The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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The following link is courtesy of craigaus69 on the HotCopper Tamboran board and has good indications for the forward pricing of nat gas in Australia -- that might help Falcon get a better price in 18 months time. However, two or three months time would be much more appreciated -- hopefully -- LOL.
https://aemo.com.au/newsroom/media-release/gas-market-outlook-signals-need-for-new-investment
From what I perceive, Falcon's fair value has never been about the "daily sp". The daily stock price is just noise. The true fair value of this bird is when we wake up to read the RNS that Falcon Oil & Gas, Inc has been sold for a price of X amount. I have to agree with WetWater and others. Collectively, the market will decide on Falcon's value when it is sold, not the daily sp. But it is fun to speculate. GLTA
Longknife: When Falcon sells, it will receive a 'fair value' for its 1 million acres of the Beetaloo - I can't put a pin in that 'fair value', but the market will help establish that price. There will be multiple buyers interested in Falcon's acreage - let's let these bidders establish a value and see how their bids aligns with the BOD's. My point is that the valuation of Falcon's acreage will be based on a fair assessment by the market rather than a simple multiple of the current stock price.
As far as timing, I refer you to Philip's estimate of a deal being done with 18 - 24 months. That being the case, in Falcon time, that's just around the corner!
If that fair value is US $.25 - .35, so be it, I am hearing a minimum of US $.60 - and some people I put credence in go up to US $1.00 - we shall what the market thinks as pricing will be out of our hands.
Too cloudy to view the flare on the Sentinal hub today, the last available picture was from 13th March:
https://apps.sentinel-hub.com/eo-browser/?zoom=16&lat=-16.84132&lng=133.65219&themeId=DEFAULT-THEME&visualizationUrl=https%3A%2F%2Fservices.sentinel-hub.com%2Fogc%2Fwms%2Fbd86bcc0-f318-402b-a145-015f85b9427e&datasetId=S2L2A&fromTime=2024-03-13T00%3A00%3A00.000Z&toTime=2024-03-13T23%3A59%3A59.999Z&layerId=6-SWIR&demSource3D=%22MAPZEN%22
Anyone have any flare overheads from the site?
Wet,
Sounds great! And I hope that's the case! However, when you say; "Falcon's currently depressed stock price doesn't even come close to reflecting the fair value of a 500-meter SS1H well - much less when the pilot program kicks off with its first two 3K wells to better prove commerciality.", then surely the entire acreage is worth way more than 6-10x the current stock price?? We will see if there are buyers that come forward- I don't think POQ has done any groundwork to line up buyers given the well numbers work out. If they don't or if BS exerts enough pressure on his friends, POQ could be sitting on this stock for years and years and hopefully we will be able to receive some dividends at the very least. Which buy the way, might not be the worse thing for BS's interest in Falcon- which is sure to grow. JMHO. I guess we will see what happens.
Willowgrove and LongKnife: Falcon's board has always been in tight agreement with our CEO that the objective of our non-operating company is to sell its interest in the Beetaloo for what the ACREAGE IS WORTH - not based on nor having anything to do with the current stock price of Falcon. As we know, Philip is not one to prop up or hype Falcon's stock price - IMO, he could give a #hit what today's stock price might be - he has always told me, as he has many others, that you won't realize the true value of Falcon until the hammer drops. Falcon's currently depressed stock price doesn't even come close to reflecting the fair value of a 500-meter SS1H well - much less when the pilot program kicks off with its first two 3K wells to better prove commerciality. The board members are not idiots - they realize the potential value of Falcon's 22.5% of the Beetaloo - the 'largest undeveloped shale basin in the world' They are not looking to give it away for 2X-3X valuation of what, IMO, is a purposely depressed stock price - for what reason I do not know.
I agree with Newt - I suspect we will see between 6X and 10X today's stock price - that range has a lot to do with the timing of any offer received. If the next two wells come in at 18-20 mmcf/d, eyebrows will be raised across the industry, and then Falcon will begin entertaining offers which hopefully meet the board's expectations - if we make it till those two wells are completed with 90–120-day flow rates, then I will be happy that I didn't sell out for 2X - 3X of today's price as you gentlemen suggest.
GLA
You are wrong Mr WillowGrove. And for the record so are you Longknife = so very wrong indeed.
I stand four square with Mr Newtofo on this. I like too Mr Wetwater's earlier comments. Moreover I'm very confident that the list is a lot longer than you think Mr Smallfish. For the record there is quite a few of us who have reached the same conclusion as Mr P:oods.
Newt isn’t stupid. BUT… it’s comical to suggest that the Board of a publicly traded stock would “not entertain” an offer for 3x current market price. Stay objective Mr Newt!!! You were young man when you invested in Falcon. No longer.
LK, This shows how ignorant newtofo is about this stock or any stock for that matter. What a fool, clueless.
Newt, I have never seen a CEO or BODs NOT entertain an offer for 2-3X their current share price. Remember, the market has built in the potential it sees for FOG right now- we may not agree w it but it is what it is. I would be thrilled if someone like Inpex came in w a bid for 800M but they certainly don't seem interested yet. Yes, we can say "wait until the 90 day flow rates" or "the next two wells" etc, but we have already shown we have no idea what the catalyst will be to move the stock price. We all thought it would be the recently announce stellar flow rates. We were wrong. As far as rather seeing FOG go bust trying for a higher price in the next 18-24 months (which seems to be the new talking point as far as timelines), vs take 2-3x the amount........I disagree and will take the 2-3 bagger.
P.S. -- it is also worth keeping in mind that Falcon had the ROFR on Origin selling of their interest, and so any ROFR might be with Falcon, but certainly not with Sheffield or Tamboran. That ROFR that POQ originally put into the Origin deal back in 2014 was the reason that POQ negotiated the extra $6.75 million contribution by Tamboran towards the next two wells, (after the 9 well Origin program was completed), and how POQ was able to also negotiate the opt-in or opt-out clause on all future expenditures. That opt-in or opt-out clause is for Falcon's benefit and will belong to Inpex or any other purchaser going forward -- so certainly has added value to any buyer of Falcon's 22.5% interest in all three permits.
Note -- after all the years that I have been invested in Falcon -- I will tell you (and will tell the same to POQ) -- I would rather see Falcon go bust trying to get this deal done in the next 18 to 24 months for six or seven times the current price than to ever sell for two or three times (and would vote for that position as well if it came to a vote)!!
Smallfish and Longknife -- I am fairly sure that Sheffield does not have any kind of a ROFR (right of first refusal) on Falcon selling their interest to a third party -- as POQ has never brought that up in any discussions nor investor presentations. I would agree that Sheffield most likely has a ROFR with Tamboran -- as he has more invested in his partnership with Tamboran -- plus bought out the other 38% of Origin's interest almost two years ago, so ROFR would surely be in place with Tamboran.
There is almost zero chance that POQ -- nor the BOD -- would even entertain an offer for Falcon that was 2 or 3 times where it is now, but any offer that was five or six times what Falcon is currently trading at would have to be taken to the Board of Directors for their input. If you talk with Cavendish's analyst, James McCormack or the analyst at Tennyson -- they will tell you clearly that Falcon should be trading two or three times higher NOW on this stellar flow rate, but certainly not a chance that Falcon would entertain this low of an offer.
Keep in mind smallfish's caveat about a vertically integrated producer from Japan, Korea, or China having a greater tolerance for risk and a motive to be a non-op going forward. Inpex has spent over $35 billion dollars developing the Browse basin and their two LNG plants in Darwin. Inpex wants to build a third LNG train in Darwin, but needs access to 5 TCF of gas before they can commit to have that third train built by 2030. I don't know the exact figure, but there is good reason to believe that the Core dark blue area in Falcon's permits, which covers one million acres, may have around 5 TCF of recoverable gas to Falcon's side of the equation. After spending $35 billion for their two existing LNG trains in Darwin -- it may not be a very big gamble on Inprex's part (or one of the other asian integrated players) to spend another couple billion to access Falcon's share of that gas without any interest in being an operator at all. Inpex would have to buy out Falcon's interest for something like 800 to 900 million and then have another $billion to cover their share of forwarding operating costs as the one million acres gets developed, but that is a significant discount to what it cost Inpex to develop the Browse underwater gas basin -- with it's 12 TCF of recoverable gas in place.
I tend to agree with you, he has an advantaged position with access to all the technical data across all operators. Combined with a tolerance for early stage activity he is in a very good position.
It will be difficult for a laggard to value this heavily without production history, almost impossible really. The caveat I would put on this is that a vertically integrated producer from Japan, Korea or China would have both the tolerance for risk due to greater reward and motive to be a non-op going forward.
That's the only challenge Sheffield faces but he probably has ROFR's on everything anyway. I'm in agreement with your take.
Newt and Smallfish,
I still think the most likely scenario is Sheffield and his friends taking FOG private at a multiple of 2 or 3- not 10. Some will argue it is worth more but most shareholders will be happy to take the 2-3 bagger and be done w this stock. I don't see any white knights coming in to save the day either and there is ZERO retail interest. Maybe it will get bid up some if an offer is made but again, I don't think it's going that high. JMHO
Very informative post smallfish9.
Given the successful flows from the SSH1, it is also good advice on Falcon participating in the next two horizontals -- even if it requires something like a ten percent dilution of Falcon's stock to make sure Falcon is going to reap the benefits of that 6400 acre block. I am fairly sure that POQ intends to participate -- as something like a 15 bcf EUR on the next two 3 km horizontals will only add strongly to the valuation metrics that will help any sale going forward.
I am also fairly sure from previous investor presentations -- (going back to when Tamboran and Origin were structuring their deal) -- that the real benefit of the opt-in or opt-out clause was described as a safety valve if any of the Tamboran planned future 6400 acre blocks were in a very questionable zone. A good example of where Falcon would maybe want to opt-out would be if Tamboran was planning on going back into the Lower Kyalla -- which we already know is going to be a very difficult zone to crack. In this scenario -- opting out might be the wisest choice until that Lower Kyalla zone proves up. However, the SSH1 area has already proved that it is a winner -- and doesn't have the risk profile that would require POQ to even think about using the opt-out clause in this situation IMHO.
Here's my quick calcs on the value and spacing units from a while back:
________________________________
Indeed, 6400 acres/185 acres is 35 spacing units (@ 2,500 by 300m). At 15 bcf EUR (a humble starting point of 6 bcf/1000m) you would be relinquishing about half a TCF of 1P at development. Using $4/mmcf you end up forgoing 22.5% of the value or about $470 million.
And it would probably come with a back-in penalty and further abuse in terms of being unable to access a facility.
Better off to just get abused.
___________________________________________
I would add that this is on a single shale, with facilities paid for and the development of the C shale understood there would be approximately double the value and well count considered above, albeit at a significant delay to the initial shale being developed.
You could say that 3,000m wells will be executed but that only cuts it to 29 wells to develop 6,400 acres - the point is you don't want to be there.
There is some thinking that non-participation the 6,400 acre block would somehow benefit Falcon. While it would certainly reduce the short term need to raise capital, the whole point here is to leverage money to make more money. Disposing of some portion of a half-billion dollars in developed value (and more in long run) is not constructive to Falcon's valuation. I understand the idea that 'you're just going to flip it and move on' but I consider that unlikely without well defended valuation. Non-participation signals to the market that you can't or won't be bothered with raising the money. I'm curious whether that's even a defensible fiduciary posture for a CEO? You'd have to assume risk and scenarios that are not likely. If you're optimisic it signals you're going to ride out your ownership stake and see what you're going to get, a more critical evaluator would say that you're just going to dead-beat it for the long haul and continue farming down and relinquishing value/influence. Insert comment about a more engaged CEO here...
I've not lived one of these clauses out in the court of time, to me they feel like relatively poorly conceived offshore sourced clauses where you have an exploration block to consider. IE, you don't believe the block has the potential to succeed so you just back away and don't participate. If you get it wrong and the first well is a rager, you pay your penalty and can back-in and participate going forward.
Shale wells aren't designed to be independent of each other, additional wells are not added to accelerate the production of a given pool. Rather, they are drilled on spacings and fracked in a manner that drives the optimum economic KPI for a given operator (free cash flow, reserves, ROI, NPV). My point is that you cannot be part of some of the wells and not the others and have a defensible position. In my view, the certain endpoint is a dispute where you're arguing that you deserve to hand-pick individual wells for participation.
With the sp not moving more but I cannot see anything happening with Falcon management any time soon. The only thing that I think will improve the sp here will be further development by Tamboran/Falcon, Empire etc, further good results and eventually the decision by Falcon to sell their shares a multiples of the current sp.
So, to me it's a waiting game for between 18-24months by which time I think a decision will be made by Falcon to sell their share. All imho.
Atb,
Northern
805slo -- here is a step out link from the one you posted -- showing the Tambo EMP is still under assessment -- which is understandable as it was only submitted at the beginning of December and is a massive 300 plus pages long.
The good news on this Pilot Program 9 well EMP is that the 30 day timetable for written submissions contesting that lengthy EMP by the anti-frackers -- expired at the end of December, and in the interim we have had the stellar flow rates confirming commerciality -- which should help get the EMP approved in the next 30 to 60 days.
https://depws.nt.gov.au/onshore-gas/environment-management-plan/emps-under-assessment
Here is the link I found. Hopefully something will pop up soon the EMP approval.
https://depws.nt.gov.au/onshore-gas/environment-management-plan/emp-decisions
Cam, I get your frustration. Why do you think POQ is not out there raising money as we speak? He said as much at the Q and A. The next two wells are not going to take much funding beyond what FOG has already. I think FOG will raise money in two rounds. But it does not really matter to me. The more successes we have the more FOG will be sold for. I think the next press release we see will be about the equity raise and then we will get our 90 day flow rate and independent analysis of the 20 year EUR. Who knows if any of that will have a positive impact on the share price. But the market cannot ignore the next two production wells if they achieve the rates TBN has predicted.
Anyone know if the EMP has been approved? Not seen anything about that yet.
And don’t forget, he earned approx $7.2 million during his highly effective FOG leadership. And he basically never purchases Falcon in the open market.
I marvel at the posters who refer to “master strokes” by the slick Irishman. Master strokes?!?!
I don't know how the rest of the board feels but it's clear to me that POQ seems to be lacking here in many ways. One the result from the SSH 1 was fantastic. That being said is POQ currently out marketing. Nope. Is he currently trying to raise money. Nope. Years ago (maybe 2019) he had an article written in the Irish or London Times....talking about how he felt that Falcon may hold the "HOLY GRAIL of SHALE etc. Then he talked about how investors were looking for a big gain on their shares as Falcon does not pay a dividend. So now when the evidence is clearly there that we may be on to a huge opportunity with the SSH 1 result what is he doing,,,,,absolutely nothing that I can see. I must say that he and Anne remind me of two toddlers in diapers that get into a jar of peanut butter.....and rather than eat it....they have it all over themselves. I am told that POQ likes to cook in his spare time....man o man he must be cooking up a storm....and it's not Irish Stew,,,,it's a rather bad smelling tasting sandwich for the shareholders. Why the BOD does not through this clown out the door is beyond me, You can teach monkeys to perform better than this. .A little tip for JUNIOR BIRDMAN.....Falcons are supposed to fly...not be held captive in a cage, TIME FOR CHANGE!!
Wet, my understanding was once they go in on block FOG can elect to put up whatever they want (up to 22.5%) of the costs for the next well. They could elect nothing for the second well and still fund the third. FOG was pretty clear in their press release they will raise money to go in on the next two well at the full 22.5%. I believe that is a smart move because if successful they will be money generating wells.
I am still at a loss as to why our recent numbers did not move the stock price up. But…perhaps the market wants to see TBN execute these next two. After all, A2 was a complete mess and then they went and drilled A3 which apparently will just sit there for now.
In any event, we should learn shortly how FOG will elect to fund the next two.
805slo: I agree that if they opt out of the first well in a 6400-acre participation block they are out of that block unless they pay a penalty on that first well to get back in. Where I am unclear is what happens if they participate in the first well but not the second well - then what happens on any future well in that block i.e. - Participate in the SS2H but skip the SS3H - Can they (or newco) come back in for the SS4H, SS5H etc. without a penalty. I thought they could come back in - smallfish9 thinks not. If not, they (or newco) might be locked out of the remaining 15-20 wells on that block, which as smallfish9 points, out could be a substantial issue if Tamboran as operator wanted to focus on that block for 2-3 more years. In reality, Tamboran would likely want all the partner's capital they can garner up to develop the Beetaloo - it's going to be a tough road for them to develop even as it stands.