Ann: Investor Presentation SparkPlus Webinar, page-47

Hi mate

BRK own 100% of the acreage but Black Mesa operate it . They payment BRK give to BM to do all that work on the ground in Oklahoma is the 25% back in after BRK recoup all their costs.

The way it works is BM source all the projects, do all the work. BRK fund these operations but BM don’t see a cent until BRK get all their spend to back on each project. After BRK get their money back, BM receive 25% of the BRK WI.

This back in also applies companies who earn their WI from BRK.. so SHE are also subject to the 25% back in on their interests they picked up from BRK.

So , in terms of the Jewell well and DSU for example, where BRK have 84 % of the DSU and ~ 42.5 % of the well, after BRK recoup all costs related to the well and DSU, eg, drilling, leasing, legal, GG&A , BM will pick up 25% of that 84 %, or 21% wi, BRK will have 63% and the original 16% partners will keep their 16%.

For the Jewell well, after SHE recoup their drilling costs, and BRK recoup all their costs Black Mesa will get 25% of the combined BRK/SHE 84% WI or 21%, BRK will have 31.875%, SHE will have 31.125% WI.

For BRK, the fact that they own 50% of BM and control the company, it effectively means the net back in they pay is 12.5%. This also means BRK will receive 50% of any dividends or capital returns BM make.

It also means that if BM do any work for 3rd parties, BRK have a 50% exposure to the BM interest in those projects. I am not sure when/ why BM would do any work for other parties and BRK would have to approve that due to their control of BM, this is another potential future source of value to BRK.

The main implication of this arrangement and the fact that BM effectively don’t get paid until BRK recoup their investment is, BM are incentivised to only bring tier 1 assets to the table that need to make a serious return. If they introduce a project that does not break even , or is marginal, they will not get any WI in the project, or if they do, it won’t be worth much to BM.

The only way the BM team make money is if BRK make money . This fact is just one of the reasons amoungst many why BRK will succeed… and we already have clear evidence through the incredible numbers coming out of the Jewell well.



Hope that makes some sense.

Cheers

Dan