Brookside Energy buoyed as US major ExxonMobil participates in Jewell drill spacing unit

Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) (FSE:8F3) confirms that ExxonMobil Corporation (NYSE:XOM), through subsidiary XTO Energy Inc, has taken up a 4.5% working interest in the Jewell drill spacing unit (DSU) in Brookside’s SWISH area of interest (AOI) in the world-class Anadarko Basin. Brookside will retain at least 87% working interest in the Jewell DSU, with its subsidiary Black Mesa Energy LLC as the operator. In another strong validation of the company and its project, Citation Oil and Gas Corporation, one of the largest private oil & gas companies in the US, has elected to take up its 2.3% working interest, with a further 5.7% taken up by a combination of private equity and smaller private oil and gas firms. Affirmation of the SWISH AOI Brookside managing director David Prentice said the participation by Exxon and Citation affirmed the potential of the Jewell well. “We are delighted by the response of these participants, some of the largest and most experienced oil and gas companies in the world, in electing to participate in the development of the Jewell DSU,” he said. “This is not only a significant vote of confidence in the quality of our acreage in the southern central Oklahoma oil province (SCOOP) but also a very strong endorsement of Black Mesa as operator of the DSU and their technical and operational ability to recover the maximum oil and gas reserves in the most efficient manner possible. “We are looking forward to working with these new partners and to keeping our shareholders informed as we move closer to completion and the establishment of oil and gas sales.” Investors have also responded positively with shares up as much as 17.4% in early trade to A$0.027. Partner details Exxon subsidiary XTO is a leading oil and natural gas producer in the US with expertise in developing tight gas, shale gas and unconventional oil resources. XTO or its affiliates operate in all major US unconventional producing regions and in western Canada, with interests in more than 50,000 producing oil and natural gas wells and more than 11 million acres with a total resource base of ~33 billion barrels of oil equivalent (BOE). Citation, meanwhile, is one of the largest privately-held independent oil and gas acquisition, development and production companies in the US, with interest in ~15,600 wells, more than 216 million net BOE of proved reserves, and net production of ~32,500 BOE per day. Jewell potential The Jewell well has been drilled and work is now underway to create facilities that support future oil and gas production. So far, work has commenced on surface production facilities, including the tank battery, oil and gas separators. Specifically, this includes a 48-inch, 10-foot horizontal three-phase heated separator, a 6-inch, 20-foot vertical heater treater and a 30-inch, 10-foot vertical separator. To provide adequate tankage, Brookside will construct six 400-barrel storage tanks within a steel containment dyke. Finally, a 6-inch, 2,700-foot gas line will connect the Jewell well to a nearby gas sales line. The development comes after the Latshaw Drilling Company drilled the Jewell Well, targeting the Sycamore formation to a depth of around 7,500 feet. Overall, the well was drilled to a total measured depth of roughly 14,100 feet. To prepare it for the next phase of development, the well has been cased with production tubing, which will be perforated and treated to allow oil and gas production. The Latshaw Drilling Rig 14 has been demobilsed and is currently stacked on the Jewell Well location in Carter County. Inaugural well Importantly, preparation for production at the Jewell Well represents an important first step in Brookside’s broader drilling program. In fact, the Jewell Well is the first Brookside-operated well to be drilled and completed in the Jewell drill spacing unit (DSU) within the SWISH AOI. More broadly, it’s the first in a potential five-year, 20-plus well development drilling program across three operated DSUs that Brookside controls within the SWISH AOI. The Jewell, Flames and Rangers DSUs will be developed as part of a conservatively estimated 11,606,000 net barrels of oil equivalent (BOE) prospective resource. Promisingly, other producing wells in close proximity give Brookside hope that Jewell will be a strong producer. To date, a Casillas Operating, LLC-operated well, around three miles west of the Jewell DSU, has produced around 580,000 BOE over 19 months - considerably higher than Brookside’s conservative estimate for the Jewell Well. In addition, a Continental Resources Inc-operated well, around one mile southwest of the Jewell DSU, has produced roughly 430,000 BOE in approximately 14 months. - Daniel Paproth