Perth - Brookside Energy Limited (ASX: BRK) and Stonehorse Energy Limited (ASX: SHE) (the Companies) 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).
HIGHLIGHTS
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.
BACKGROUND
Brookside Energy is a Perth-based ASX listed company that generates shareholder value by developing oil and gas plays in the world-class Anadarko Basin. The Anadarko Basin is a proven Tier One oil and gas development province with significant existing oil and gas gathering and transportation infrastructure, a competitive and highly experienced oil and gas service sector, and a favourable regulatory environment. Brookside is executing a 'Real Estate Development' approach to acquiring prospective acreage in the Anadarko Basin and adding value to it by consolidating leases and proving up oil and gas reserves. The Company then has the option of selling the revalued acreage or maintaining a producing interest. This model is commonly used by private equity investors in the sector and has been successfully piloted by Brookside in the northern Anadarko Basin's STACK Play. Brookside's subsidiary and manager of US operations, Black Mesa Energy is an experienced mid-continent operator, which identifies opportunities and executes development under a commercial agreement with Brookside. The business model effectively assigns risk and provides commercial incentives to maximise value for both parties. The Company is now set to scale-up its activities and asset base significantly with its operated- interests in the SWISH AOI.
Stonehorse Energy is a Perth-based ASX listed oil and gas exploration and production company which currently has working interests in a number of producing oil and gas assets located in Oklahoma and Texas in the United States. The Company's overall objective is to be cashflow accretive by building a portfolio of working interests in high quality producing assets delivering a return on investment to its shareholders reflecting risk appetite and capital availability.
This announcement has been authorised for release by the Boards of Directors of Brookside Energy Limited and Stonehorse Energy Limited.
Contact:
David Prentice
Tel: (+61 8) 6489 1600
Email: david@brookside-energy.com.au
Forward-Looking Statements and Other Disclaimers
This announcement may include forward-looking statements. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions, which are outside the control of Brookside Energy Limited and/or Stonehorse Energy Limited (Brookside Energy, Stonehorse Energy or the Company). These risks, uncertainties and assumptions include commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal, or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied in this announcement. Given these uncertainties, readers are cautioned not to place reliance on forward-looking statements. Any forward-looking statements in this announcement speak only at the date of issue of this announcement. Subject to any continuing obligations under applicable law and the ASX Listing rules, Brookside Energy and Stonehorse Energy do not undertake any obligation to update or revise any information or any of the forward-looking statements in this announcement or any changes in events, conditions or circumstances on which any such forward looking statement is based.
This announcement does not constitute investment advice. This announcement does not take into account any person's particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations in this announcement are not intended to represent recommendations of particular investments to particular persons. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments
The information set out in this announcement does not purport to be all-inclusive or to contain all the information, which its recipients may require in order to make an informed assessment of Brookside Energy or Stonehorse Energy. You should conduct your own investigations and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this announcement. To the fullest extent permitted by law, the Company does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information, statements, opinions, estimates, forecasts, or other representations contained in this announcement. No responsibility for any errors or omissions from this announcement arising out of negligence or otherwise is accepted.
ABOUT BLACK MESA ENERGY, LLC
Black Mesa Energy, LLC is a Tulsa-based oil & gas exploration and production company focused on profitable development of petroleum properties located in the Mid-Continent oil province of the United States. Our lean and highly specialized technical and operations team is committed to providing attractive returns for our investors and shareholders by generating and drilling high quality oil and gas prospects. The founders of Black Mesa have worked together for over 30 years at companies they previously founded, including Medallion Petroleum, InterCoast Energy and Brighton Energy. Over the course of their careers, the Black Mesa team has drilled hundreds of horizontal wells and thousands of vertical wells in numerous mid-continent oil and gas basins. In addition to the financial backing from the Black Mesa shareholders, Black Mesa partners with outside investors on larger-scale projects by offering non-operated direct working interest participation.
BROOKSIDE ENERGY LIMITED 
