Jewell is a great well, but how great?

We have known that the Jewell is an incredible well for some time, and now  that we have the IP24  and the IP 30 numbers out we can work out how incredible the well really is.... and it is not actually  just about comparing the IP 24 numbers with the adjacent wells on face value.

We have seen the chart below from the Spark Plus presentation which lists the IP24 flow rates from adjacent offset operator wells in the SWISH AOI



The first fact we must appreciate is that the flow rates by the offset operators are based on what flows from the well head being oil and rich  raw natural gas and do not include the NGL's that are separated from the rich gas stream at the 3rd party gas plant. So for example , the  Park Place well with an IP24 of 2377 BOEPD is made up an oil flow of 1826 BOPD and a rich gas flow of 3.307 MMCFGPD which equals 551 BOEPD gas .The Flash well with an IP24 of 1978 BOEPD consists of an oil flow of 1708 BOPD and a gas flow of 1.62 MMCFGPD which equals 270 BOEPD gas.

So to compare the Jewell we have to convert the 1800 BEOPD IP24 number which includes extracted NGL's and dry gas into an oil and rich gas number. I won't  bore you with the details of the calculation which is my best estimates  but a number of  observations need to be mentioned. Firstly as expected,  the well as it continues to flow is showing the oil to gas ratio decreasing, the NGL ratio to gas also decreasing  but by some quirk, the oil to NGL ratio seems to be staying fairly constant as the other ratios change. So  well is getting less oily, more gassy and the gas richness has dropped a little, all of which was modelled to happen.

So, when BRK announced the flow rate of 1727 BOEPD  on 13/10/2021 including extracted NGL's where the figure was 973  BOPD oil, 440 BNGLPD and314 BOEPD gas, the comparative flow rate for oil and rich gas was 1496 BOEPD ( 973 oil and 523 BOEPD gas).

My best estimates calculation to convert the 1800 BOEPD IP24 flow rate  75% liquids ( 929  BOPD oil, 420 BNGLP ) and 25% gas  ( 450 BOEPD gas)  becomes  1588 BOEPD made up of 929 BOPD and 659 BOEPD gas ( which is the peak gas rate).

Now we can use those numbers to compare the well IP24 flow rates and as I mentioned at the start, it is not just about comparing the gross numbers at face value. The reason for this is because it is not so much what the TOTAL well flow rate is, but the flow rate per lateral length in terms of BOE per lateral foot drilled. The critical factor is how well the rock allows the oil and gas flow out of it.

For example, what is deemed to be a more productive well, one which flows 2000 BOEPD from a 10000 foot fracked lateral, or a well which flows 1600 BOEPD from a 5000 foot fracked lateral? Which well would be deemed to have the better reservoir  ? If the second well was able to be drilled to double it's length then there is pretty good chance that it's Ip24 number , while possibly not exactly doubling to 3200BOEPD, would come  very close to that  and would significantly exceed the 2000 BOEPD of the first well.

For this reason, to actually compare the well performance , comparing apple to apples (which is actually more a function of the quality of the rock and reserves within as completion techniques are almost identical) we need to work out the flow per foot in the lateral length of the well.

Basically, I have compared the top 5 Sycamore wells from the above list.  The top 4 are pretty well all 10,000 foot laterals which for completeness  I will list below:

1) Park Place =10350 foot lateral
2) Ringer Ranch = 9933
3) Flash = 10154
4) Leon = 10475
5)Boardwalk = 4974
6)Jewell = 6700

To work out the the BOE  per foot you just divide IP24 number by the length  and you get a number which is a little meaningless.  The best way to compare the well performance to the Jewell is to see what the production would be if the lateral of each well matched the 6700 feet of the Jewell. The results of such are shown below.


1)  Boardwalk= 2179 BOEPD
2) Jewell =1588 BEOPD
3) Park Place =  1538 BOEPD
4) Ringer Ranch= 1394 BOEPD
5) Flash =1305 BOEPD
6) Leon=1244 BOEPD

So in terms productivity per foot of drilled lateral, the Jewell is the SECOND BEST performing well of those drilled and reported within the SWISH AOI so far behind the Boardwalk well ... again a truly remarkable achievement  by the Black Mesa team  the significance of which, totally missed by the Australian market. This is our  5 man/ person team plus a few high quality contractors  competing  against the likes of Continental Resources and kicking butt!

Just for fun..... with the Rangers well slated to have  a~9200 foot lateral,  for her to match the Jewell in performance by the above metric,  she should flow an IP24  of  ~ 2180 BOEPD ( oil and raw rich gas only) ...... gauntlet thrown down to the BM team !

With the well flowing steady at 830 BOPD, 376BNGLPD and 424 BOEPD gas,  at current prices with local discounts if we say they receive US$75 per barrel oil,  US$35 per barrel NGL and US$30 BOE gas, the daily well gross revenue is 830 x US$75 + 376xUS$35 + 424 xUS$30 = Us$62,250 +US$13,160 + Us$12720 =US$88130 a day. Taking out 20% royalties, US$5 per BOE production costs and say US$ 1.5 transport and other variable costs the net field cashflow would be ~US$ 60,000 per day or US$25,200 = ~US$750,000 per month to BRK.  This correlates almost perfectly to what the SHE presentation from yesterday showed if you scaled it at AUD 500,000 per increment on the cashflow projection graph.

I have said it before, and will say it again till the cows come home ,  BRK is kicking goals like there is no tomorrow . They are playing in the big league and are getting noticed by those that matter over in Oklahoma. Just because our Aussie market is not rewarding the company for it's efforts right now is no reason for one to spit the dummy, take their bat and go home..... but then again , if test match cricket is not your thing, then maybe a few would be better suited to the Big Bash.

Another great day to be a Brookie, especially if you get the picture


Cheers

Dan