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It woul dbe helpful to see the actual farmin agreement amendment. The press release for the LOI said the penalty applied to the spacing unit for 1 well: "the introduction of limited proration units on sole risk operations to a maximum of 6,400 acres per well, providing Falcon Australia with participation optionality on the drilling of future wells;"
I think there is little chance FOG does not seek funding for the remaining wells in the pilot project. If successful, it will generate cash flow. If successful it will only create additional value to any future sale. I still think we are sold if we nail these next two production wells. I suspect the next equity raise will be aimed at the next two wells only for now. And if need be FOG will seek another equity raise to participate in the next four. But I think the latter is unlikely if the flow rates of the first two wells are production rates. Fingers crossed.
Generally, once you're out, you're out. There are back-in penalties sometimes that would allow you to participate at a later date for 2-3x of the original cost. You would also be out the entirety of the 6,400 acre block, or as I previously calculated ~30 wells. And you could be sure TBN would place every producer in there...you'd also have some disadvantages in accessing any production infrastructure any time soon. 30 wells is going to be more than are needed to fill the 500 mmcf/d intial dev line. So...2029 or later would be next opportunity to participate.
Thanks WW for your explanation of the sole risk clause, that was a masterstroke by POQ, we can sit & do nothing while Tamboran heads towards production, which we hope will benefit our SP, with no costs to Falcon, apart from POQs salary.
Origin789 - I think the sole risk clause is something people tend to forget about. Falcon could just sit on their thumbs and let Tamboran/Sheffield drill the next two wells. They would lose their rights in the 6400-acre participation blocks but when it comes to selling the whole 1 million acres I don't think believe that would greatly impact the sales price since these two wells will further prove up the surrounding acreage.
Saying that, I suspect that Falcon will participate in at least the first well - especially since it has the 3.75 million carry available. Being that the second well will be drilled on the same pad, the only thing Falcon gives up is the future production of that one well - This needs to be verified by POQ. If the stock price is still lagging when it comes time for the next raise, then the 'sole risk clause' might be a better option than a sizable stock dilution. Philip indicated to me that of all the agreements he has negotiated, the sole risk clause is the most important and beneficial for Falcon. It ensures Falcon's ability to see this project through without being forced to raise funds at unsuitable times to drill wells.
If Tamboran have fulfilled the obligations for the carry, could POQ decide to let the two 3 km horizontals go ahead before raising funds to participate further, as our price is likely to move upwards after two successful 3km legs have been completed by Tamboran.
Just "One" more small but important clip from the Tamboran report out today -- (and then I will stop posting -- for this week anyway) -- so that other LTH posters can get a chance to get a word in edgewise -- LOL!!!
This paragraph below in reference to the amazing flow rates announced two weeks ago -- is where I think Brian Sheffield will be focusing his conversations with big shale gas players in Texas -- as he works towards finding partners to develop the first one million acres in the Beetaloo. While there has been some issues with Tamboran (like the Amungee H2 fiasco and the exorbitant G&A overhead expenses) -- it is worth noting that Falcon might not have reached this proof of commercial gas flows with the SSH1 well -- if Origin was still our lead operator. I am fairly sure it was the engineering expertise brought to the Beetaloo by the ex-Pioneer team and their new completion engineer -- (along with all the expertise from Faron Thibodeaux's team) that finally got us that long anticipated proof of commerciality in the Beetaloo.
"The result, we believe, has de-risked more than
1 million acres of high-quality shale at depths
below 2,700 metres (8,202 feet) and validates
the Company’s view that deeper shale areas
in the Beetaloo Basin are likely to be the most
prolific and optimal areas for the location of the
proposed pilot development.".
"This normalized rate is the highest rate
delivered in the Beetaloo Basin to date and
exceeded the Company’s pre-drill modelling
expectations"
A bit of weekend reading for any that are interested -- while we wait, and wait and wait a little more!!
This update has a paragraph (copied below) that shows that Tamboran has completed all the obligations that Tamboran inherited from Origin regarding the 9 wells and total dollar commitments. Falcon still has another 3.75 million dollar credit remaining that will most likely be used with one of the two full length 3 km horizontals to be drilled later this year.
"During the SS-1H well drilling activities,
Tamboran gave notice to Falcon Oil and Gas
Australia Limited (Falcon) that all farm-in
commitments have been fully satisfied, having
reached the associated cost carry commitment
in accordance with the 2014 Falcon farm-in
agreement".
https://hotcopper.com.au/threads/ann-half-yearly-report-and-accounts.7905312/?post_id=72912624
.
Longknife -- I am almost positive that Falcon will be sold for at least twice your 30 cents US number, but the biggest question still remains the same -- WHEN??
Brian Sheffield will most likely be the driving force to see Falcon taken out by one of his Texan associates -- like EQT or possibly Chesapeake amongst others. Having Falcon hanging around beyond the Pilot Production program makes no sense for someone like Sheffield -- as he will want to have one of the major US shale gas companies as a long term deep pocket investor, with a buyout of Falcon the most logical long term solution.
Just the Dark Blue Core area of the Falcon permits in the Beetaloo will require anywhere from 1000 to 2000 3 km horizontals to drain that low CO2 shale gas over the next 15 to 20 years. That will be a very lucrative purchase of Falcon 22.5% interest for any big shale gas player (for most likely something just under a $billion). However, that Falcon purchaser will need to have another couple of $billion to invest in their 22% share for all of the very expensive infrastructure, pipelines, dozens of new well pads, and a huge gas processing plant for the next five years -- before the really significant profits from $12 Aussie gas start to offset the forward costs, (at which point the potential buyer will will be on a roll towards $billions in profits over the following 10 to 15 years).
Sorry, but don't see 30 cents as a realistic scenario at all or something anyone should target reasonably. The prospect is simply too big and valuable for that. It's actually more likely with these takeover games that we either get a big fully representative number, or the company gets choked for funds and ground out of play. This is why patience is needed .... Still, even after years and years.
I actually think we are closer to this than many believe. It may take more years, but equally we could approach end game at any time. Personally I would be happy for them to farm down, do a placement etc, as the extra value further wells and flows bring outweigh dilution or a reduced stake.
Merloid- been patient for Apx 8+ years. Not as long as many but long enough. $.30 would be more than a double which would give me about a 10pct annual return here- not what I was hoping for but also not down! Schemeil, yes we need monetization but will that happen? I see a scenario where Sheffield and friends acquire more and more shares quietly and take this co private at a relatively low number. I could be wrong of course- and hope I am- wouldn't be surprised. I stated that I didn't think we would see much of an upside here with good results and u fortunately I was right. I didn't think we'd see a downside though. There's a reason for it and I don't think it's good for us. Sorry to be a negative Nelly, I really hope I'm wrong.
Esacas
Mate, these are strange markets, very strange markets. At present real value is unleashed when monetisation occurs and not before. Potential no longer applies. What matters is that potential is realised and then turned into cash through either takeover or some other form of monetisation event
Suffice to say, FOG is closer to the above than it has even been before and believe me I and others should know, we've been for what seems like a FECKING lifetime, 'scuse the French
No way I would take 30 cents. Patience is still needed here.
Newt,
We better hope the 90 day numbers are good. We know the stock goes down w good numbers, with bad I'm sure we'll see $.05 again! I would take a $.30/share buyout right now no problem. Forget $1/share, I don't see a scenario where the retail investors get that- hope I'm wrong.
Rsacas -- promoting this stock to some of the big oil and gas investment ETF's and brokerages would certainly help generate new buyers -- as there doesn't appear to be more than a couple of day traders wrecking havoc and pushing Falcon down.
That being said -- without new deeper pocket investors we are somewhat stuck with this ridiculously low price point on Falcon due to the fairly clear timeline on smoothing the path forward to the full Pilot Production plans. Tamboran and Falcon both need to secure more funding to cover the next two full length 3 km horizontals later this year, and position themselves for further funding steps in 2025 for the remaining four horizontals (if POQ hasn't found a buyer before then).
Tamboran needs to complete their move to being a US listed company, and we need to see how strong the EUR is after the 90 day flow test is complete -- with both events taking place around the end of April. The satellite shot seems to be indicating that the 90 day flow rate should be solidly in the higher EUR category!!
However, without some solid promotion to the bigger gas investment banks -- that can clearly see that Falcon's side of the recoverable gas in the Deep Blue Core area alone is in the range of 5 TCF of gas -- I am very concerned that we won't see any respect for Falcon's position in the Beetaloo until the full length horizontals are completed.
This is something I cant understand. Amazing flare and flow for many days and SP going down. Maybe is because our bird has not been correctly promoted. Hidden interests?.
We clearly need volume to go to next stage.
FOG is a non-operating partner but Santos is THE operator. Even though they are not active atm, they are still present and may be waiting for others to spend money and see what works.
I speculate Santos will be active just to book reserves; their RRR sucks.
805slo -- your question has validity -- if you read what this less than diligent research piece has stated in error about which companies are currently involved in the Beetaloo and the crap they state about Viktor Vekselberg.
"Sheffield is strategically positioned within two of the three companies operating in the Beetaloo" -- with no mention about Sheffield's over 9% interest in Falcon.
Then a bit further on the following misleading statement: "Moreover, Sheffield’s collaboration extends to Russian oligarch Viktor Vekselberg, the largest shareholder in Falcon Oil & Gas, who remains a non-operating partner of the Origin assets within the Beetaloo".
Sheffield has had absolutely zero collaboration with Vekselberg -- as for all intents purposes Vekselberg has zero input into Falcon affairs anymore -- since the sanctions against him were put on two years ago. BS only deals with POQ as far as his large investments in Falcon are concerned
The three companies that are operating in the Beetaloo currently are -- Tamboran, Empire, and the largest permit owner in the Beetaloo Basin -- Falcon Oil and Gas (as Santos has suspended all of their Beetaloo operations currently).
There is no mention in this article of Falcon's long 14 year history in the Beetaloo -- nor any mention that it was Falcon that created ALL the forward momentum in the Beetaloo by fracking the very first horizontal just before the moratorium kicked in 6.5 years ago. Without that frack going ahead 6.5 years ago -- (proving the existence of the massive gas resource in the mid-Velkerri shales) -- the forward momentum in the Beetaloo could easily have ceased due to all the Pepper Inquiry's somewhat restrictive new recommendations that were adopted.
More importantly -- Brian Sheffield's investment to date in Falcon is almost twice the percentage of his Empire investment at just over 9 % interest in Falcon (and most likely higher if BS has been snapping up cheap shares of late like he was doing a year ago). Sheffield's total dollar amount invested in Falcon is much more than double his investment in Empire -- especially when his extra $6 million purchase of the 2% ORRI is added in to the equation.
I think it kind of mentions it. LOL
Doesn’t he own a stake in FOG as well? Wonder why that was not mentioned.
Huge endorsement of Beetaloo's importance and prospectivity
Https://www.sharecafe.com.au/2024/03/13/bryan-sheffield-increases-stake-in-empire-energy/
Maybe while we are speculating, we might include Sheffield's Formentera Partners. It has been rumored that this partnership which was recently oversubscribed to for US $828 million could be used as a base vehicle for another operating company in the Beetaloo. Early speculation at this point, but with Sheffield as laser focused on the Beetaloo as he is, Formentera could spin off an operating company. Likely not much to this, but a lot of money there if the partners chose to invest in the 'largest undeveloped shale oil basin in the world'.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Formentera Partners is an energy-focused, private equity strategy founded by Bryan Sheffield and Blake London in 2020. Partners, Paul Treadwell and Stephanie Reed, joined the firm in 2021 and 2022, respectively, and together, the partners have worked closely with one another for more than a decade.
Based in Austin, Texas, Formentera responsibly acquires and optimizes producing oil and gas assets in onshore United States basins and strategically develops the assets under management. The Formentera team leverages substantial experience in operations, engineering and finance to drive continued success and utilizes strict diligence criteria, hedging, streamlined structure and new age technology to produce visible and predictable income returns.
Formentera Partners Fund II Closes Oversubscribed with $828.5 Million in Capital Commitments
Empire just posted Sheffield owns about 41 million shares