And that's why SHE holds 45m shares in BRK

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16/09/22

07:47

Post #: 63729138
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Originally posted by danpech: ↑

Hey mate

This post deserves a response but am having difficulty with good wifi in my present location

If you are going to post about something I said, you need to make sure you get that correct . I didn’t say Rangers could be a better well than Jewell because of the completion crew, I said the Rangers well could be a more significant financial contributor to BRK cashflow than Jewell possibly by a factor of 3-4. This was based on a number of parameters.

1) Rangers being as productive as the Sundance Kid , which shares the same hydrocarbon pool… and being as productive was on a comparative level (x3) , not absolute (x4) because the Rangers lateral was 75% of the SK length. SK 3 stream IP 24 was ~ 2300 BOEPD which means Rangers needed to hit~ 1700 BOEPD to hit that mark. It hit 1310 BOEPD so relative to SD , it “underperformed” by 25%. Regardless it is a very good well as is any well producing ~ 1000 BOPD plus NGL and gas at IP 24 .

2) Rangers needed to emulate the SK hydrocarbon mix of a higher oil ratio in the production stream than the
Jewell, which it did.

3) The fact that the BRK WI in Rangers was ~ 80% vs ~ 42 % for Jewell.

At the end of the day, Rangers cashflow impact will not be the high bar of x 3 -4, but closer to x 1.8 of the Jewell on the new workout.

So my statement regarding Rangers being a more financially significant well than Jewell stands, it just didn’t hit the high mark…and a possible reason for that is the Sundance Kid did actually drain some of the BRK reserves which had a greater effect than expected. Rangers admittedly did get an extra boost from better oil prices to be fair. We will get more clarity on how it is declining relative to Jewell over this next reporting period

In terms of SHE not participating in Rangers, you really need to do better DD.

For~ AUD 5 million, SHE could have had~ 35-38 % of Rangers, a well as mentioned before, IP 24 at 1310 and produced ~ 82,000 BOE after commencing production in mid April . SHE would maintain a WI level for the life of the well which would be 20+ years.

But they declined that and decided to invest $ 2.9 million over 2 stages in an AJQ gas work over well on the Surat basin. They will contribute 50% of the costs for a 25% WI and receive 25% of the total well revenue for 7 years, after which their WI drops to zero. For their initial $ 1.5 million spend on the work over, they have 25% of a well that is producing ~ 400MCFPD ( 70 BOEPD) of which their share is ~ 18 BOEPD worth ~ $ 1000 per day gross.. work out the payout period on that investment but it looks doubtful they will get their capital back.

The next phase of work on the well requires then to spend another $ 1.4 million and it’s going to need an amazing result which for their sake I hope they get..but just over 6 years to go before they have zero interest.

Now, do we really need to debate which was the better investment?

Cheers

Dan

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And that's why SHE holds 45m shares in BRK

BRK Price at posting: 1.3¢ Sentiment: None Disclosure: Not Held
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