You can do your own sensitivities , at least for the 2025...

You can do your own sensitivities , at least for the 2025 production based on the BRK guidance of a net 715,000 BOE to be produced in 2025.

That 715,000BOE (78% liquids) is net to BRK to their WI and after royalties have been taken into account, so we can disregard royalties from the equation.

The 78% liquids component allows us to work out fairly accurately the individual oil, NGL and gas sale percentages mix, which will then allow us to calculate the sensitivities for each stream.

Firstly the gas sales is equal to 22% of the production BOE, which means gas sales are projected to be 0.22 x 715,000= 157,300 BOE gas or 943 million cubic feet gas ( using the 1 BOE = 6 mcf gas conversion). This number is the shrunk gas after BGL's have been extracted from the gas flow at the 3rd party gas processing plant.

When NGl's are removed from the gas stream, there is a ~30% volumetric shrinkage of the gas in the SWISH formations. We know that the early part of the gas stream carries ~140- 200 barrels NGL per 1 million cubic feet raw gas. That means after NGL extraction, 1 million cubic feet raw gas produces 140-200 BOE of NGL's and 0.7 million cubic feet " shrunk gas".

Working back, the 943 million cubic feet gas ( or 157,300 BOE shrunk gas ) is what is produced OUT OF the gas plant after NGL extraction , so raw gas INTO the gas plant is 943 million/ 0.7 = 1.348 Billion cubic feet.

Therefore , at a rate of 100-160 barrels NGL per million cubic feet, the total NGL production will be 1,348 x (100-160 ) = 188,720- 269,600 barrels NGL.

So now we have the gas and NGL production components, we can work out the oil., which is equal to

715,000- 157,300 (gas) - ( 188,720 to 269,600 barrels NGL) = 288,100 to 368,980 barrels oil . That oil range is 40-50% of total production which is typical of the mix in the first 12 months so will be ball park correct.

This means per BOE produced in the first year.

Gas will be 22%
Oil will be 40-50%
NGL will be28-38%

So now we can work out the sensitivities for each component.

Gas in BOE conversion is 6MCF gas = 1BOE, so if the gas price per MCF is US$2, then the BOE price is US$12.At $2.5 per MCF , the BOE price is US$ 15.

NGL is selling at ~US$16 per barrel.

At the current pricing of US$ 68 for oil, $2.20 per Mcf and $16 per barrel NGL, at the lowest oil component of the revenue of 40%, which means NGL is 38 % for a total received price per BOE we get

Oil component is $68 x 0.4 = $27.2
NGL component is $16 x0.38= $6.08
Gas component is $15 x 0.22= $ 3.3

So the BOE price is $ 36.58

At the higher Oil component of 50% and lower NGL at 28% we get a BOE price of $41.78.

IMO it would be best to use the midpoint of oil at 45% of production, and NGL at 33% of production for the FMDP for 2025 for rough sensitivity calculation.


So at the $ 55 oil and $2 HH gas, assuming NGL stays at ~$16, at the midpoint oi mix, the BOE price would be US $24.75 (oil) + $5.28 (NGL) + $2.64 (gas) = $32.67

At a cost per BOE of US$9-10 that would give a margin of ~$ 23, so the FMDP contribution to operating cashflow would be ~$ $16.4 million in 2025 with net production of 715,000 or ~1960 BOEPD annualized.


At $75 for oil , $ 2.5 gas and $16 NGL , the midpoint oil mix would give us a BOE price of $33.75 +$5.28 + $3.3 = $42.33 . This would give a margin of ~$33 for a operating cashflow of US$23.595 million from the FMDP in 2025.

Oil pricing is without question the largest driver for the BOE price received , but bear in mind, gas and NGL prices are very low at this point of time. If gas were to return to a more normal $3.5 per MCF and NGL to the normal $25-30 per barrel, this alone would add $6 x.22 $= 1.32 ( gas) +$10x 0.33=3.33 ( NGL ) or $ 4.65 net margin per BOE.

The effect of new US LNG production coming online in 2025 , consuming ~5 BCF gas per day ~4% current USA production, and the West Coast Canada Kitmat LNG commencing also in 2025, which will need ~1.5 billion CFPD ( diverting some export gas to the US) should start to have an impact on US gas pricing from 2025 and onwards.

Hopefully, this post will enable you guys to work out pricing sensitives for your own assumptions.

I really need to learn how to use EXCEL