Brookside Energy’s acquisition of drilling JV wells and reserves in STACK Play will boost production

Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) is enhancing its strong position in the world-class Anadarko Basin of Oklahoma by purchasing the well-bore interests and associated PDP reserves that are subject to its Drilling Joint Venture in the STACK Play. The company has successfully concluded negotiations with joint venture parties to acquire 11 producing wells and the associated PDP reserves. This will deliver an almost four-fold uplift to Brookside’s net daily production, which will increase to approximately 110 net barrels of oil equivalent (BOE) post-closing of the acquisition. High-quality low-decline production stream Brookside managing director David Prentice said: “We are absolutely delighted to have successfully concluded these negotiations with Merchant Funds Management to acquire this high-quality low-decline production stream in the STACK Play.” This acquisition is expected to deliver additional stable, long-life production at an ideal time in the pricing cycle, and the company says this makes the deal highly accretive to shareholder value with considerable exposure to further upside as the outlook for oil and gas prices continues to improve. Shares higher Shares have been more than 23% higher to A$0.0255, a new high of seven years. Prentice said: “Merchant was a founding shareholder in Brookside and their commitment to supporting our strategy as both a large shareholder and joint venture partner has enabled us to grow and prosper through what has been one of the most challenging periods for our industry in over 100-years. “We look forward to their continued support as we enter this next very exciting period of the company’s growth as we kick-off the operated drilling pillar of our business and begin to unlock the very significant value we have built within our SWISH AOI DSUs.” The low-cost acquisition demonstrates Brookside’s dedication to increasing shareholder value via a strict adherence to its three-pillar strategy and the ability of the team to deliver on that strategy. De-risking purchase Brookside has extensive technical experience with the wells and a good working relationship with the operators through its current working interest as a partner in the STACK Joint Venture. This will go a long way to de-risking the purchase of producing assets and the company has very high confidence that these wells will perform as expected for the long term. Consideration for this acquisition of approximately US$2 million will be satisfied via the issue of 125 million fully paid ordinary Brookside shares. This equates to around US$8.30 per BOE acquired, a considerable discount to the current Forward Strip Pricing for oil and gas. Upside exposure It means that Brookside can instantly benefit from current commodity pricing with upside exposure to future price increases. With activity increasing in the STACK Play, Brookside will also be well placed to participate in any future development of its PUD acreage in this area. Acquisition wells. At closing the Drilling JV will be dissolved and Brookside will acquire 100% of the available Working Interest in the relevant wells and the associated PDP reserves.