Brookside & Stonehorse Provide Update on Orion Project JV

Source: 7/20/2020, Location: Not categorized

Brookside Energy Limited and Stonehorse Energy Limited are pleased to provide an update on the successful operation of the recently announced Orion Project Joint Venture (the Joint Venture). The Joint Venture is targeting producing properties and associated Held by Production (HBP) acreage predominantly within Brookside’s existing area of focus in the SCOOP Play (the SWISH AOI).

- The Joint Venture successfully acquired a 43.45% interest in the Newberry Well (and its associated acres) which is located within Brookside’s Jewell Unit in the SWISH AOI in the southern part of the SCOOP Play
- This vertical well (completed in the Sycamore Formation) which was drilled on an 80-acre spacing unit, holds these acres by production (HBP Acres) i.e. no acreage term or further drilling obligations
- The well was identified by the Black Mesa Energy, LLC (Black Mesa) team as an ideal value enhancement candidate with low terminal decline and the opportunity to increase production via a low-cost workover
- Workover operations have already been completed and have delivered an almost sevenfold increase in daily gas production and significantly extended the wells producing life
- Black Mesa has identified a large number of potential acquisition targets within the SWISH AOI that satisfy the Joint Venture’s investment hurdles and work to advance these opportunities and add to the list of targets is ongoing

Commenting on the announcement, Brookside Managing Director, David Prentice said:
“This is a very positive start for the Orion Project and a great result to kick off the Joint Venture operations. The combination of improved production, cash flow and increased reserves with HBP acres within one of our existing drilling spacing units (DSUs) is compelling and we look forward to continuing to execute on this strategy - taking advantage of the time in the cycle to build production and grow our acreage position in our SWISH AOI.

“In the last few months we have also seen some early signs of stability in the price of oil with some market commentary calling for substantially higher prices as production falls, capex for new development is limited, inventory is drawn down, and demand improves. This price action looks encouraging and given the very strong economics of the acreage within the SWISH AOI we are watching this trend closely and are ready to respond quickly with our development plans for the area.”

Stonehorse Managing Director, David Deloub said:
“Stonehorse is pleased to have made this initial investment under the Joint Venture with Brookside and we look forward to building on this early momentum. The opportunity to partner with Brookside on this project and to have access to the experience and expertise of the Black Mesa team is enabling us to continue to add to our portfolio of producing oil and gas properties in the Anadarko Basin".

The Joint Venture has successfully acquired a 43.45% interest in the Newberry 12-1 well (and associated acreage) located in Carter County, Oklahoma. The Newberry well was drilled and completed in the early 1980’s as a vertical well targeting the Sycamore formation and was spaced on an 80-acre DSU.

The Newberry well is located within Brookside’s Jewell Unit in the SWISH AOI.

This well was identified by the team at Black Mesa as an ideal candidate for the Joint Venture, satisfying the hurdles for investment and importantly delivering HBP acres in the core of the SWISH AOI.

Black Mesa has subsequently completed a workover on this well to improve production. These successful operations resulted in a significant increase in daily production volumes (gas increased from 6Mcf/day pre workover to ~40Mcf/day and 2BOPD post workover). The well is now cashflow positive at the current STRIP pricing and importantly these operations have added proved oil and gas reserves, additional PV10 value and have significantly extended the wells producing life.

The costs1 associated with the acquisition of the well (and the associated acreage) and the cost of the workover, were met by the Joint Venture partners (50/50) in accordance with the terms of the agreement.

The Joint Venture is continuing to work up a pipeline of opportunities that can be pursued during this period in the cycle. In this regard, the Black Mesa team have already identified a large number of potential acquisition targets within the SWISH AOI that satisfy the Joint Venture’s investment hurdles and work to advance these opportunities and add to the list of targets is ongoing.

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