Brookside Energy Ltd (ASX:BRK) shares have surged 20% intra-day after closing an initial acquisition and completing a successful workover at the Orion Project Joint Venture with Stonehorse Energy Ltd (ASX:SHE).
The joint venture is targeting producing properties and associated Held by Production (HBP) acreage predominantly within Brookside’s existing area of focus in the South Central Oklahoma Oil Province (SCOOP) Play.
The companies recently 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 (area of interest) in the southern part of the SCOOP Play.
Workover operations completed
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 team as an ideal value enhancement candidate with low terminal decline and the opportunity to increase production via a low-cost workover.
Brookside’s subsidiary and manager of US operations, Black Mesa, is an experienced operator which identifies opportunities and executes development under a commercial agreement with Brookside.
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.
Building production and growing acreage
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.”