Brookside Energy Limited

Q3 production declined 11% QoQ to 1,290 boepd, 5% below our estimate, reflecting natural declines, and the absence of new wells coming online. Revenue fell 27% QoQ, 6% below our estimate, reflecting both lower realized oil prices and reduced production and sales volumes.

We expect a stronger Q4, supported by the company's recent two-well development program. These are the first two of 19 proved undeveloped drilling locations. Both wells commenced sales in October, and are expected to contribute to Q4 production, providing a catalyst for production, and cash flow growth.

BRK has acquired 123 boepd of oil production, increasing its production base by 9%, for U$1.1M. The purchase price equates to $9K per boepd vs. $29K for comparable juniors, a 68% discount. The deal also increases BRK’s working interests in several wells it already operates, strengthening near-term production, and cash flow, at a low acquisition cost.

The company also completed drilling of two wells, which are now moving into completion, and stimulation ahead of Q4 production. The wells will be fractured together before being brought into production, with initial production results the next key catalyst. Based on prior results, we believe each well could potentially deliver 1,000–2,000 boepd initially, providing significant production upside. BRK has maintained a 100% drilling success rate, with all nine previous wells successfully producing.

BRK has substantially completed construction of the production facilities for its upcoming two-well program, enabling a smooth transition from drilling to production and sales once the wells are completed.

In Q1-2026, BRK's nine producing wells averaged 1,495 boepd. All wells were completed on the first attempt, highlighting the company's strong operational execution.

We see meaningful production upside from the two new wells, with first production expected in H2-2026. Based on the performance of prior wells, initial production could reach 1,000–2,000 boepd per well.