I can't speak for the share price trajectory except to say that if the company does as I expect it to, and increases it's asset base materially over the next few years via the monetisation process being production and asset sale, and then reinvesting that cash to acquire more tier one undeveloped acres, and doing it all again. All things being equal, I would expect that share price to follow that increase in value .
What that increase in value will be in the first instance will be a function of production and asset sale proceeds of the 3 DSU's. That will depend on the WI level in each of the wells BRK will participate in, the price of the commodities , the reserves proven and what price any PUD's sold will be able to be generated . In the second instance, it will be a function of how many tier 1 premium acres they will be able to purchase from the proceeds of the initial monetisation round , and the process repeats.
In regards to proceeds from selling the PUD's, the most common way this is done is to a major producer in the area along the private equity model, in this case the main candidates would be Continental Resources and XTO ( Exxon Mobil).
The price one can get for any Proven Undeveloped Reserves sold to a major is usually based on the NPV10 of the reserves and then applying a discount, usually 20-30%
So for example, if the Woodford reserves proven attributable to the BRK working interest (WI) in the 3 DSU's comes to 10 million BOE, and they were certified to have a US $15 per barrel NPV10 , then those reserves would be valued at US$150 million. They could be sold for US$105-$120 million. The reason BRK would sell those PUD reserves for a discount is because they would find eager buyers, and after taking production revenue from those initial wells, which should effectively pay back the drilling capital over a 1-2 year period, the company would achieve it's goal of a 10x+ return on invested capital.
The reason why a major would buy those reserves is because they would be able to book those reserves on their balance sheet at the NPV10 value (US$150 million) but only pay US$105-120 and generate an immediate book profit of US$30-45 million dollars.... a classic win, win situation for both parties.
Please note all the numbers above are hypothetical, just describing the process rather than financial outcomes.
Hope that helps
Cheers
Dan
BRK Price at posting:
2.6¢ Sentiment: Buy Disclosure: Held
(20min delay)