Brookside Energy (ASX: BRK) has announced the start of production from two new oil and gas wells in Oklahoma’s world-class Anadarko Basin, bringing the total number of completed horizontal wells the company has participated in up to sixteen.
The US-focused oil and gas developer today reported established initial production rates at the Dr No 1-17—20XH and Ladybug 1-22-27XH wells, located in the STACK Play in Blaine County.
Dr No, which is operated by Tulsa-based Triumph Energy with Brookside holding a minority 3.7% working interest, has reportedly flowed at a rate of 1769 barrels of oil equivalent per day (64% oil) over the initial 24 days of production (IP24).
Ladybug, operated by NYSE-listed Devon Energy with Brookside holding a 2.2% stake, achieved a 30-day initial production rate of 3200boepd.
Of the 16 drilled and completed horizontal wells that Brookside has now participated in, 14 have established production with an average IP24 of around 2400boped.
In addition, the average payout for wells with sufficient production history is currently estimated at around 30 months.
According to the company, these non-operated working interest wells provide further support for the quality of the acreage that Brookside has secured within the Anadarko Basin plays.
“We continue to see outstanding results from the wells that we have participated in; both in terms of initial production and estimated time to payout,” Brookside managing director David Prentice said.
“We have now established a body of work in terms of initial and sustained production that will feed into our maiden reserve report and provide further support for our acreage acquisition and revaluation business model,” he added.
Revaluation business model
Brookside’s commercial strategy is based on acquiring acreage and utilising its undeveloped proved reserves to raise the property’s valuation.
The company 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. Brookside then books 100% of the reserves attributable to the proved undeveloped wells.
According to the company, the production data and payout estimates of its non-operated wells back up the effectiveness of the company’s drilling joint venture structure as a source of development capital.
“The relatively short time to recover 100% of the drilling and completion capital enabled Brookside to reinvest capital from the drilling joint venture in the new wells and grow the company’s oil and gas reserves without having to raise additional equity capital,” it stated.