There is no doubt that everyone, large and small shareholders, management, directors , even the cat down at the corner store expected BRK shares to be much higher than they are now based on the operational success the company has achieved over the past 2 years.
IMO, what is different now to the last 2 years is we have more certainty to where to company is heading, and how it's going to get there. The market didn't understand the Private Equity nature of BRK... it was originally marketed as a real estate company that drilled not for production, but for acreage revaluation which would be sold for an undisclosed amount at some stage in the near future. That model while very successful in the USA is unknown in Australia, there are no local reference points to compare to so the fundamentals can get a bit lost with the associated lack of understanding and uncertainty.
The ASX is much more comfortable with a developer/ producer where it can see it is on a growth profile. I don't know if any new investors will jump on because of the news, but I am sure that a new investor when looking at BRK will be much better positioned to get a handle as it now transitions into a fairly large producer on the ASX. My very rough back of the envelope calculations have us producing ~ 10,000 ( +/- 20%) BOEPD net to BRK by the end of 2026 , fully funded by cashflow if prices average between US$60 and $90 for oil and US$ 2-4 per MCF gas....and we would still have 1 DSU of 5-6 wells to develop. These are very low risk reserves to drill and produce, and are very bankable if BRK decide to accelerate the DSU development program by borrowing.
By not selling the asset whole, BRK will ensure it will generate significant cashflow every year as the SWISH assets are developed, which will give it time to generate,or acquire significant development or producing assets to boost reserves and production even more. That is the bigger picture that is clearer now that BRK have confirmed the path ahead.
How the market reacts to this clarity it up to it.
Cheers
Dan
BRK Price at posting:
1.2¢ Sentiment: Buy Disclosure: Held
(20min delay)