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Brookside Energy looks for Jewells with 'real estate development' model

Snapshot

The company has a buy-low sell-high land and leasing model for the SCOOP and STACK plays of Oklahoma’s Anadarko Basin.

Brookside Energy Ltd - Brookside Energy looks for Jewells with real estate acquisition model

Quick facts: Brookside Energy Ltd

Price: 0.009 AUD

ASX:BRK
Market: ASX
Market Cap: $8.99 m
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  • The Western Australian company’s real estate development approach involves leasing prospective ground for drilling and proving up reserves. 

  • Brookside then books proved undeveloped wells for drilling so it can experience accretive growth. 

  • The SCOOP and STACK plays where Brookside accumulates real estate are Oklahoma’s most productive oil and natural gas plays. 

  • SCOOP is the South Central Oklahoma Oil Province while STACK is the Sooner Trend in Anadarko Basin in the Canadian and Kingfisher counties. 

  • Brookside has an arrangement with newly-relisted Perth company Stonehorse Energy for the SCOOP and STACK plays and Anadarko Basin which involves the Subiaco company stepping up its interest in drilling spacing unit (DSU) to 90% over time. 

  • As part of this arrangement, Brookside’s US partner and operations manager Black Mesa Energy will production test the Australian company’s first operated DSU, in the SWISH area of interest (AOI) at SCOOP. 

  • The Jewell 1-13-12SXH DSU is 880-acres. 

  • SCOOP and STACK cover 50,000 square miles where 129 drilling rigs produce about 600,000 barrels of oil equivalent a day for US$3 billion of annual drilling and completion capital expenditure. 

Brookside’s always maintained [a] real estate development and land and leasing strategy, and the strategy around the (Stonehorse Energy) step-in agreement is really focused on Stonehorse participating at the drilling and cashflow level, so the two strategies really compliment each other. It’s a real win-win for our respective shareholders … and in terms of the assets, they will be focused on our assets in the Anadarko Basin, primarily in the STACK and SCOOP play in Oklahoma in the States.

Brookside Energy managing director David Prentice told Proactive Investors last week

What does Brookside Energy do?

Brookside Energy Ltd (ASX:BRK) is an oil & gas explorer focused on acquiring and upgrading prospective ground in the US state of Oklahoma.

The company is backed by developer and equity portfolio manager Mark Casey through his Casey Capital investment outfit.

The Western Australian energy company acquires undeveloped or undrilled acreage through a US$4 million leasing facility, then drills it through a US$3.5 million drilling joint venture or other drilling funding source.

Subiaco-based Brookside is executing a buy-low, sell-high strategy to lease undeveloped acreage then pursue revaluation and appreciation through the funded drilling to establish high-quality proved undeveloped reserves.

Brookside’s approach is to lease all or a portion of undeveloped acreage in a drilling unit of, say, 1,280-acres, then minimise dilution through using a drilling joint venture or drilling company to completely fund the costs of an initial or parent well.

The drilling can include a horizontal well bore about 10,000 feet below surface.

Once the company and its partners produce reserves from their efforts, Brookside can “book” all the reserves attributed to any proved undeveloped wells in the unit.

The approach allows for acreage revaluation and ensures Brookside can then “sell high” to other operators.

Who leads Brookside Energy?

Brookside is led by David Prentice, an energy and resources industry management professional with more than 15 years of experience leading companies and boards.

Prentice has an MBA and more than 27 years’ industry experience.

The corporate leader has headed up Brookside as its managing director since July 2015 while also serving as a director for a variety of energy and resource companies.

Prentice has chaired Lustrum Minerals Limited (ASX:LRM) for the past two years and is a non-executive director of Brookside manager-partner Black Mesa Production LLC and Comet Resources Ltd (ASX:CRL).

He was previously MD of Red Fork Energy Limited (ASX:RFE) for a decade and was chief executive officer of DLA Phillips Fox for three years.

What does Brookside Energy own?

Brookside’s key assets are in the SWISH AOI of the SCOOP Play, with some assets also found in pilot study acreage in the STACK Play.

A focus for the company is its arrangement with the newly-relisted Perth company Stonehorse Energy Ltd (ASX:SHE).

As part of the Stonehorse step-up arrangement for the SCOOP and STACK plays in Anadarko Basin, Brookside will step up its interest to about 90% of the Jewell 1-13-12SXH drilling spacing unit (DSU) over time.

As part of this arrangement, Brookside’s US partner and operations manager Black Mesa Energy will production test the Jewell well in the SWISH area of interest (AOI).

The 880-acre area will be the Australian company’s first operated DSU and will be one of several operated DSUs Brookside will control in SWISH AOI.

With Stonehorse waving an opportunity to participate in one Jewell development opportunity, Brookside is continuing to follow a path to fund drilling and completion costs for the high-impact well.

The partners are finalising step-in arrangements for Stonehorse participation in other opportunities in Anadarko Basin.

Brookside managing director David Prentice spoke to Proactive Investors about the duo’s arrangement on camera last week, saying it would involve “Stonehorse participating at the drilling and cashflow level”.

He told the market on Wednesday, October 2, 2019, “We are working closely with the Board of Stonehorse and look forward to continuing to support them as they progress their already successful drilling, production and cashflow based strategy in the world-class Anadarko Basin STACK and SCOOP plays.

“This strategy supports and complements Brookside’s real estate development approach and the relationship that we have formed with Stonehorse via the step-in agreement is a win-win for our respective shareholders.”

Inflection points

  • Financing, drilling and firming up of reserves in Jewell well
  • Acquisition of additional STACK and SCOOP acreage in Oklahoma’s Anadarko Basin during 2019
  • Activity of other operators in the basin, such as Encana Corp (NYSE:ECA) and Continental Resources, Inc. (NYSE:CLR)
  • Coming online of other DSUs Brookside holds an interest in
  • Upgrade to reserves at new and existing acreages
  • Further execution of accretive strategy

Brookside Energy managing director David Prentice will outline the company’s real estate development approach at the upcoming Proactive Investors CEO Sessions in Sydney on October 14, 2019 and Melbourne on October 15, 2019. Other companies presenting at the Sydney and Melbourne events are Minotaur Exploration Ltd (ASX:MEP), Eon NRG Ltd (ASX:E2E), Kingston Resources Ltd (ASX:KSN) and Shekel Brainweight Ltd (ASX:SBW).

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Brookside Energy continues 'Real Estate Development' approach in Anadarko Basin

Brookside Energy Ltd (ASX:BRK) managing director David Prentice updates Proactive on the company's involvement in the world-class Anadarko Basin in Oklahoma, USA, where its 'Real Estate Development' approach is proving lucrative. Although Stonehorse Energy Ltd (ASX:SHE) has withdrawn from the...

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