$60 million for 6 wells cost to BRK at 80% WI sounds about right for an expenditure of $10 million per quarter.
For the June quarter BRK funds from operations was ~$8 million, but as explained in an earlier post, production is paid ~30 days in arrears so despite almost 2.5 months of production ( from a zero start) BRK only received ~1.5 months for production revenue, and the best month of Rangers production ( 30,000-36,000 BOE or AUD$2 - $2.5 million net to BRK ) was paid in July.
The September quarter will contain 3 full months of receipts from Jewell, Rangers, and again, a lag of 1 month of receipts from Flames. On the above basis, depending on commodity prices we can expect funds from operations to be over $ 12 million in September and a bit more $14 million in the December quarter.
It will take time to ramp up to 3000-4000 BOEPD. If you assume all 6 wells perform like the Rangers IP30 (1200 BOEPD) and IP 90 ( 900 BOEPD) est and IP365 ( 500 BOEPD) you can do some very rough calculations with a large margin of error .
The ramp up should increase production net to BRK ~500-600 BOEPD per quarter for each new SWISH well, with decline lopping off ~ 200-300 BOEPD per quarter for the portfolio of wells.. When Flames hits IP 30 probably in September BRK net production should be ~1600 BOEPD. If you average the new wells out and add 200-400 BOEPD per quarter for the next 6 quarters ( will probably be lumpy especially if they decide to drill 2 wells back/back) you get to ~2800-4000 BOEPD net to BRK by end 2023.
This is lower than earlier estimates using Rangers as the reference point ( which I had previously estimated would IP ~20% higher)
As the production calculations are net to the BRK WI and after payment of royalties, just multiply whatever netback you want tp apply . With oil at US$100 and gas at US$ 8 , BRK were banking US$75 per BOE. With oil prices dropping the current netback will be less. Regardless, suffice to say it is pretty clear that from the September quarter, BRK will be self funding for the SWISH program, and indeed produce free cash flow as production ramps up to the net 3000-4000 BOEPD.
There will be no need for a CR to fund the drilling program. If BRK spend a significant amount of cash for leasing new acreage, or spend extra cash on a Bradbury well or 2(US1.5 million each) then we may see a decline in net cash. I am banking on the next 2 wells being drilled back to back which means 2 wells drilled by Christmas, 1 completion starting by Christmas but finishing in the first quarter , with well 6 also commencing drilling sometime in the first quarter.
My rough estimates for cash position at Sept 30 is calculated as $31 million -$8.25 ( Note repayment) - $5 million ( Flames completion )- $2 million ( leases , GG&A, Ruby pad ) + $12 million FFO = ~ $28 million.
Cash at Dec 30 = $28 million - $5 million ( drill Ruby ) - $5 million( drill Hi-Ho -Silver .. my guess for Rangers 2) - $3 million ( Ruby part completion) - $2 million ( leases, GG&A) + $14 million FFO =~$27 million.
That's my take on things .
Obviously very, very rough back of the envelope calculations but I would say ball park correct with a margin of error +/- 20%
Will be interesting to see how we end up, especially if BRK surprise with a Bradbury well or 2.
Cheers
Dan
BRK Price at posting:
1.4¢ Sentiment: Buy Disclosure: Held
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