BRK discussion, page-2339

What Paul and Chilled are saying is the change in oil price does not affect the share price, but does affect the value of the NPV of the reserve base....The lack of appreciation in the share price in tune with the movement in the oil price is more a function of the lack of awareness of BRK as a whole, and general lack of understanding of the business model rather than anything else, including the POO. The market is not taking the increase in the number and value of the acreage into consideration when setting the share price.

I would agree with that supposition. If you compare the company position now as to where it was 12 months ago, fundamentally BRK is significantly stronger yet the share price does not reflect that.

The BRK business model needs the price cycle to function. When the POO is low, sentiment is low and quality acres can be picked up cheaply and is the time to buy. As geffa says, when prices go through the roof, sentiment increases and leasing competition for primary leases increases , adding value indirectly to the undeveloped land bank, and directly through an increase in the NPV of the reserve base... that is the time to sell. The period in between the peaks and troughs are the times for high grading the portfolio and drilling primary leases to prove the reserves to sell during the high cycle.

This is the differentiating factor to other ASX oilers who need high prices because they rely on production revenue to make their cash. Production revenue for BRK is just a bonus that helps pay the bills but the aim of the drilling is to prove up the reserves to sell at the time BRK choose to get the maximum value for BRK shareholders.

Right now, BRK are in the acreage build phase, that has been stymied somewhat by the increased local competitio in SWISH but BRK should be winning another 2 DSU within the next few months, and are about to achieve a step change in NPV through the Jewell well. Through this period they have also continued high grading the portfolio and sold production to raise cash for the next phase, as is the plan.

People who understand the exact nature of what BRK are achieving, while obviously unhappy with the current share price, are not panicking and selling, as can be seen by the build in the T20 over the previous quarter.

When the market prices BRK anywhere near it's intrinsic value as determined by the value held within the land bank and NPV of it's PDP / PUD is anyone' guess, but with the company fundamentals as they are, and what the company is about to achieve operationally over the next 6+ months should mean we are in for an exciting ride.

Cheers

Dan