Hi
@keith54
Haven't posted anything lately as all I post is business as usual material which seems to frustrate those with think value creating BAU is less important than a rise in the share price based on nothing but market sentiment.
Regardless, I will say that there is quite a lot of activity building in the background "as usual" especially, but not exclusive to applications / approvals for well spacings etc which still have to go through the courts, and as usual, BRK will announce those when they are dealt with.
I am not in the T20 anymore, NOT because I have sold ( I actually increased my holding by 50% on exercising my BRKOB options, plus have bought BRK outside my super fund for the first time recently) , but because others either bought stock or exercised their options and pushed me out. The T20 threshold at the last quarterly is ~31 million shares as opposed to ~18 million shares the quarter prior. Can't speak for
@TheProfessional but as pretty sure he has at least maintained his holdings ( Very, very sizable holding )as well.
In regards to losing faith, (and take this with a pinch of salt because what I believe is not really relevant), I wouldn't have increased my holding if I had lost faith in the company. On the contrary, my " faith" in the company has never been greater because the company has exceeded my expectations in regards what the business has achieved.
Looking back to Jan 2021, before the Jewell CR was announced and after the SABO Drilling Trust had fallen over, if a time traveller had returned from the future and said by Sept 2022, BRK would have Jewell, Rangers and Flames wells drilled and on production, with BRK producing close to 2000 BEOPD net I wouldn't have believed them! Having said that, if they told me the share price/ MC would be at these levels with oil and gas prices at decade highs, I definitely wouldn't believe them either!
IMO people confuse "faith in the company "with "faith in the share price" . For example, regardless of what the business is actually doing, they "lose faith in the company" because the share price goes down and "gain faith in the company" when the share price goes up. I'm not interested in that mentality.
As previously posted, there is/ can be little positive correlation between the share price and business trajectory in the short term, but in the long term, there always is a positive correlation.
If we were all shareholders in BRK as public unlisted company, a company that wasn't the the behest of daily market fluctuations, how would we feel about our investment in BRK. Would one "feel" that the company was successful in executing it's business plan?.. would one "feel" the value of the business was increasing with the record net positive cash flow coming into the accounts, that the acreage had materially increased in value? We are however not in that environment , but that is how I look at things. If the business is doing well, then in the long term, the inherent value will be recognised by the market. Some who have a shorter time frame will have a different outlook, which is fair enough.
The business is getting stronger every day folks. Despite some thinking there is no plan.... there is.
1) The plan was to get the 3 DSU's HBP..... done
2) Next comes monetisation.... Originally the plan for monetisation was sell all the PUD's after the HBP drilling program which " proved" the SWISH resource and enabled the reserves to be booked which enabled the acreage revaluation..... but because of the extraordinary productivity of the Sycamore formation in the Jewell, the extra high oil content of the Sycamore formation in the Sundance Kid , emulated in the Rangers, coupled with the very high oil and gas prices the monetisation plan changed. BRK are now part developing the Sycamore formation in the first instance, and looking to monetise the PUD's in the second instance.
The change in the plan was brought about by the fact that the well payout period is now down to 6 -12 months as opposed to 18-24 months originally planned. ( Admittedly the Rangers initially looked like it may payout even faster than Jewell, but subsequently it is apparent the well whilst being a great producer, didn't quite hit the high note to exceed expectations like the Jewell ... part of the explanation for that could be that the Sundance Kid did actually impact on the Rangers well.... Rangers 2 will prove/ disprove that theory )
Remember, the Jewell, Rangers, Flames wells were not drilled for production purposes, but the get the acreage HBP which facilitates revaluation . The production revenue from these wells is a huge bonus, to the extent that BRK have " changed" their plan ( for now), to capture some of the value of the reserves through development for production cashflow, enhanced by the rapid payback period. This has the added benefit that even though the wells have significant harmonic type declines in the initial period, where production can fall 80% within the first 3 years, the wells become long term stable , very low decline producers for decades after. This provides a solid base of production and annuity type revenue. 8 such wells in this part of their productive lives can produce 1200-1600 BOEPD production at declines at 4-6% per annum. This in turn provides a high baseline cashflow to fund the day to day running of the company, plus generating excess cash for operational activity.
So in terms of monetisation
a) Being done through development of the Sycamore , funded through production at a rate of ~1 well every 3 months but the pace is also set but OCC approvals for drilling locations, spacing exemptions, etc etc, and operational requirements like back/back or batch drilling.
b) Sale of PUD's or other M&A
The next 12-24 months.
3) During/ after monetisation there is asset building on a grander scale. RThis will be a function of available cash, opportunities generated by the company or presented to the company .
The actual specifics of the plan can change as circumstances change, and the plan can pivot, as was seen with the HBP drilling were initially:
BRK were NOT to fund initial DSU wells , therefore no BRK direct WI in Jewell, Rangers, Flames as a well bore partner was sought to fund all BRK equity in the wells (2018-2021).
BRK sharing WI in the initial 3 DSU wells with Stonehorse Energy ASX: SHE ( March 2021-June 2021).
BRK funding initial Rangers/ Flames HBP wells to full WI ( June 2021-March2022).
BRK not developing any reserves proven from HBP drilling (2018-2022).
BRK developing the Sycamore(2022....) .
Again, as previously stated, the basis of the change was "doing what gives the shareholders the best return at the time", that means in terms of returns to the business which BRK can control, not in terms of the share price which they can't control.
As far as lack of news flow is concerned..a big part is the due process, they will announce court dependant news once court approvals are given for the BAU .
Announcement on Flames flows may take some more time as the Flames well having the longest lateral means the largest completion which means more frack stages, much more water and sand injection involved which will mean much longer flow back period to retrieve the injected fluids .
Another consideration to news flow would be the competitive environment they are dealing with. There are many games that the parties in the USA E&P scene play to distract, confuse, divert attention and there may be some of that occurring now.
Cheers
Dan
(20min delay)