Hi
@Smacky1705 The best I can give you is this, and it depends on what numbers you put into your assumptions.
Assume both BRK and SHE hold the same WI in the Jewell well of 50% for ease of calculation but IMO SHE will have a lower equity position because of the original lease holders like CLR will have ~10%, the SABO drilling trust is unknown but should have 10%, BRK will keep 45-50% and SHE will take the rest 30-35% .
Put whatever numbers you want, but at 50% and spending $5 million each to drill can complete where the well discovers 1.5 Million BOE Proven Developed reserves, comes on line at 1500BOEPD and 4Million BOE in Proven Undeveloped reserves you will see
SHE have initial production at 750BOEPD and 750 000 BOE in proven developed reserves
BRK have initial production at 750 BOEPD , 750 000 BOE in proven developed reserves and 3.4 -3.6 million BOE in proven undeveloped reserves.
Put in your NPV values for what a barrel PDP reserve ( say $15) and PUD ( say $5) you can get some idea of the potential NPV for each company you can get out of Jewell
If SHE participate in the Rangers and Flames on the same T&C's as a well bore only contract and for ease of calculation we input the same results ( this will give the reserve 16.5 MMBOE, not the 11.6 MMOBE estimated by BRK for the 3 DSU's but they admit that is a conservative number now with the significant offset operator well success and am only using this number for ease of calculation):
Then for a spend of $15 million each
SHE will have 2.25 million BOE in Proven Producing reserves and after a few months and some decline when all 3 wells are producing estimate 1000-1500 BOEPD
BRK will have 2.25 million BOE in Proven producing reserves, production estimate 1000-1500 BOEPD and 10.2-10.8 million BOE in Proved Undeveloped reserves.
Putting the above numbers in you can get a NPV value for SHE of ~US$34 million and BRK of~US$ 85-90 million.
IMO it is unlikely SHE will be able to participate in the full development of the 3 DSU's on a well bore only basis to get access to the Proven Undeveloped reserves. BRK will monetise these reserves by either
1) selling the PUD's undeveloped to major player like CLR or development fund
2) Drill and produce the development wells on a 100% basis
3) Farm out for a ~20% free carry for the full field development of the 3 DSU's.
So to answer your question,IMO BRK are the better investment vehicle because SHE are totally dependant on BRK for access to their asset base, and they are offered, rather than choose what level of participation they will have. Having said that, it is in BRK's interest for SHE to be highly successful because SHE will, and were set up to provide funding for the initial drilling and subsequent revaluation of the BRK asset base.
May not be much help but despite both companies holding WI's in the same well , their business plans are different. SHE are for predominately production cashflow whereas BRK strive for asset creation , using third parties ( SHE predominately) to fund the initial wells facilitating cashflow and asset revaluation followed by monetisation which is dependent on what will give BRK the best return at the time. The cash from monetisation will be predominately used for further asset purchase and repeat the cycle.
Cheers
Dan
PS.. as mentioned, the input parameters were for indication purposes only for ease of calculation.
(20min delay)