BRK 0.00% 1.0¢ brookside energy limited

Hi @Ghp1 You are 100% on the mark :)...BRK have the full...

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    Hi @Ghp1

    You are 100% on the mark ...BRK have the full flexibility on how they will fund the drilling of the well, either paying for the well themselves through to a well bore only contract , the mechanism of which you described perfectly.

    @Aurelius1 correctly stated, with ~ $700,000 in the bank, BRK don't have the cash in hand to fund the drilling of an ~$8 million dollar well, and hence, the market may be skeptical of BRK's ability to fund the well... there may be an expectation in the market of a significant farmout, or a highly dilutive CR because those are pretty well the only options known/ understood or available in the Aussie oil and gas E&P space. This may be one of a number of reasons why as the well spud is approaching, the share price is going down, rather than the other way.

    As the general market seems to know didly-squat about BRK , it's operations and how things can be done in the US, it is not surprising that there is a significant negative sentiment surrounding this company...it can be said that the company has much to do with this due to it's marketing ( that is a discussion for another day)

    BRK has not specifically announced the funding mechanism details as yet, possibly because not all the pieces of the puzzle have fallen into place as yet, but there is enough information around that can be " dug up" to form a pretty good picture of what the funding process will be. What it won't be, is an equity raise at current levels.

    Firstly, there is a company called Nickelore (ASX NIO) which has negotiated " step in rights" to fund a number of wells for BRK on a well bore only basis... it has been trying to raise up to $8 million over the past 7 months and has finally successfully raised the minimum $4.2 million it needs to begin it's activities. It is still trying to raise more cash at this stage.

    http://www.nickelorelimited.com.au/

    It will be renamed Stonehorse ( ASX SHE) and should be relisting in the next month or so after meeting the last of a few listing requirements ( in the prospectus). I expect BRK to start announcing information regarding SHE financing and well details shortly ( ie ..in the next few weeks) The significance of SHE to BRK has a few components.

    1) SHE will refund a large proportion of the $1.1 million BRK paid up front to fund approximately 40% of the cost of the highly successful Bullard well.... the final amount is probably still to be negotiated and may be done on a NPV10 basis of the reserves left in the well at purchase date. With this cash BRK should be able to fund approximately 10% of the Jewell well for ~ a 10% stake in the well.

    2) SHE will also participate directly on a well bore only basis for 40-50% interest in the Jewell well ... if they raise the more cash, my understanding is they can fund a higher equity if they desire.... this information can be found through Red Leaf Securities, who are the broker for this round of capital raise.



    Then there are the USA based drillco's that may participate in any remaining equity available, again on a well bore only basis, with the possibility of a small free carry interest for BRK.

    Success with the Jewell well will be a significant proof of concept for the BRK operations in SWISH, and will precipitate further potential SHE and US drill co participation in the rest of the SWISH operation.

    The cash flow from the Jewell well, STACK A wells reaching payout, and from the BRK participation in further STACK A drilling units over the next 6-9 months, will also provide a leg up in further funding of BRK operations.

    Cheers

    Dan
 
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