Ann: Jewell Well in Production, page-111

Brilliant, brilliant, brilliant!

We have confirmation the well is in commercial production which now means the Sycamore and Woodford reserves can be booked. Hopefully the well performance will mean the PDP reserves attributable to Jewell will be at the upper end of the ~1.8 million BOE estimate on a 100% basis and there should be another 5-6 million BOE in PUD reserves of which BRK should be able to book 85-87% of before royalties and the Black Mesa back in.

The SHE announcement where they list their equity in jewel at 41.5% implies that the BRK equity in Jewell should be ~46% as the only change up would be any pro rata take up of the minority 5.7 5 interests held by original lease holders and small firms.

Now for the real tantalizing part of the announcement with the mention of the flow rates approaching the base case ( 1300 BOEPD) and increasing with the modeled flow back profile. What we need to appreciate is this frack job would have pumped around 200,000 barrels of water into the formation to fracture it. The presence of the water actually now acts like a barrier to hydrocarbon influx into the well bore. The company stated flow back commenced around September 2 at an undefined rate.. hard to say what the water flow back volume is as it is dictated geology and also the production guys who control and monitor the process to make sure it runs smoothly and don't compromise the hydrocarbon flows. In saying that, it should be safe to assume the flow back can be between 1500-2500 barrels water/ fluid a day so after almost 2 weeks , the water recovery could be ~20,000-35,000 barrels water. The fact that there is so much water to be recovered and that oil and gas flows are approaching the base case already is a testament to the quality and potential of the well. IMO this indicates the 1300 BOEPD base estimate is indeed conservative and should be exceeded... we will find out by how much when the IP24 number is produced.

As previously discussed, it will be the IP24, IP30 and IP 90 numbers which will tell the story and give an early indication of how good a well the Jewell is, but so far from the news provided, it is a bloody incredible start. So we can with even more confidence, go forward with the understanding that each 1280 acre pick up by BRK in the SWISH AOI will add ~10 million BOE in reserves on a 100% basis if both the Sycamore and Woodford formations are present.... and that a fracked horizontal well drilled into those formations will produce at modelled rates with a greater than 90% certainty.

Congratulations and a huge thank you to David, Gracjan and the Black Mesa team. This is actually not a surprise as such, considering all the data that has been available to them for their modeling, and the confirmation proof of concept that was done by the offset operator drilling over the last 2 years. But having BRK also confirm for themselves ( and us shareholders) is a incredible achievement for such a small executive and operational team, and a wonderful attestation for all that we are rightly backing the correct horse which is racing on turf it knows so well.

cheers

Dan