Brookside Energy Ltd's (ASX:BRK) STACK Play non-operated Working Interest wells in the Anadarko Basin of Oklahoma are performing well, with the payout profile validating the company’s acreage selection and acquisition process.
Analysis of sales data for the non-operated wells shows that 75% that have achieved payout to date did so within 12-months of first sales with the average time to payout being 16-months – a strong result given the recent variance in commodity prices.
This rapid payout profile creates long-term value with several decades of post payout annuity style stable cashflow and exposure to further upside from higher oil and gas prices.
“Rapid return of capital invested”
Brookside managing director David Prentice said: “We are very pleased to provide this update on the performance of our non-operated wells in the STACK Play.
“Results like this are the foundation for the success of all three pillars of our business.
“The rapid return of capital invested is one of the most important metrics for us (alongside capital discipline) when we look to make an investment, whether it be in operated drilling, leasehold acquisition and trading or in producing property acquisitions.
“We are building good momentum across the business and look forward to keeping our shareholders and investors up to date as we continue to unlock the value in our premium acreage position in the SWISH AOI in the southern part of the SCOOP Play in the Anadarko Basin.”
Cumulative cashflow curve showing fast payout for Brookside non-operated well Landreth BIA 1-14H.
Targeting premium acreage
The results show that focusing on exploitation of premium acreage with low entry costs is a successful strategy that is very robust and can withstand commodity price cyclicity to continuously deliver strong cashflow and high rates of return.
Consistent application of this strategy led Brookside to acquire its premium acreage position in the highly sought-after Sycamore-Woodford trend in southern SCOOP and ultimately resulted in the successful acquisition of three operated drilling spacing units (DSUs) in the SWISH AOI.
Pivot to operated drilling
Brookside estimates that more than US$250 million of new capital has been invested in the SWISH AOI in just the last three years, the majority of which (lease acquisition, drilling and completion and associated development expenses) was deployed by tier-one independents that remain active in the area despite recent pricing volatility.
The success achieved by these operators in this area, combined with the payout results achieved to date from the non-operated wells provided the catalyst for the company to pivot to operated drilling in the SWISH AOI.
Brookside has now established a 20 well, 5-year, inventory of premium ‘drill-ready’ locations with the opportunity to expand this through further leasing.