Hi mate You make some excellent points as usual. Some context ....

Hi mate

You make some excellent points as usual.

Some context .

Whist the reserve position has been known for over a year, the market was informed of the partial reserve development via the FMDP ~5 months ago, and only a week ago for the full SWISH development. The market yawned at last week's announcement like it always seems to do for good BRK news, but it wouldn't have been because it had a handle of the magnitude , timing, production outcome of the FFD before hand.

The company is in build mode where each DSU provides the funds for the next. The company will not sacrifice a DSU development just to return some cash to shareholders. It will / should return excess cash to shareholders during the development phase if that excess cash is generated.

BRK does have good visibility on expected production performance, development costs and timing for the DSU's to know it's capital requirements ( plus contingency) to determine if excess cash is generated. The driver of excess cash will primarily be the commodity price ( over which the company has no control). So yes, the company will be producing significant cash during the development phase, but shareholders will only" see " cash over and above operational requirement as a capital return... IMO that is a prudent course of action.

After the FFD of SWISH is complete , capital management will be a different story.

I 100% agree that to play with the big boys you need to be in a position of strength. Your " 4 points of strength "are on the ball. BRK's lack of strength previously was why we only originally ended up with 3 operated DSU's and ~3000 operated acres, rather than the planned 8-10 DSU's and 8000-10000 acres post the initial leasing phase.

But points 1 and 2 BRK have no control over.

Point 2 needs partners owning adjacent leases to come to the party. They didn't come to the party for the FMDP, and it doesn't look like CLR are coming to the party for Bruins/Jewell. CLR have just applied to continue their diagonal lateral development of the Gapstow DSU ( immediately south of Bruins, Jewell) in a southerly direction , away from our leases. It seems they may have enough leases, reserves, drilling locations in the SWISH not to want to get involved with BRK. CLR drilling in a manner This may create an interesting opportunity for BRK which I will cover later.

CLR are the biggest player left in the SWISH AOI and the BRK relative position is small. No other player of note will get a big boost from acquiring BRK's 4 DSU's, and another smaller player wanting to build is unlikely to pay the price BRK would want, need to sell.

In March 2021, Camino sold out of it's SWISH position which included 12 operated DUS's, (which had exceptional wells like Sundance Kid and Billy the Kid in the mix) plus significant non operated producing and non producing acreage for ~US$176 million to CLR . The 12 operated multiunit DSU's ( most were 1280 acres) were apportioned ~50% of the value of the transaction or US$ 90 million. BRK have 4 so we can pretty well see what offers they would have received $ 30-40 million)... even if someone offered BRK twice what CLR paid to Camino that still wouldn't have been enough to tempt BRK to sell.

As to point 3 BRK will hopefully have multiple wells that outperform as they implement point 4.

Whether they wasted a year in 2023 trying to sell the assets is debatable. Selling was always the preferred monetisation method , but the CLR Courbett development did change the landscape somewhat. Last year allowed BRK time to exhaust the sale option and at the same time build the cash pile to be able to essentially fully fund the FMDP aided by information gleaned from Courbett.

I wouldn't be counting on a sale of assets as the instigator of returns to holders. If the FFD of SWISH outperforms, the purchaser will need to stump up more cash to wrestle the assets out, and in the current climate, that is unlikely ... but then there is the corporate play.

For new acreage, BRK position will be soooo much stronger than is was in 2017-2019so the future on that front should be very bright.

Thanks for the discussion

Cheers

Dan