Brookside Energy Limited A Low-Cost U.S. Oil Producer with Price Tailwinds, Trading at a Steep Discount – Initiating Coverage

Disclosure: Brookside Energy Limited has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.

Company Details

Sector – Real Estate

Industry – Oil & Gas Exploration & Production

Trading Information

Trading information – BRK.AX : ASX

Report Highlights

• Acreage in a Tier-1 U.S. Hydrocarbon Basin: BRK operates in western Oklahoma’s Anadarko Basin, one of North America’s most prolific hydrocarbon regions, with over a century of production history. Recent oil price spikes driven by geopolitical tensions, and conflict have strengthened crude prices, and renewed investor attention across the energy sector.
• Shale-Driven Basin Revival: Since ~2010, shale development, now a widely adopted and highly successful industry standard, enabled by horizontal drilling and multi-stage hydraulic fracturing, has unlocked vast resources that were previously difficult to access in tight rock formations, extending production life across mature basins. Shale production now dominates U.S. oil output, underscoring its scalability and economic effectiveness.

• Strong Growth & Execution: BRK’s production has grown from 244 barrel of oil equivalent per day/boepd (2021), to ~1,700 boepd from nine wells. From 2021 to 2025, revenue increased from $13M to $54M, and EPS improved from ($0.10) to $0.03. Free cash flow turned positive in 2025. Notably, all nine wells were successfully drilled, and completed on the first attempt, underscoring strong technical execution. A key advantage is its low production cost structure of $5–$10/boe (spot: $94/bbl), supporting resilient profitability, even if oil prices normalize from recent geopolitically driven highs, as Middle East tensions ease.
• Large Undeveloped Resource Base: BRK has produced 3.5 million barrels of oil equivalent (mmboe) since 2021, while retaining 12.52 mmboe of remaining reserves, supporting 19 future drilling locations. We estimate cash from operations will comfortably fund development of the 19 additional wells, limiting financing risk, and share dilution.
• Strong Financial Position: Debt-free balance sheet supported by a $35M undrawn credit facility, providing financial flexibility for continued development.
• Valuation Disconnect & Multiple Catalysts: BRK trades ~51% below comparables across key metrics – EV/Forward Revenue 0.71x vs 2.00x, EV/Forward EBITDA 1.76x vs 3.78x, EV/daily production $26k vs $41k, EV/2P reserves $3.60x vs $7.33x.
• Multiple Near-Term Catalysts: We anticipate record revenue this year, driven by higher production, and oil prices. Key catalysts include an ongoing two-well drilling program, and continued land expansion through leasing. The company is also executing a share buyback program, signaling management’s view of undervaluation, and an NYSE American ADR listing (targeted for H1-2026), which we believe should broaden the investor base, and improve liquidity.

Key Risks

• Highly dependent on oil prices
• Oil prices are volatile, and driven by macro and geopolitical factors
• Exploration and drilling success is uncertain
• High upfront drilling and completion costs

Price and Volume (1-year)

* Brookside Energy has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in A$ except commodity prices, which are in US$.

Anadarko Basin (Oklahoma, USA)

BRK operates in the Anadarko Basin, one of North America’s most productive hydrocarbon regions.

Headquartered in Perth, Western Australia, and operating in the U.S. since 2015, with operations in Tulsa, Oklahoma

Anadarko Basin: Location and Extent

Source: Novi Labs

BRK’s portfolio sits within the Anadarko Basin, which covers ~58,000 sq miles (150,200km²), mainly in western Oklahoma, with extensions into Texas, Kansas, and Colorado

Oil exploration in the basin began in the early 20th century

The basin has a production history of over 100 years, yielding tens of billions of boe from thousands of wells. To put this in perspective, global oil production is ~ 100 mm boe per day. The basin is actively developed by several major and mid-sized oil and gas companies.

The basin is considered mature, but since around 2010, it has seen renewed activity driven by shale development. Shale reservoirs contain oil trapped in low-permeability rock, meaning the rock does not easily allow fluids to flow, unlike conventional reservoirs where oil flows naturally into wells. Shale production involves horizontal drilling, and multi-stage hydraulic fracturing, in stages, to create flow pathways. This modern method, widely adopted since the mid-2000s, contrasts with conventional production, which relies mainly on vertical wells, and natural reservoir pressure.

A mature basin revived by horizontal drilling and fracking

According to various sources, the basin is still estimated to host tens of billions of boe in recoverable resources, supporting multiple decades of remaining drilling potential.

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