Brookside Energy Ltd (ASX:BRK) (FSE:8F3) has constructed the necessary production facilities for the Jewell Well operation, an oil and gas asset within Oklahoma’s world-class Anadarko Basin.
With construction now complete, the ASX-listed energy stock has the surface facilities required to accommodate oil & gas production from the Jewell Well.
A tank battery and separators have been set on location and plumbed in, ready to receive and commercialise oil, gas and associated natural gas liquids from the Oklahoma well as soon as it is completed for production.
Meanwhile, Brookside is working on a gas pipeline that will tie in with a nearby DCP gas sales line, with construction progressing on schedule.
In a major financial move, the ASX-lister has also moved to retire its Anadarko leasing facility by repaying the fund in full. This will make Brookside debt-free and strengthen its cash position as it prepares for revenue from oil and gas sales.
Black Mesa, Brookside’s controlled subsidiary, operates the Jewell Well within the SWISH Area of Interest (AOI), a key portion of the Anadarko Basin.
Production facilities complete
News that work on Jewell’s surface production facilities has been finalised comes just three weeks after Brookside announced it had started construction on the facility. Positively, all work was completed safely, on schedule and without incident.
Brookside is also hard at work constructing an approximate 2,700-foot, 6-inch gas line from the Jewell Well to a tie-in point with a DCP Midstream gas sales line.
Now Jewell’s production facilities are complete, the oil and gas producing hopeful intends to commission the surface facilities and finish the DCP gas sales line.
Brookside will also prepare the location to move-in and rig up completion equipment.
Leasing facility to be retired
Now it is gearing up for production from the Jewell Well, Brookside has set its sights on becoming debt-free by retiring the Anadarko leasing facility.
With the facility poised to mature at the end of this month, the energy stock has decided to pay off the outstanding US$3 million balance through a share placement and cash payment.
Brookside intends to raise as much as US$2 million by issuing fully paid ordinary shares under its existing placement capacity, while the remaining US$1 million owing will be repaid in cash.
Overall, the company believes funding the majority of the repayment through an equity issue represents a strong endorsement of the company’s prospects and the work that has been completed to de-risk the Jewell Well and the SWISH acreage more generally.
Once the Anadarko Leasing Facility is retired — a move which should complete by week’s end— Brookside maintains it will be debt-free with a strong cash position.
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 will be the first Brookside-operated well to be drilled and completed in the Jewell 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.