Hi
@DoubleDown!
Just need to pull you up here a bit and on some of the comments you made today and in yesterday's post.
Apart from operated drilling, BRK announce when stuff gets done, not along the way.
Court approval timing and process is out of their control, but is BAU. We will see some Orders come from the OCC fairly shortly IMO and BRK will announce those Orders when issued, or the operations based on those orders commence as they have always done . Orders generally relate to DSU applications, Drilling locations, Well Spacing locations, Drilling permit and Pooling.
Many people here express the view that BRK do not have a plan, or kinda do have a plan which they are not following based on their assertion that BRK stated they will drill 2 additional SWISH wells end 2022, and it looks like that "target" won't be met. Based on this BRK are obviously crap and management don't know what they are doing etc,etc. The problem with that is folks don't understand the approval process in getting wells drilled,that this approval process is court based and subject to the usual court based timing issues.
So below is an example of the process, using the second Jewell well. ( hypothetical only)
After data review of 6 months of Jewell well outperformance , correlation with other Sycamore offset well data and the high commodity prices , BRK board decide that monetisation of the assets will now in part include production .
12/1/2022.... Drilling Location, Spacing Exemption, Drilling Permit for 2nd Jewell well applications sent to OCC
3/2/2022... Hearing date set for application set for 1/3/2022.. notices to be send to lease owners and general public newspaper notification.
4/2/2022-20/2/2022 ... Protest notifications received from 6 parties
1/3/2022... DL, SE hearing continued to 6/4/2022
6/4/2022... DL,SE hearing.. 3 protests dropped and 3 protests dismissed.
7/4/2022.. protest parties appeal
28/4/2022 .. Appeal date set for 6/6/2022 for appellate court
6/6/2022... Appeal continued .. date set for 15/7/2022
15/7/2022... Appeal heard.. judge to make decision, date set for 8/8/2022
8/8/2022... Appeal dismissed... DL,SE application sent back to original court. Date 15/9/2022
15/9/2022.. DL,SE application recommended.. Emergency orders requested to expedite drilling as company Aussie shareholders are shitting themselves , and BRK allege financial harm will be caused if drill slot timelines are missed and contracts broken..... Emergency hearing set for 29/9/2022
29/9/2022.. Hearing recommends Emergency orders given for DL, SE and drilling permit. Well can only conduct production testing and not production until Final orders to be issued within 90 days.
This is a fairly typical timeline of the court process. It can be much faster when there are no protests, but they are almost mandatory as parties use them for leverage. Many protests are dropped before hearing dates, and not all protest decisions are appealed. BRK / BM have no control over court date timings, protests, appeals etc, but they know the process intimately and have very good lawyers . This is BAU, all operators go through the same process and the steps don't get announced as they happen. BRK just announce that all permits and approvals have been received. BRK wouldn't book a rig until they have a good indication if / when their applications will be successful and the rig slot needs to time in with the court approval.
So back in March 2022, when BRK guided they expected 2 wells to be drilled by end 2022, it was a loose target ( my wording) because the court process was early in the process and the timeframe would have achievable in a best case scenario . Unprotested applications can be approved at the first hearing and once recommended, activity like pad preparation can start pretty well immediately. I am not saying this is exactly what has happened , just wanted to highlight that there is a process that is out of company control which can affect timelines. If the timelines are missed, it doesn't there is something sinister or wrong, and it certainly doesn't mean the company is crap.
BRK don't announce the court steps, but possibly, despite the process being BAU, they could announce there has been a court delay( if that is what has happened) to at least give an explanation for the perceived delay.
In terms of the 3 pillars, contrary you your well constructed post yesterday, there has been " significant" activity in all 3 pillars.
The Operated drilling pillar has been obvious.
The PDP Property acquisition pillar incorporates the Orion Project, which originally was partnered with SHE. The Thelma property and Bradbury AOI belong in this pillar and the last quarterly stated
We will see movement on this project to the extent that they should be drilling the Bardbury well in the last quarter 2022. The well is a vertical well, which will cost ~US$1.5 million and SHE will almost certainly NOT be invited to participate . They are targeting the Simpson Group of sands, of which the Mclish and Bromide are productive in the Thelma well, along with another 5 or so stacked zones higher up which are productive in the area. Unlike the SWISH wells, this well actually has a fairly large exploratory component associated with it. IP24 for each zone are in the 50-200 BOEPD, where the successful targets will be produced starting with the deepest and then moving up the wellbore as they are depleted.
In regards to purchasing other existing PDP properties, this pillar is least active when commodity prices are high as it is a sellers market, and BRK's stringent economic parameters are difficult to meet in this market. When the oil / gas market turns down, when bargains abound BRK will focus on this activity, and the Operated Drill pillar will have activity scaled down. This is using their Full Cycle Business model.
As mentioned, BRK do not generally announce leasing as that is BAU, or until there is a significant leasing event . The Land and Leasing Pillar has seen substantial unannounced activity, which has increased in this 3rd quarter.
Below is the leasing profile for BRK since the beginning of 2022.
I have blocked out new leases not associated with the 3 existing DSU's.
Leasing activity late Nov 2021 to Early Feb 2022
Leasing activity early Feb 2022 to early May 2022
Leasing early May 2022 to late June 2022
leasing late June 2022 to early Aug 2022
leasing late June 2022 to early Aug 2022
leasing Aug 2022
leasing Aug2022 to mid Sept 2022.
Pretty obvious that leasing developments telling a certain story IMO.
Just because the company hasn't announced details of activity doesn't mean there is no activity.
BRK/BM are certainly not out of their depth . These wells cost up to and over US$10 million to get drilled and completed . The SWISH wells go 6000- 8000 feet deep , turn and do another 7000-10000 feet laterally. There are SO many things that can go wrong during the entire drill. You need the right people doing the right things at the right time. Black Mesa organise and plan the whole process, the well design, completion design and then choose the teams that will perform those functions. It may seem easy to "outsiders " which is probably why so many here are so blase' about the operational success, because they have no real idea of what is involved to get these wells approved, drilled and completed, then successfully producing and selling to market, safely, on time and on budget.
Operationally, rather than having their butts handed on a plate to them, these guys are kicking butt competing against some serious majors with much, much deeper pockets. BRK after all were the company that delineated , named the area and started leasing the Sycamore/ Woodford formations 6 months ahead of everyone else, Continental Resources included.
The share price is obviously disappointing to everyone here. BRK management have not done a perfect job in communicating with shareholders, some of that is for operation reasons and some of that is not. Having said that, I would rather them being weak in communication and strong in operations, rather than the other way round.
Cheers
Dan
(20min delay)