Rising oil and gas output to boost Brookside Energy cash flows
US-focused Brookside Energy (ASX: BRK) expects to earn around US$2 million over the next 12 months, thanks to the steady ramp up of oil and gas production at its Stack leasehold area in Oklahoma’s Anadarko Basin.
Oil and gas sales were first established in May last year for wells drilled within the Stack acreage. There are now nine wells producing a net output of around 300 barrels of oil equivalent per day (net to Brookside’s working interest and royalties).
According to Brookside, these current levels are expected to generate the US$2 million net cash flow, which will be used to fund drilling and completion costs related to the next series of initial wells planned within the acreage.
It will also enable the company to book 100% of its proved undeveloped reserves for the undrilled infill wells.
Furthermore, Brookside announced it expected a boost in production to around 1000 boepd via contributions from its interest in an additional 14 wells that are either already drilling, being completed or are currently permitted.
Brookside managing director David Prentice said the establishment of production and cash flow was a very important milestone for the company.
“We are very pleased with the productivity of these initial wells. The results confirm our view that Anadarko Basin plays are truly world-class and that they sit comfortably alongside the Permian [Basin] plays as the very best onshore resource plays in the US,” he said.
According to Brookside, the recycle rate of net cash flow pointed to an average pay-out period of about two years based on wells currently in production.
In addition, estimated ultimate recoveries for the current producing wells average 1.3 million boe – higher than Brookside’s 1 million boe estimate for this section of the Stack oil play.
The company believe the results achieved to-date strongly endorse its business model of building an inventory of high quality oil and gas reserves and ultimately, increasing acreage values.
“Strong production rates drive larger reserves per well, which in turn drives higher leasehold acreage values,” Prentice explained.
He said the company looked forward to announcing the start of production from the new wells as its continued to ramp up output to its 1000 boepd target.
Through its wholly-owned subsidiary BRK Oklahoma Holdings, the company also holds oil and gas royalties over 100 acres in Blaine County and about 282 net acres in Payne County, Oklahoma.
Shares in Brookside rose 6.7% on today’s news by afternoon trade to A$0.016.