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Couldn’t have said any more clearly
POODS
Clearly, as the basin matures and the industry becomes more established drilling costs and operational risks per
well will reduce substantially. Therefore, we see the decision by Falcon to reduce its exposure in these early
wells as prudent risk management. Each successful well drilled will derisk the basin as a whole, adding significant
value to Falcon’s residual 4.52 million acres, and meanwhile Falcon still retains a 10% stake in the pilot area
(which is equivalent to just 1.6% of its overall acreage position). Were Falcon to participate in the next two pilot
wells, it would likely have to raise a significant sum of equity which would have been very dilutive at the current
share price. Falcon will now only require a small amount of funding to complete the next two wells, which gives
the company flexibility and minimises dilution (options include equity, debt, pre-payment for gas, or farmdown). Should the wells be successful, they will have a positive impact on the market value of its entire acreage
position, and Falcon can decide whether to raise additional equity to participate in forthcoming DSUs, raise
finance from industry or a strategic partner, or indeed make the decision to sell the entire company.
I think we need proper promotion. Bruner was very good at that, maybe too good. I guess most of the shareholders arrived during his CEO stage, like in my case.
Now we need something similar, but most consistent, without lies or imagination. Now we have facts to prove our value.
30-day and 60-day flow rates, labeled “stellar” by the slick Irishman, fail to move the stock up. Why would 90-day rates be different?
SS1H Production Indicates Large Connected Resource The SS1H well has achieved an average 60-day initial production (IP60) rate of 3.0MMscf/d, normalised to 6.0MMscf/d over 1,000m. The exit rate trajectory continued to show a steady, low decline type-curve (2.76MMscf/d) and downhole pressure implying a highly effective frack that is connected to a sizeable volume of gas. The IP60 flow test indicates that future development wells with lateral lengths of 10,000ft may be capable of delivering average rates of 18.4MMscf/d over the first 60 days of production. The rates continue to track average flow rates from the core regions in the Marcellus Basin in the US – the world’s largest unconventional shale resource. The SS1H well is planned to be flow tested until IP90, which is scheduled to be announced in late April 2024.
Falcon Oil & Gas Ltd - Shenandoah South - 1H well IP60 Day Flow Rates of 3.0 MMcf/d (normalised to 6.0 MMcf/d)
Falcon Oil & Gas Ltd.
(“Falcon” or “Company”)
Shenandoah South - 1H well IP60 Day Flow Rates of 3.0 MMcf/d (normalised to 6.0 MMcf/d)
26 March 2024 – Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG) is pleased to announce that the Shenandoah South 1H (SS-1H) well in EP117 achieved above commercial IP60 flow rate of 3.0 MMcf/d (normalised to 6.0 MMcf/d over 1,000 metres).
Highlights are as follows:
The SS-1H well in EP117 achieved an average 60-day initial production (IP60) flow rate of 3.0 million cubic feet per day (MMcf/d) over the 1,644-foot (501 metres), 10 stage stimulated length within the Amungee Member B-Shale, normalised to 6.0 MMcf/d over 3,281-feet (1,000 metres).
Exit rate trajectory after the 60 days of flow testing showed a steady low declining curve at 2.76 MMcf/d over the stimulated length (normalised at 5.52 MMcf/d per 3,281 feet) and stable reservoir back pressure of 530 psi.
The SS-1H IP60 flow test indicates that future development wells with lateral length of 10,000-foot (3,000 metres) may be capable of delivering average rates of 18.4 MMcf/d over the first 60 days of production.
Results to date confirm that this region measuring more than 1 million gross acres below 8,850 feet (2,700 metres) is one of the best locations in the Beetaloo Basin to commence pilot development activities.
Flow testing of the SS-1H well will continue for the next 30 days to achieve average IP90 flow rates to better determine the well’s estimated ultimate recovery per well (EUR). IP90 flow rate results are expected to be announced in late April 2024.
The Beetaloo JV Partners of Falcon and Tamboran B2 Pty Limited will continue to progress development plans for the proposed 40 MMcf/d Pilot Project at the Shenandoah South location. The project is expected to require six 10,000-foot development wells initially to achieve plateau production of 40 MMcf/d. Drilling of the first of these wells is planned to commence in Q2 2024 and the JV is targeting first gas in H1 2026.
At the end of February 2024, Falcon held ~US$5 million in cash and has the benefit of a further A$16.67 million gross (~US$2.5 million net Falcon) carry to support immediate activities.
Falcon is funded to commence drilling of the initial two wells in the program and will evaluate opportunities to support funding the remaining capital commitments to reach first production, including issuance of equity and/or debt, evaluation of pre-payment for gas from the proposed pilot project and potential farm-down opportunities.
Philip O’Quigley, CEO of Falcon commented:
“The SS-1H IP60 flow rate announced today of 3.0 MMcf/d, normalised to 6.0 MMcf/d over 1,000 metres, demonstrates a steady low declining curve while holding its downhole pressure. This augurs well for the initial development in the S
Highlights
• The Shenandoah South 1H (SS-1H) well in EP 117 achieved an average 60-day initial production (IP60) flow rate of 3.03 million cubic feet per day (MMcf/d) over the 1,644-foot, 10 stage stimulated length within the Mid Velkerri B Shale, normalized to 6.0 MMcf/d over 3,281-feet (1,000 metres).
• The SS-1H flow test indicates that future development wells with lateral lengths of 10,000 feet may be capable of delivering average rates of 18.4 MMcf/d over the first 60 days of production.
• Results continue to demonstrate that the 1 million acres below 8,850 feet (true vertical depth) in the Beetaloo West region is one of the most favorable places to anchor the initial development.
• The SS-1H well is planned to be flow tested until IP90, which is planned to be announced in late April 2024.
• Tamboran continues to undertake Front End Engineering and Design (FEED) studies on the proposed Shenandoah South Pilot Project. The Company expects to take Final Investment Decision (FID) in mid-2024, subject to funding and key stakeholder approvals.
Https://www.investi.com.au/api/announcements/tbn/8895da9b-5be.pdf
Https://app.sharelinktechnologies.com/announcement/asx/6424cd58de59c6dd8c20478e05ab46c1
Thanks WW, good points, well made, I fully agree, its a smart move by POQ. The alternative would be unnecessary dilution with the cost, risk, and further weakened SP should the two 3km wells not go as hoped.
Well, I managed to pick up a few more shares sub-US 0.10 - not a bad risk reward IMO, even if LongKnife is correct and I only double or triple today's investment over the next couple of years :^) Going into the end of the day here in the US, this latest move by Falcon seems to be pretty much of a non-event with a little over a million shares traded and the share price being down only .009 cents - well within the norm for Falcon.
I believe the Tamboran shareholders are in for a rough ride over the next few years. Carrying 47.5% of the next six wells is going to be burden - especially when one considers a pipeline to sell production will not be available for another 4 years or so. I would much rather be in Falcon's boat with little to no dilution than is Tamboran's who will be taking on many more shares in an attempt to stay afloat. With the delay of APA building out a pipeline, I support Falcon's decision to cut back on the WI rather than a further dilution of our stock which would then reduce what Falcon might receive for the balance of its 4.5 million acres.
Also, what some fail to consider is that there is still risk in stepping out with these two new 3 Km wells - we have seen faulting in other parts of the Beetaloo and there is always that potential with these longer wells- for the JV's sake, hopefully that will not come into play but with Falcon's limited funding, I would rather see them take a conservative stance on the short-term horizon and stay focused on the eventual sale. Falcon doesn't need another 1H or 2H fiasco which their new reduced WI helps avoid. Tamboran ran seismic for the SS1H well but that was on a limited area which I suspect doesn't cover the blocks for the next two long horizontals. If this is the case, that would be a little bit of a roll of the dice in this new undeveloped acreage - something Falcon doesn't need at this point.
As many already know, I am one that tends to always support our CEO and Falcon's board. They have/consider the inside facts which we are not privy. To date I have found their decisions to be sound and beneficial to the stockholders. Until proven otherwise, I will continue to put my faith in these guys - I believe we are in good hands. GLA
B2B. If it was "blindingly obvious" I wouldn't have asked, and I have not seen the actual agreement. Have you? As far as "continuing to struggle", I'm not sure what you mean. I've been investing online for about 30 years and done very well overall. Penny stocks are a part of my investment strategy. Not a big part and most do NOT pay off. When they do, however, it is very exciting. I had hoped FOG would do that. As I've said, I'm now looking at a much smaller return. As far as Newt and wet water, some times I agree with them and other times I don't. For the most part I have always found them to be civil and rational. It seems that you and Mr POODS have become emotionally attached to this investment- never a good idea. It's not personal and there's no need to make any comments here personal. I have yet to insult anyone here despite what they say. If you choose to do that- well you just make yourself look bad.
The answer to your latest question 'can a buyer alter Falcon's decision re reducing its participation in the next 6 wells? Surely the answer is blindingly obvious and it would depend on the buyer {or a particular buyer} agreeing a price before drilling of the SS2 commences.
As for your earlier question I hope it's not too difficult for you to understand that a rational board of directors {like Falcon's} in this type of situation} always chooses what's best for shareholders i.e. to minimise share dilution and likely factor in under different scenarios the length of time before the asset is monetised.
Given our similar backgrounds I'm not surprised that Mr Poods and I are on the same page. He's very rational. Mr Longknife, quite frankly I fear you will likely further struggle if you find yourself disagreeing with Messrs Newtofo and Wetwater. As for Cavendish Securities I don't think they will change their target price until POQ announces his 90 day reading on the SS1 well at the end of April....at which time it might go up.
POODS. Just what I figured.
Thank you. Keep the faith. This is POQ’s retirement. You can bet he’s focused, as he should with the salary we pay him.
Good to hear from you Poods, your genuinely the only person on here where the old addage ' you can always buy cheaper' doesn't apply! I think POQ had made the right decision with the cards we hold, and this short term pain will benefit us all in next 12 to 18 months, if TAM can do it's bit! GLA.
I think some consider me a rational patient investor. If you will reread my note I hope it’s essence becomes clear. If the word infinitesimal is unclear, suggest you consult Webster’s or the Oxford’s dictionaries.
POODS. That's great! Maybe you can prop up the share price some! But why do you think this is a good decision?. I don't necessarily disagree- there wasn't a great set of alternatives, but how do you think this is going to help the FOG shareholders? And does anyone know whether or not a buyer of FOG could go back and up its pct in these wells?
The FOLGF board made a good decision and I have placed a sizeable order slightly under the market if you care to unload shares. POODS
They certainly seem to step on their own willy at each turn of success. I would hope that they would do another POQ shareholder call so that he could explain this latest "expert" move.....Ha ha ha! Would also bee good to know what Sheffy feels about this...i'm sure he had input.
WG, that was perfectly said apart from adding Newtofo, wetwater and a couple of others to the mix. Unfortunately this stock is going to steadily decline below $.10 cad and even then it would be an iffy buy given the latest move!
Born2Boogy is TheKnight from a prior board. A Falcon perma-bull who has lost his shirt, like all of us.
Is POQ accountable for Beetaloo’s geology? NO
Is POQ accountable for the fact that Falcon whimpered after stellar results? YES!!!! This is reality, no matter what any perma-bull tells you!!
B2B , which part of what I write do you find to be "rubbish"? Esp since I've stated it's my opinion. You seem to gloss over the fact that the market clearly dislikes what FOG has done- as well as what Tam has done- yet you only mention Tam. What do you disagree with?
You do write such absolute rubbish Mr Longknife. Given all the facts it ought to be obvious to all that the Falcon Board of Directors have carefully looked at all the numbers and made the right decision. Obviously if the shares had reacted a lot more positively to the SS1 news {i.e. had been trading around 30 pence plus last week} a different decision might have been made.
Conversely if I were a TBN shareholder I would today be increasingly concerned that Riddle is all about stroking his own ego and couldn't care less how much the company's shareholders are punished and diluted as a result. It was no surprise that first reaction down under to the news was to mark down TBN shares.
As for the not so clever article posted on this board earlier today clearly the author did not do his homework before he wrote the article since he had no understanding for example why Hess was sent packing by Falcon and why Origin's CEO as it turned out was more focused on the short term opportunity of selling his company on, rather than creating more medium/long term value. However what he did get right was his conclusion that 3 minnows are not going to develop the Beetaloo.