##{"id":88816,"date":"2020-09-22T09:20:51","date_gmt":"2020-09-21T23:20:51","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=88816"},"modified":"2020-09-22T09:20:51","modified_gmt":"2020-09-21T23:20:51","slug":"research-momentum-building-for-brookside-energy","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2020\/09\/22\/research-momentum-building-for-brookside-energy\/","title":{"rendered":"RESEARCH: Momentum building For Brookside Energy"},"content":{"rendered":"

Pitt Street Research has updated its modeling for Brookside Energy post a new JV and capital raisings<\/em><\/p>\n

Momentum building For Brookside Energy<\/strong><\/u><\/p>\n

By Pitt Street Research<\/p>\n

Brookside Energy Ltd ((BRK)) is a Perth-based energy company with exposure to the most productive oil and natural gas plays (STACK and SCOOP) in Oklahoma’s Anadarko Basin.<\/p>\n

BRK has a strategy based on three pillars focused on 1) operated drilling, 2) producing property acquisitions and 3) land & leasing.<\/p>\n

The three pillars strategy has positioned Brookside to take advantage of the oil and gas cycle at every level while minimising downside risk.<\/p>\n

This approach has allowed BRK to grow in the Anadarko Basin using an asset-light model.<\/p>\n

Orion Project gaining momentum <\/strong> <\/p>\n

In June 2020, BRK has entered a 50:50 JV with Stonehorse Energy ((SHE)) to exploit opportunities to acquire producing oil and gas properties within the SWISH AOI in the Anadarko Basin region.<\/p>\n

Within about two months of operations, the JV has successfully closed two acquisition opportunities, the Newberry Well and the Mitchell Well, both located within the SWISH AOI.<\/p>\n

In addition to acquiring the assets, the JV has managed to unlock their upside potential through implementing low-cost, low risk workover operations, which have resulted in increased reserves, improved net volumes, and expected cashflow levels.<\/p>\n

BRK to grow asset base at a low point in cycle<\/strong><\/p>\n

2Q20 has seen the company experiencing some difficulty in net revenues due to the significantly lower realised oil and gas prices.<\/p>\n

To remediate and conserve cashflows, BRK has adopted some measures to optimise its operations which included cutting its operating cost base.<\/p>\n

Availability liquidity stands at approximately $3.5M. Additionally, BRK has sought to take advantage of the low price point in the commodity cycle by pivoting towards a producing property strategy, which involves acquiring value enhancement wellbores and unlocking their upsides through low-cost operational execution such as workovers.<\/p>\n

Valuation revised to $0.015 – $0.018 per share<\/strong> <\/p>\n

We have re-worked our DCF model by incorporating the JV’s acquisitions and their expected cashflows to be generated from forward gas sales.<\/p>\n

On a per share basis, however, we trim our valuation range to $0.015 – $0.018 (previous: $0.019 – $0.022) caused by the dilution of an expanded share base following the company’s recent equity raisings.<\/p>\n

Key risks we see in BRK include: 1) extended period of weak commodity pricing; 2) partnership risk and 3) execution risk.<\/p>\n

Download the full report<\/strong><\/p>\n

Earlier today the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:<\/p>\n

https:\/\/www.fnarena.com\/index.php\/pitt-street-research\/BRK\/<\/a><\/p>\n

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n

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