Ann: STACK Wells Acquired Significant Production Increase, page-54

No, this move was a surprise...

Previous commentary was that the cashflow from the JV was to pay down the outstanding amount owned to Merchant. Once this occurred the JV would dissolve, Merchant would then receive their 25% NRI of the BRK well and DSU equity till production from the wells was exhausted, (up to 25years) . BRK would get back 75% Wi of it's original asset contribution to the JV and receive that cashflow.

It could have taken another 18-24 months for the outstanding US$ 2 million the JV " owed " to be paid back from production before the JV was dissolved.

So for this US$2 million equity issue, BRK get full access to the cashflow now, effectively getting that US$2 million that was owed to Merchant over the period it would have taken to pay back, and get the 25% NRI that Merchant were to receive. That 25% applies not only to the PDP in the wells, but aslo in any PUD held within the DSU's that these 11 wells are located. There 30 + potential PUD locations that BRK may participate and tidying up the JV will make it much easier to manage and more economic for BRK to participate if they choose.

I see this move almost as a replacement ( to some extent) of the cashflow BRK were aiming to achieve from the Orion JV , excluding the Thelma / Bradbury as in all honesty, with commodity prices where they are, it will be difficult for BRK/ SHE to achieve the scale of 40 acquisitions to build material production.

This move goes a long way in achieving that goal , and at a much faster pace.

Big tick for BRK management here.

cheers

Dan