Ann: Jewell Well in Production, page-329

Hi @Lute

The company has not specifically stated the expected Jewell production costs per se but it depends on a number of factors. for example,the production mix, especially if the gas stream is high in NGl's can bring the costs down dramatically , the production rate,and what period of production in the life of the well you are talking about.

The initial flush production , when a well flows at max rates, the BOE production costs can be as low as US$3-4 per BOE, and at the tail end of production when the well is producing at less than 10 % if it's IP24 it can be US$8-10 per BOE.

The STACK JV wells for example currently have a production cost of US$5-8 per BOE, but these are high dry gas producers with very little NGl's. Some of these wells have been producing for BRK since 2017.

Since the Jewell will produce oil, gas and NGl's I would expect the production costs to be lower than the STACK wells. BRK ( and the other operators who produce a similar hydrocarbon stream ) not have any extra production costs if their gas stream is liquids rich. The onsite separator on their pad separates sand, water, oil and gas. The gas is transported down the pipe to the gas plant which then separates the NGL's from the gas stream and BRK receive cash for the gas plus the NGL. It is a bit like having a copper mine with some gold in it's ore... the gold produces extra revenue which offsets the gas production costs and the " wetter" the gas , the better. It looks like the Jewell gas is pretty wet.

So if you are trying to input a BOE cost for Jewell for early production , despite the wet gas,I would be conservative and useUS$5 per BOE, that should give you a good amount of wriggle room, especially for the first 5 years or so IMO.

Cheers

Dan