Brookside runs lean and strong in American oil and gas field

An Australian junior has set itself up to withstand the current turbulence in the O&G sector, with operational discipline, near-term cash flow and robust reserves.

Pic: Getty Images

• Brookside Energy is setting itself apart from other operators in the American O&G sector with low operating costs of ~$9 per BOE

• The latest update from its Bruins Well demonstrates Brookside’s focus on operational efficiencies, near-term cash generation and disciplined development pacing

• Bruins is Brookside's ninth operated well in its lucrative SWISH Play, part of its strategy to remain cash flow positive even at lower oil prices

Special Report: Brookside Energy continues to make a name for itself as a lean operator with savvy strategic moves in Oklahoma, including the latest well in its SWISH Play.

From the prolific Anadarko Basin, Australian junior Brookside (ASX: BRK) has just announced that it’s targeting first production and sales from its new Bruins Well project this Quarter.

Completion crews and equipment have been mobilised, with operations now underway at the company’s ninth well within its SWISH Play acreage in the Anadarko Basin, Oklahoma.

MD David Prentice said: "The Bruins Well represents a key step in unlocking the full potential of our Bruins DSU, and we remain focused on delivering optimal production and cash flow outcomes from this well in the near term."

The news from Bruins closely follows Brookside’s release of its March Quarterly detailing beefed up reserves and a strong cash position to make the most of the inevitable recovery in its sector, alongside strong production.

Resilience built in

But the key factors setting BRK apart for eagle-eyed bargain hunters is its below industry average costs from disciplined operations in sought-after North American acreage.

“Our business is built to thrive in tough markets” Prentice said.

“We run lean and disciplined with lower than industry average operating costs of around $9 per BOE. That means we remain cash flow positive even at lower oil prices.”

While the lower West Texas Intermediate (WTI) price of ~US$56 a barrel may provide relief for motorists, it’s giving the jitters to many US oil producers which, according to independent research house Rystad Energy, face all-in breakeven prices above US$62.50.

Prentice added: “Even if we stopped drilling after Bruins and prices stayed low for the next five years we’d still generate more cash flow than our current cap during that time.

“Best of all, our oil and gas reserves would still be in place ready to develop when prices rebound.”

Brookside’s production for the March quarter averaged 1,920 barrels of oil equivalent (BOE) per day on a net basis, with valued liquids-rich barrels continuing to drive its revenue and margin strength.

The company has a strong cash position of A$12.68 million, up almost 12 per cent on the previous quarter. That was after cash receipts of A$18.1 million in the March quarter, which did not include Brookside’s share of revenue from production at Gapstow development operated by American company Continental Resources.

With those results plus 2P net reserves at 12.35 million barrels of oil (MMBO), Prentice said the company had the resilience to withstand the current conditions.

Swooping into SWISH

Brookside gave the area its name as it’s the Sycamore and Woodford shale In the Southern Half of SCOOP, which stands for South Central Oklahoma Oil Province.

Larger American companies have now followed Brookside’s lead into the Area of Interest and are using the SWISH moniker given to it by Australian company – and one of the few ASX-listers in the North American sector.

Prentice said: “We made this discovery and some of the clever work we did early on in prospecting delivered up these results.

“We have the capacity and the capital to repeat that so we’re excited to be able to look at adding opportunities and more barrels down the track when the market conditions are right.”

“We now have some of more successful companies surrounding us, so we’re in the middle of a very hot area.”

This article was developed in collaboration with Brookside Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Brookside runs lean and strong in American oil and gas field