"STACK stands for Sooner Trend Anadarko Basin Canadian and Kingfisher counties. Despite the eccentric acronym, the play is drawing more and more E&Ps because of high yields and low production costs. (It is a new hotspot that is the most cost efficient place to drill for oil .)
Devon recently announced a daily yield of 2,100 barrels of oil equivalent, of them 70% oil. Several months earlier, Continental Resources said it had achieved 2,345 barrels of oil from another STACK well, again 70% of the total output, which is an impressively high portion.
No wonder then that Marathon Oil is buying acreage in STACK. The company recently announced the purchase of 61,000 acres from PayRock Energy Holdings for some $888 million. To finance this deal and others like it, Marathon Oil is selling non-core assets, clearly focusing its core operations on the STACK."
This area is heating up fast with numerous news reports indicating big players are moving in.
“STACK Play identified as a stand out in the select group of on-shore United States plays that remain economic at the forward curve”
Timeline of Events
07/12/2015 – Acquired a 15% interest in United States focused energy start-up Black Mesa Production LLC
BRK Oklahoma and a Tulsa, Oklahoma based equity group (‘the Tulsa Equity Group”) have executed an Operating Agreement with Black Mesa. Under this agreement, which is effective December 1st, 2015, BRK Oklahoma will acquire 15% of Black Mesa and the Tulsa Equity Group will acquire 35% (“the Equity Members”). The Black Mesa management team will earn 50% equity in Black Mesa as Incentive Members.
Black Mesa will leverage its relationship with Brookside and the Tulsa Equity Group to support and enhance its efforts to identify potential acquisition and development opportunities and to provide capital for these initiatives as required
Brookside’s acquisition of this interest in Black Mesa is consistent with the portfolio approach of acquiring and developing producing oil and gas properties as well as lower-risk development drilling opportunities.
31/03/2016 – Acquisition of Royalties in world Class Stack Play
Black Mesa identified the acquisition and BRK acquired oil and gas royalties over approximately 100 acres, across four sections, in Blaine County, Oklahoma (RA Minerals Royalty Acreage).
-The RA Minerals Royalty Acreage is located in the heart of the world class STACK Meramec Play within a core focus area that has been identified by the Black Mesa Production, LLC (Black Mesa) team and which is currently subject to active development through horizontal drilling
-Devon Energy and Continental Resources are the dominant operators within the RA Minerals Royalty Acreage and lease records confirm that Continental Resources has already permitted an extended reach lateral (10,000 foot) horizontal well within the acreage
-Continental Resources, Inc. to be the operator of the well which is expected to target the Meramec formation which is up to 450 feet thick in this area with excellent reservoir qualities
-Modelled development scenario delivers ~US$4 Million in royalties to Brookside over the life of the project at the Forward Strip1. (with no operating expenses or further capital required)
Joint Venture delivers capital at the asset level to fund initial development of Brookside’s STACK acreage US$3,500,000 drilling Joint Venture to fund Brookside’s interest in up to ten (10) STACK wells
Joint venture structure will enable Brookside to grow its exposure to the STACK Play with initial development capital secured off balance sheet
Joint Venture Wells to be drilled and completed by some of the best performing operators in the STACK Play
Structure delivers funded growth to Brookside through the addition of cash flow, oil and gas reserves and importantly very substantial future development potential from proven undeveloped locations
Success with this Joint Venture likely to provide Brookside with access to a pipeline of capital for future development in the STACK Play
The Joint Venture will fund (from the Cash Contribution) 100% of BRK Oklahoma’s share of the cost to drill and complete the Joint Venture Wells.All amounts advanced by Merchant to the STACK-A Joint Venture will be repaid in priority out of BRK Oklahoma’s net revenue from the Joint Venture Wells, and thereafter the STACK-A Joint Venture will deliver to Merchant a 25% net revenue interest in the Joint Venture Wells (Net Revenue Interesti).
22/08/2016- Matthew Walker becomes Sub Holder
17/08/2016 - Brookside STACK Drilling to Commence
First horizontal well (Strack 1-2-11XH) to be drilled within Brookside’s STACK Play leasehold acreage in Blaine County, Oklahoma
Marathon Oil will operate the (extended reach) well which will target the Meramec formation in the core of the world class STACK Play in an area where the level of permitting and pooling activity is at unprecedented levels
Industry type curve for a single extended reach horizontal well delivers 1,700 Mboe EUR (58% oil) with 380 Mboe produced in the first 12-months (~70% pretax ROR at current pricing)
Numerous offsetting extended reach horizontal wells have achieved 30-day IP’s of 2,000 Boe/day or better
This well is the first of six (6) wells located within the Company’s STACK nonoperated working interest leasehold acreage
Previously announced Drilling Joint Venture to provide off balance sheet funding for initial development
Company’s leasing campaign is continuing in the core of the STACK play
The Strack 1-2-11XH well is being drilled in an area where permitting and pooling by operators is at unprecedented levels with in excess of 180 pooling applications and orders (a pre-curser to the spudding of an individual well) active across Brookside’s area of interest in the core of the play.
Numerous offsetting extended reach horizontal wells have achieved 30-day IP’s of 2,000 Boe/day or better.
Experienced and well funded tier one operators, including Continental Resources, Inc. (NYSE:CLR) and Marathon Oil are already testing increased drilling density with eleven (11) successful pilots conducted in and around Brookside’s core focus area. Of particular note is Devon Energy Corp’s (NYSEVN) recently announced Alma spacing pilot which tested five wells per section across a single interval in the upper Meramec, delivering 30-day production rates averaging 1,400 Boe/day per well. The Alma wells were drilled with normal length 5,000-foot laterals
16/09/16 -Increase in Stack Leases -
BRK Oklahoma has, through its ongoing leasing campaign, expanded it’s holdings in the core of the STACK Play to ~300 acres1. Importantly, this acreage is located within the highly productive over-pressured volatile oil window in Blaine County, Oklahoma.
The productivity of core STACK acreage was again reinforced last week with the release of initial production data on two recently drilled and completed extended-reach wells that delivered very high initial (24-hour) rates of 3,700 Boe per day per well (70% oil).
Summary
*BRK through its 15% investment in Black Mesa is doing an aggressive land grab of STACK leases.
*STACK a stand out in the select group of on-shore United States plays that remain economic at the forward curve.
*Numerous big players are buying up leases around BRK’s
* Joint Venture Wells to be drilled and completed by some of the best performing operators in the STACK Play - Marathon Oil and Continental Resources, Inc. (NYSE:CLR)
*Merchant funds Management will fund development of the wells and will have their money repaid by the cash flows
*Currently drilling with a further 5 wells soon to be drilled
*Acquired oil and gas royalties over approximately 100 acres, across four sections, in Blaine County, Oklahoma (RA Minerals Royalty Acreage).- US$4 Million in royalties to Brookside over the life of the project at the Forward Strip1.
VN) recently announced Alma spacing pilot which tested five wells per section across a single interval in the upper Meramec, delivering 30-day production rates averaging 1,400 Boe/day per well. The Alma wells were drilled with normal length 5,000-foot laterals
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