Good discussion
A few things
You seem to be ascribing selling / cashing out as the only monetisation option whereas BRK have always and repeatedly defined monetisation as per the slide below.
View attachment 5116117
No where does it say monetization = selling all assets completely
"Monetize, sell upgraded acreage ( whole or in part) or harvest cashflow from PUD's" .... also well represented in the photo .
BRK's preferred option is to sell ( whole or part), followed by JV followed by BRK development.
If BRK only sell part, then it stands to reason they will JV or develop the remaining PUD's.
The pathway for monetisation or the " road taken' will be determined (as repeated countless times) to be the one which gives the greatest return to shareholders at that time.
No where and never have the company said that selling all the SWISH asset was going to be the only path taken... so how can BRK be accused of changing the story?
BRK have said their primary focus for drilling is HBP, not for production, but they have never said they will never drill for production.
You are correct when you say a plan did change, but it changed in 2021, when they raised cash to drill Jewell. The original plan was not to fund and participate directly in the HBP wells at all , but have 3rd parties ( like SHE) to drill the HBP wells on a well bore basis only. BRK wanted to avoid directly funding drilling as that required massive dilutionary cap raises when the share price was low .... but no one came to the party to fully fund the HBP wells so we are now where we are.
My preferred monetisation pathway is to sell the Woodford and BRK fully develop the Sycamore. BRK now drilling Sycamore development wells fits that narrative . Even if BRK intended to sell the SWISH asset as a whole, as a shareholder I wouldn't be happy if they just sat on their hands, waiting for a buyer while the oil price is at current elevated levels. With payout times under 12 months and the possibility of bonanza wells like Sundance Kid, Billy the Kid and Bowery, they would be crazy, I would say even derelict not to take advantage of the current cycle and capture some significant value through production cashflow. Locating any development wells in a manner that decreases the effect of 3rd party offset drilling is logical, prudent and just makes plain sense.
IMO one of the major issues surrounding BRK ( apart from the SOI and hence penny stock label) is not that there is doubt over the monetization pathway as such, but there is significant doubt regarding the VALUE BRK will realise / generate through the various pathways . We have no real idea what a full, partial sale will bring , and even if you can work out the NPV of the SWISH asset, the discount to be applied to any sale is uncertain... almost certainly the buyer's NPV for SWISH will be different to BRK's because the development programs in terms of wells per DSU and the pace of drilling will be different. Then we have no idea what a partial farmout , or JV deal will look like and therefore how to determine the value that would be realised .
The easiest pathway to calculate value is the full scale BRK development plan which they have stated is 1 well every 3 months for 5 years, (and probably more now that Bruins is part of the equation ) as that is essentially the calculation to work out the NPV... but as mentioned, that would be the least likely option IMO.
So I disagree that the story has changed. But I do agree there is significant uncertainty for many people as to BRK's value.
Cheers
Dan
(20min delay)