Discussing the efficacy of the BRK business model relative to the recent experiences of a number of peer companies is a significant point.
Yes , the model may be convoluted which has lead to significant misunderstanding of the company and has without doubt been detrimental to the share price, but the results speak for themselves.... the contrast between them and what BRK was doing cannot be more stark.
During the time when many of the BRK peers were going to the wall as mentioned by @peto2810 , our team took the bull by the horns and established the Orion JV, a new business pillar. As a result, through the intimate "hometown " knowledge , technical and operation ability, our BRK/ BM team has discovered a multi million dollar, and potentially multi 10's of millions of dollars virgin oil field. They placed it onto production and onto sales within 3 months of acquisition..... and doubled it's acreage footprint in that field ........ for ~ $300k gross to the JV. An incredible achievement and as a typical comment for BRK, the significance of which is not yet understood by the market.
To try to quantify the potential upside of the Thelma/ Bradbury " discovery" I have been doing some background work on the Thelma area referencing the up to 7 potentially productive zones BRK mention to try to understand what potential they may be sitting on.
Please bear with me for the following.
Now the completion report from the original Thelma well shows the hydrocarbon zones the well penetrated
and pages 5 through to 9 of the article below describe the hydrocarbon potential of the zones found in the Thelma well and which should be present right next door in the Bradbury.
The Sycamore , Hunton, Viola are limestones, the Bromide and Mclish are sandstones, the Woodford and Sylvan are shales and source rocks. The limestone and sandstone zones will be the vertical well producing zones, with the Bromide being the producing zone within the Thelma from the records found.
and
The above graphs show the historic production from the Thelma well . Cumulative production up to Sept 2020 been ~332,000 barrels oil.
The last announcement from BRK indicates that rather than one behind pipe zone in the Thelma, there are now more , as successfully achieving a flow from the first BP zone has opened up the possibility of repeating this last success multiple times in the Thelma well bore.
The adjacent Bradbury 40 acres (40 acres is basically a 400x400 metre square) is virgin ground and has not had a well drilled on the acreage... which means the Bromide producing horizon and the newly tapped behind pipe zone in the Thelma have not been produced in the Bradbury.
The IP production in the original Thelma bromide zone was 96 BOPD.... the new behind pipe zone in the Thelma had an IP flow of 130 BOPD, choked back to 30 BOPD for efficiency reasons as reported. It is not unreasonable for a new Bradbury well to replicate those results from at least 2 of the 7 zones.
We have the Thelma producing 300,000 barrels from one zone and now a second virgin zone producing with a similar IP flow. We can see from the Thelma completion results that Samson, the operator at the time, only production tested the Bromide formation and didn't appear to be bothered with any of the other limestone/ sandstone reservoirs for whatever reason.
Now, here is the rub.. BRK/ BM have the Thelma logs which tells them all the information they need to know to determine if they should perform a production test. That log information gave them the confidence to test a zone that Samson decided not to test and it has proven to be productive. BRK now tell us on that basis, there are additional BPZ in the Thelma well they are confident they will be able to produce from. BRK have seismic of the Bradbury block that is tied back to the logs from the Thelma well
Until BRK production test the remaining BPZ in the Thelma, which they probably will not do until the new zone has decreased producing to a rate which is low enough for them to halt production , seal it off and production test the other zones, we cannot say too much about the productivity or reserve potential if the other zones.....but, we know one zone has produce 300 K Barrels oil, another zone is producing.
DP has stated a basic rule of thumb is for a typical vertical Anadarko well, operators are chasing 100,000 BOE reserves which IP's at 100 BOPD. There are wells within the area where zones have produced up to 700,000 barrels of oil..... you would expect that Samson would have drilled the best zone so it IMO it is unlikely that any of the other Thelma zones will have more than 300,000 barrels reserves and the rule of thumb should apply to the first BPZ. It would be reasonable to assume a similar outcome at Bradbury which will need a new vertical well drilled to test that area. Having said that until the zones are tested the upside cannot be discounted.
For a rough , ball park figure, the back of the envelope calculations have high probability of Thelma at 100,000 barrels oil for the new zone and combined 400,000 barrels in Bradbury from the 2 already tested Thelma zones. Of the remaining 5 Thelma/Bradbury zones in each well, the upside is all could be productive or the downside , no other productive zones. using the rule of thumb target, if all are productive and contain 100,000 barrels oil each then there could be another 1 million barrels reserves added to the high probability 500,000 barrels or 1.5 million BO total for the JV.... with the low side being 500,000 BO.
And this is just the beginning. A new AOI in the Murray county will not stop with the 80 acres so far so there should be a high probability of repeating the above in a number of new acreage positions.
The " nice " thing about this is our twin company SHE, will be there along side to share in the success.
Cheers
Dan
BRK Price at posting:
0.8¢ Sentiment: Buy Disclosure: Held
(20min delay)