The main risk at SWISH is operational drilling risk at the individual well level.
SWISH is a resource play, so drilling and completion are the critical technical factors. The drilling carries the risk and the completion determines the pay for any particular geology. There is essentially statistically almost zero for geological risk in terms of source, trap, migration and seal . There is also almost zero risk for access to infrastructure, services and market. Almost zero risk for regulation and jurisdiction inhibiting drilling and development.
It will be hard to envisage non of the next 16 or so SWISH well to be drilled to be incident free. There are always some issues but it just depends on how they are dealt with and solved.
I agree that it is up to BRK to ensure it runs their programs as safely as possible, on time , on budget and hit the operational milestones that result in successful programs.. That all comes down to planning , employing the right people and using the best contractors....which seems to have been the case so far.
Whilst one can never guarantee a 100% success rate in any large undertaking regardless of preparation and planning, in all honesty the risk of failure of the FMDP and or any of the other DSU developments failing to deliver would be more commodity price based than anything else.
As far as clarity for what BRK are going to do with the SWISH cashflow, DP has already been quite clear IMO
During the FFD development phase the cashflow will be directed towards funding the developments. " If'" there is excess cash generated over and over operational requirements, that cash may be directed towards capital returns ( most likely as a buy back) ... for this to occur the main driver will be commodity prices ranging l above the modelled $75 oil and $2.5 gas.
Operational requirements would also include increasing the asset base during the FFD via acquisitions, eg new DSU purchase/s ( which may require a HBP well/s to be drilled) and potential production asset purchases that have ongoing development potential. The question to be asked of shareholders, what would they prefer, if in 2026 you could have a US$ 10 million buy back, or the drilling of a HBP well on a new SWISH type 1280 acre DSU which would result in another 6 PUD locations to be drilled after 2028?... or buying a development asset of 1280 acres with say 500 BOED low decline production with 4 -6 PUD locations to be drilled post 2028?
After the FFD cash has been spent and BRK averages 4500 BOEPD in 2028, BRK will / should hold surplus cash to the tune of US$40 million and generate significant free cash of another ~US$40 million ( thanks to
@LewZealand excellent table) in the following 12 months. DP has said if the SP hasn't responded to the FFD, then using a significant chunk of the free cash for a cap return will be seriously considered... might be an equal access offer to buy say 20% of every shareholders stock at a fixed price for example.
As mentioned before, the best thing BRK can do for shareholders is to continue to build the business sustainably ( ideally without issuing any more capital), and use excess cash when applicable to buy back as much of the stock as cheaply as possible.
Cheers
Dan
