Perth - Stonehorse Energy Limited (ASX: SHE) and Brookside Energy Limited (ASX: BRK) (the Companies) are very pleased to announce the formation of a new Joint Venture (Orion Project) which will enable the joint venture partners to take advantage of opportunities to acquire producing oil and gas properties in the world-class Anadarko Basin, Oklahoma.
Highlights
The Orion Project Joint Venture is a 50/50 joint venture between the Companies, with Brookside Energy's subsidiary, Black Mesa Energy, LLC responsible for identifying, acquiring and operating the properties on behalf of the joint venture1
The joint venture will target natural gas weighted, mature long-life production assets with very low terminal decline and upside that can be unlocked from remedial workover activity and/or unexploited or underexploited behind pipe or deeper productive zones
The Orion Project offers significant scalability, with the initial focus area extending over 1,100 square kilometres in the Anadarko Basin, covering several historic and currently producing oil and gas fields and many hundreds of vertical wellbores
Work has commenced on the Orion Joint Venture Project, with the Black Mesa Energy team analysing comprehensive data sets covering the focus area to refine and identify acquisition opportunities - discussions have commenced on several targets already
The current macro environment has created a unique opportunity to acquire producing properties in an area that we know extremely well at a time in the cycle when prices are below the incentive price for aggressive development
Commenting on the announcement, Stonehorse Executive Director, David Deloub said: 'This new venture affords us the opportunity to continue to build out our oil and gas asset portfolio by leveraging off our existing relationships with our JV partner and the technical team at Black Mesa through the acquisition of producing properties within our focus area in a low commodity price environment'.
Responding to the Macro Environment
Recent global events that have impacted demand for oil and gas, together with the supply side tensions between the OPEC+ nations have resulted in sharply lower commodity prices. This has created a significant opportunity for companies that are able to respond to this macro environment.
The current price environment has seen a dramatic drop in the level of drilling and completion activity across the US basins (including the Anadarko Basin). This reduction in activity is likely to have a lasting impact on future US oil and gas production and help to quickly restore the apparent supply demand imbalance, putting upward pressure on prices.
In particular we see natural gas prices being a very strong beneficiary of this recovery with some commentators calling for much higher prices later this year and into 2021 and beyond. This environment has created a unique opportunity to acquire producing properties in an area that we know extremely well at a time in the cycle when prices are below the incentive price for aggressive development.
Joint Venture Structure and Key Metrics
The Orion Project is a 50/50 joint venture between Stonehorse Energy Limited and Brookside Energy Limited, with Brookside's subsidiary Black Mesa Energy, LLC responsible for identifying, acquiring and operating the properties on behalf of the joint venture. The joint venture participants have committed to an initial combined investment in the Orion Project of US$500,000 with the opportunity to expand this commitment as the joint venture grows.
The joint venture will be acquiring producing properties and the associated 'Held by Production' acreage, with an emphasis on natural gas weighted production from mature vertical wells with very low terminal decline and substantial remaining economic life. The producing properties will be cashflow positive at the current Forward Strip pricing, with upside that can be unlocked from remedial workover activities or from unexploited or underexploited behind pipe or deeper productive zones.
Joint Venture Objectives
The joint venture will acquire a portfolio of operated, long-life producing wellbores with upside that can be unlocked through low-cost, low-risk workovers. The Companies aim to build out this portfolio at a low point in the commodity price cycle and then add value through operational execution. The ultimate objective is to grow this asset base to complement our existing asset base within the SWISH area and to increase both operating cashflows and reserves.
Contact:
David Deloub
Tel: (+61 8) 6489 1600
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 Stonehorse Energy Limited ('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, Stonehorse Energy does 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. Shareholders should not rely on this announcement. 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 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.
STONEHORSE ENERGY LIMITED 
