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Rapid Payout for STACK Play Wells Creates Long-Term Value

Source: 10/21/2020, Location: Not categorized

Brookside Energy Limited is pleased to provide the following update on the performance of its STACK Play non-operated Working Interest wells (Non-Operated Wells) in the Anadarko Basin, Oklahoma.

• The payout1 profile of the Non-Operated Wells validates Brookside’s acreage selection and acquisition process
• 75% of the Non-Operated Wells that have paid out to date did so in 12-months, with an average time to payout of 16-months
• 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
• Brookside’s strategy to remain disciplined and target only premium acreage and maintain low entry costs underpins these results
• Our focus on exploitation rather than exploration, and a commitment to high-quality reservoirs, ensures strong rates of return through commodity price cycles
• These Non-Operated Well results provided the catalyst for our pivot to operated drilling in the Company’s SWISH AOI
• The Company has now established a twenty well, 5-year, inventory of premium “drill-ready” locations with the opportunity to expand this through further leasing

Commenting on the announcement, Brookside Managing Director, David Prentice said:
“We are very pleased to provide our shareholders with 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.”

Analysis of sales data for Brookside’s Non-Operated Wells shows that 75% of the wells that have achieved payout to date did so within 12-months of first sales with the average time to payout being 16-months. This is a tremendous result given the recent variance in commodity prices.

Furthermore, these 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.

The Jewell, Flames and Rangers DSU’s are located in the core of this trend. Brookside estimates that in excess of US$250 million of new capital has been invested in the SWISH AOI in just the last three years. The majority of this capital (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 we have achieved to date from our Non-Operated Wells provided the catalyst for our pivot to operated drilling in the SWISH AOI.

Brookside has now identified twenty premium “drill-ready” locations in these DSU’s alone, with the opportunity to expand this position through further leasing and build on what is already an impressive 5-year drilling inventory.

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