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Hi newtofo- isn't here an option for FOG to buy back into any wells which it has not fully participated in ? I recall POQ saying that they could do this - admittedly at a higher cost- but if the wells are a success then any future buyer just pays a multiple of the initial drill cost and regains the 22.5% or whatever they decide. Key here is the repurchase is based on drill cost not on the drill success.
Strategically this ability to decide participation at the outset with the ability to buy back in is a major benefit which the market currently just does not see. Any future buyers will see this and FOG is saved from currently diluting at such low levels.
This is my concern here. Not that this was the wrong choice as I didn't see much else that could be done other than massive dilution. My concern is that there is no reason to buy Falcon at this point that I can see. There is little revenue that could be coming in and we know that proving up the acreage doesn't seem to move the share price. The only exception I see are if someone can come in, buy out Falcon and then add their cash to the development of the S2 & S3 wells at the full 22.5pct.
Cheers Newt.
Newtofo March 25th. This is very worrisome news out of Tamboran today -- as Falcon will now have a tiny 5% interest in the next 138 wells to be drilled around the 51,000 acres surrounding the SSH2 Pilot Program well pad. Those next 138 wells could take five years to get completed and during that 5 years Falcon will get next to nothing in revenue for five long years.
What the heck is going on that POQ is basically giving up on the Beetaloo for that many years -- as I for one can't remotely think about hanging on for another five years to see any chance of revenue or a buyer. It is very doubtful that POQ will ever find a buyer in the next 18 to 24 months -- as any buyer won't get anything more than 5% of the gas until those 138 new wells have all been drilled -- sheesh.
Newtofo march 28th, The brilliance of this decision (IMHO) to reduce Falcon's actual risk on these next two 3 km horizontals -- is keeping Falcon's dilution to a minimum while Sheffield and Riddle take on 95% of the risk on what is an untested new well pad 4 km away. There is still a fair degree of risk on what are going to be the most expensive wells drilled to date in the Beetaloo -- especially if Riddle is going to drill blind without doing the 3D seismic program first -- so letting BS and Riddle pay up 95% of the expenses seems to make great sense.
This kind of rhetoric has been going on FOREVER!
Fleurs -- Falcon's interest in the 51,000 acres that surrounds the new SSH2 and SSH3 well pad will now be down to 5%.
When you include the remaining $3.75 million in Aussie funds that remains from the deal POQ negotiated on the Origin sale to Tamboran -- Falcon may only need to contribute another $1.25 million on those next two extremely expensive 3 km horizontals. Falcon still owns 22.5% of the 20,000 acres that surrounds the SSH1 well site as Falcon paid it's full share on the current SSH1 one km horizontal.
Taken together -- Falcon will have approximately a 10% interest in the entire 70,000 acre blocks that covers both the SSH1 and the SSH2/H3 well sites.
It is worth remembering that this 70,000 acre block (that Falcon will still have a 10% interest in) is only a tiny fraction of the total 4.2 million acres that are covered by Falcon's three permits, and only 7% of the deep blue CORE area of one million acres -- leaving 930,000 acres in the deep area.
The brilliance of this decision (IMHO) to reduce Falcon's actual risk on these next two 3 km horizontals -- is keeping Falcon's dilution to a minimum while Sheffield and Riddle take on 95% of the risk on what is an untested new well pad 4 km away. There is still a fair degree of risk on what are going to be the most expensive wells drilled to date in the Beetaloo -- especially if Riddle is going to drill blind without doing the 3D seismic program first -- so letting BS and Riddle pay up 95% of the expenses seems to make great sense.
Looks great, that should knock a couple of % off the share price. For clarification do we now own 5% of the clear view and not 22.5% , as part of the recent deal.
POQ busier on LINKEDIN of late. Hopefully take the message to a wider audience
Makes a good case for the Beetaloo and they will be in production in 2025.
Https://www.finnewsnetwork.com.au/archives/finance_news_network458896.html. Maybe good one to listen, since it is about betaloo
Sorry, dilution may not have been factored in dilution, but point being, competent and probably conservative price point, I think it was 39 pence. . . All the best
Frankly, we need more credible coverage, but also agree, best move, sp malaise, again, is awful, but is what it is. Tennyson comment in comparison to most of what is stated here (and more than half of that is now filtered out. . .) is spot on. Also, in terms of valuation, look no further than Cavendish's Note, price, and that is today, not in futuro, with dilution or this move factored in. And our Chair, Nally, used to head that outfit and couldn't be more connected to the City and it's network, money, etc., guy who was key in the Cove buyout. . . But of course, we must wait, testing our resolve and patience! As always, all the best, KMJ
Absolutely, it is good to see Philip is not afraid to use our opt out clause, it feels rather smug to sit here and wait for Tamboran to do the dirty work, proving up our resource for us... and without effectively reducing our overall percentage. I think we can now see the deal POQ made will benefit us all. GLA.
Have to say the recent move, I can only see ot as a positive. I also still think the chance of a buyout coming during the pilot scheme is significant and so it could be a very interesting period we enter into.
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