Thanks for posting, great question and forensic review of the accounts.
I have asked DP about this sale previously as these acres were listed for sale on the old Convey Energy Consultants website before it was revamped and removed pretty well all it's free access information.
Firstly, some background . It must be noted that BRK high grade, sell and swap acres all the time behind the scenes as part of their every day activity. Sometimes they do so because there is a chance to make a quick, substantial profit multiple ( even though the amounts involved may be small), other times the acreage doesn't meet the hoped for drilling result or PUD value and is sold , exited. They have completed dozens small transactions and continue to do them . They do not report on all of these as they are not material and are part of the process. In the case of the Roser property, these acres are located in the Northern part of the stack play, in the under pressurised mainly oil fairway , whereas BRK primarily target the over pressurised gas/condensate fairway . The parent Roser well was successful and completed with a flow rate of 1089 BOPD and 1.94 MMCFGPD. Result looked good but production quickly dropped off. Marathon were determined to make to property work, proposed to develop the Unit but BRK didn't want to participate because of the lack of confidence that the wells will work, and BRK are NOT focused on general production, but acreage revaluation. When Marathon proposed a 4-6 well full field development for late 2018, early 2019 BRK decided they didn't want to participate, and decided to divest.
From memory , there were ~50-60 acres for sale, and actually had sold some equity previously. They held ~8% of the Unit at one stage, where during the pooling process, from the original ~ 4 % WI the operator allowed them to double their equity. They sold off those additional acres for an undisclosed sum very quickly ( likely to have been a quick flip, possibly ~x2 value generated).
Sorry to bore you with the above, but it is important to be aware that high grading acres though selling, trading, and swapping is a continuous behind the scenes activity that doesn't make the announcement page unless it is highly material.
In regards to your post, you are correct, they didn't achieve a x10 for this acreage. This was a partial sale of the property, whereby they maintained their interest in the well, keeping the PDP reserves and well production, sold of the PUD ( where they calculated they were not the high value they are after but kept some upside by negotiating a small royalty).
From the HY report it is difficult to say accurately what the Roser multiple may have been. Roser was not the only acreage sold, traded in the half. It may have been the only STACK acres sold, but there was trading and divestment of SWISH acres. The $257,720 moving off the cost base would not just have been Roser. The way I see it is, in the cash flow statement, they had proceeds from sale of investments which would have been acreage sales of A$302,624, of which Us$ 212,322 were the partial sale of Roser. The A$ 145,890 was the profit on the sale of all the acreage, including Roser. The $257,720 would unlikely all be attributable to Roser. Without an itemised list of acres sold , it is difficult to work out.
What is clear, as you correctly pointed out, is the sale multiple would not have been anywhere near the x 10 BRK are targeting. I would look at that target ratio as a portfolio target, made up of individual properties where the multiples will be above , and below x 10, but as a group be close to the target, with Roser being perceived of lower quality and thus value.
Just as aside, one property which will be valued very highly will be the Bullard , where BRK have ~300 acres. When BRK eventually bring out their next reserve report, hopefully not to far out, the performance of the Bullard well, and its effect on the PUD value will be disclosed, which should reflect value close to the maiden STACK reserve value of ~ US $30,000 per acre. (IMO)
As a second aside, OCC records, which can be found online, show that many recent pooling orders for competitor acreage within the SWISH AOI, especially Stephens county, are court mandated at up to US$ 6000 per acre, but mostly in the US$3000 per acre level for the highest lease , lowest royalty offers. It is not unreasonable IMO to expect the 2000 BRK SWISH to have a current market value within that range.
Sorry about the rambling, hope that helps .
Cheers
Dan
BRK Price at posting:
1.0¢ Sentiment: Buy Disclosure: Held
(20min delay)