is based on a WTI oil price of US$65 per barrel and US$2.85 flat pricing for gas.
Most importantly, these results mean both wells are set to payout in less than 2.5 years, which is a good endorsement of Brookside’s acreage revaluation strategy as it translates to higher per acre valuations.
Production data
Brookside has an 18.2% working interest in the Herring well, which is operated by Triumph Energy in the Anadarko Basin’s STACK play in Blaine County, Oklahoma.
In the first 10 months of production, the well has produced around 474,000boe (5% oil), averaging about 1500boe per day.
Based on revenue received to date and forecast future net revenue, this well is set to pay back all drilling, completion and operating costs in 28 months.
The Kevin well, operated by Continental Resources also within the STACK play, has produced around 385,000boe (13% oil) in its first three months of production, averaging about 4200boe/day.
This well, in which Brookside has a 2.1% stake, is expected to achieve payout in 17 months.
Results back up commercial strategy
Brookside managing director David Prentice said the company was particularly pleased with the success of the Herring well, Brookside’s second highest working interest well, with its payout estimate of just over two years.
“The results support our acreage selection methodology, which is key to the success of our acreage acquisition and revaluation business model,” he said.
This business model is based on acquiring acreage and using its undeveloped proven reserves to boost the property’s valuation.
Brookside leases all or a portion of the undeveloped acreage to a drilling company or joint venture, which funds 100% of the costs of an initial well.
According to the company, the effectiveness of using this structure as a source of development capital is supported by the production data and payout estimates of these non-operated wells.
“The outstanding sustained productivity of these wells {Herring and Kevin] is further evidence of the high-quality oil and gas reservoirs being exploited in the Anadarko Basin plays and ultimately points to higher per acre valuations,” Brookside stated.
Earlier this month, the company reported the start of production from two new oil and gas wells in the STACK play, bringing the total number of completed horizontal wells the company has participated in up to 16.