Just as the news of the spudding of the Rangers well was announced, we learn that BRK was at the OCC applying for pooling of the Flames unit during November.
View attachment 3919595Having previously received orders for the Flames DSU in late 2019 BRk is applying for pooling orders as it prepares for drilling the Flames well.
The Flames well AFE ( Authority For Expenditure)
View attachment 3919604View attachment 3919607Flames will be a multiunit well with a ~10,000 ft lateral section, projected cost ~US$10.5 million, BRK WI probably ~80% ..... No , there won't be a CR to fund Flames , the reasons explained in multiple previous posts.
The most interesting feature is that Flames will be a Woodford well target, not the Sycamore. The significance of this is BRK will prove both formations are highly productive within its DSU's which will aid in the monetisation of the reserves. I still suspect BRK will sell off the Woodford reserves and potentially keep the Sycamore reserves for development. Even though the BRK business model is not based on drilling for production, if the Rangers well emulates the results of the Sundance Kid, especially in terms of oil production and BRK are confident they can replicate that high productive capacity in the child Sycamore development wells, BRK may decide the best return to shareholders could actually be developing those reserves for themselves, funded by selling the Woodford PUD'S.
A major attraction to BRK in following this path is the substantial low decline, long term base production it will be quickly able to build after the initial high flow flush production which will pay out the wells within ~6 months. Excluding Jewell an ~80% WI in 6 Sycamore producers which after 2-3 years have declined 70-80% from their peak production of ~1500-2000 BOPED could yield a low decline base production net to BRK of ~1400- 2800 BOEPD. At a cash netback of ~US20-25 after royalties and taxes ( US$44 per BOE, 25%royalty, 20% tax, US$6 per BOE production cost ) this base production would provide net operating cashflow of US$10- 25 million per annum. That will be the steady income stream BRK " live off" interposed by the large sales of future PUD's and the company recycles it's capital.
The fact that BRK are applying for pooling right now indicates they intend to drill the Flames well in fairly rapid succession to Rangers. Probably not back to back but almost certainly not 7 months after the Rangers spud.
There are the usual protests from parties trying to gain leverage but it appears that the first step in receiving pooling orders may have successful as the application was recommended for approval by Judge Moore.
View attachment 3919628So yet again, we have a clear example of the behind the scenes progress of the BRK business plan for the drilling of the operated DSU's which was so successfully facilitated by the Jewell, now drilling the Rangers and preparation for the drilling of the Flames.
Cheers
Dan
(20min delay)