Ann: Update - Notification of buy-back - BRK, page-27

I've respected your vast knowledge of the oil and gas industry and your excellent commentary for a lengthy period of time that I've been invested.

However I have to disagree with your comments in this post.

I disagree that the fundamentals of the Company are sound. I did agree that while they were adhering to the plan that they pitched to investors - namely 20 wells in a five year period - the fundamentals were sound.

But. They are not delivering on stated key milestones. For example. Are we ever going to see the magical 'third pillar' materialise?

They are also way behind schedule on their 20-well program.

The buy-back IMO is a disgrace. One minute they are putting out announcements about how they are so far below fair value and then they continue to place bids lower and lower and therefore driving the share price lower. The share price was 1.3 cents immediately prior to the trading halt and subsequent buy-back announcement. They have 'budgeted' $6.5 million to purchase the 500 million shares at 1.3.

They have not once met the market price, instead continually placed bids and waited for sellers to hit their price. How is this tactic meeting the fundamentals of the Company? It is telling potential investors that the management of the Company believe that the share price is worth less than the current price so no one is going to buy at the market price - which is exactly what has occurred since the buy-back commenced.

So - NO. The fundamentals are not good at all. So they have drilled a few wells that are and will continue to decline at a steady rate. With the oil price around $75 I believe we will start to see quarterly reports with diminishing revenue in the not too distant future.

The pending quarterly should provide a short-term boost only because there should be no drilling expenses.

Holders can try and buy now at these low prices in an attempt to average down but how is that showing sound fundamentals?

Sorry Dan, I have to disagree with you on this.

All the best.

Thanks for your response mate.

I'll respectfully disagree with you for a number of reasons as to your points.

I completely understand the frustration regarding the 20 well, 5 year development plan . This was first articulated by BRK in May 2022 and looking at the presentation, it looked like for all money, that BRK were going to start drilling one well every 3 months .

Reading that, what other conclusion can one come to?

For me, it wasn't until I questioned them about this slide that I received the clarification as to exactly the message they were trying to convey through the slide. They have subsequently tried to clarify the message but it seems this has not been very successful. The fact that so many posters keep on coming back to BRK "missing this milestone " is testament to that.

I have posted this on a number of occasions but I will again so I can be a crystal clear as possible, so you can be cognisant of what they meant. You have every right to say you haven't seen, heard , read BRK clarify what they mean't because to be honest, I too haven't read a clarification in any subsequent presentation. I have heard DP clarify what they meant on a number of occasions , but I cannot find this written down anywhere.

The 5 year, 20 well development program when announced in 2022, was what BRK perceived would be the way they would develop their 3 DSU's ( now 4 DSU's so you can add another 4-5 wells over a 6 year timeframe), IF and only IF, they decided they would develop them on their own.... not through a JV or drilling partnership, but on their own to the full extent of their WI. This would be the way they could afford to develop those DSU's through production cashflow. They were not saying it was the most efficient way to develop the asset, just the most efficient way they would develop if they decided to do it themselves.

BRK were NEVER going to develop the asset this way, it was an idealised plan/ flowchart . If BRK want to develop the SWISH assets, they will use JV's, drilling partnerships to drill and complete back to back wells to maximise cost efficiencies for the wells, maximise DSU EUR and well productivity, minimise downtime for well shut ins as for every well drilled , there will be an effect on adjacent wells. Were they to drill a well every 3 months, the BRK wells on either side of the new well would have to be shut in during the completion period, the cumulative negative effect of these shut ins over the 5 year period would be significant. Evidence the effect the shut ins had on Jewell, Rangers and Flames in the first Q, and what will be seen for Flames in the 2nd Q. That is why they will JV or partner if they monetise through drilling, to be able to drill and complete back to back for most, if not all the development wells.

In regards to the 5 year, 20 well development program, the messaging and subsequent lack of clarification has possibly been their biggest failing in shareholder communication. As I said, you and those other holders or potential investors are not necessarily to blame for believing this was a path BRK were to take.... but as a result, you are giving them a fail for something they were never going to do.

I see you often use the investor forum to pose questions to management, if this post doesn't satisfy you then I suggest you ask them directly and then post their response here. I really think this point need to be put to bed.

In regards to the " magical" 3rd Pillar being realised , it's not magical, it's the last part of a 3 stage process. It will be announced in full , or in part when they monetise either through full or part sale, JV / drilling partnership, or full field development. If BRK embark on FFD by themselves, it will NOT be at one well every 3 month for the next 6 years.

In regards to the buy back, I will say IMO , there has been another potentially confusing message sent by the company. Whilst in the initial buy back announcement , they stated as per below

which basically says they determine the shares are cheap, they have excess cash at this stage so are prepared to use some of that cash, at times they deem it to be most efficient, to take advantage of the situation as part of their capital management strategy , to buy back up to 10% of the shares on issue. This statement never said anything about defending the share price at a certain point, or increasing the share price . It was pretty clear.

But.... I do concede that in a few subsequent interviews DP did say that the buy back was a string in the bow BRK had, to close the gap between the market cap and share value, which can be seen to mean an increase in the share price. That is where a lot of the confusion has originated IMO.

If one takes DP's " string in the bow" statement as gospel, and hangs on to the belief the BB was going to stabilise the share price at 1.5/1.5 at the least, or actually increase the SP , then one will be disappointed for the whole duration if the BB. If one sees the BB as an opportunity to unwind some of the dilution of the 1.1 c options, and hopes they get the opportunity to expand the BB past the 10%, then buying back shares at 1.2, or even 1.1 will be seen as a big win , as it will make an expanded BB more likely, and more affordable. The $6.5 million budget was just an example of what the cost would be if the shares were purchased at the 1.3 cents average cost over the entire 500 million lot.... I doubt too many people actually thought this was going to be the case.

BRK have consistently said for the buy back, they are a market taker, not a market maker . Apart from the 5% increase over the VWAP, they cannot bid any higher. If holders are prepared to sell into a buy back at lower and lower prices, then BRK would be crazy not to allow and take advantage of that. You may be outraged they are not bidding and paying higher, I and many LT holders would be outraged if they would be bidding and paying higher, when they could be bidding and paying lower.The concept of paying over market price for an asset is ludicrous, especially when it is your money. The outcome of may monetisation will not be affected by the current share price. If an event results in the value generated means the share is worth 3 cents and the market agrees, it will trade at 3 cents, regardless of whether the share price was 1.1c or 1.8 c at the time of the announcement..... think about it, BRK is trading at 5c, a deal is done over it's entire asset base which values the stock at 3 c, will the price increase or fall closer to 3 c?

In the meantime, why would BRK want to reward holders that want to sell out cheaply in the short term, and penalise long term holders by spending more cash than they need to.

Lets agree to disagree on this point.

In terms of drilling, yes, I agree that the wells decline and unless they drill further wells there will be a decline in revenue going forward, that is obvious and expected. Apart from drilling vertical wells in the Bradbury AOI, it is highly unlikely BRK will drill one off development wells in their operated SWISH AOI for reasons outlined earlier . They may drill a one off HBP well in the Bruins DSU, and a low possibility the Ruby well, in the east portion of the Jewell DSU.

If they monetise some of their DSU's via drilling JV's or partnerships, then you will see production and revenue decline fairly substantially until the JV's drill and complete the wells. If the JV's operate in the manner expected, it will be at least 9 months from the first well drill bit breaking the soil, to when the taps are opened and flow back starts on the multi- well program. So that means if BRK monetise via drilling JV's or partnerships in late 2023, it could be well into the second half of 2024 before we see the benefits of any new production coming online.

If monetisation is all about selling the acreage, then BRK could be selling all it's current SWISH operated production , end up with a mountain of cash ( to distribute a significant portion and use the rest to prospect, prove the next position) , plus minor non operated STACK production , and whatever comes from Bradbury.... and then start all over again.

No matter what the outcome of the monetisation, there will be significant value realisation, either through cash from outright sale, or significant large cashflow over a longer multiyear period.

To be honest, in late 2022, I had originally thought we would have seen a monetisation announcement of some sort by July 2023.... obviously was wrong in that timing assessment.

Good chat.

Cheers

Dan