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Surely the dream is for FOG/Santos/Tamboran to prove what they suspect and for a major to come in and sweep up the lot at a premium? Whilst it is romantic to want to sit it out and produce, the risks/costs involved and more so, the timelines for shareholders will be problematic.
Shoot me down if you think I'm wrong but that seems to be the best way, for FOG at least.
GLA.
Newtofo,
Thank you so much for taking the time to answer my question. I really appreciate it. I'm just trying to get my head around who would make the decisions 're any sale of Falcons share. As you have pointed out it is sounding quite complicated and also sounding like 2023 before some of these scenarios start to play out.
Atb,
Northern
Longknife -- ideally any raise will be done at a higher price point that currently. We should have good news from Santos and more dog and pony shows with POQ and Joe Nally over the next few months that should move the stock higher before any new placement is put in place.
I think to some degree that the carry position is an asset of Falcon's -- but it gets very complicated as it is Origin's money that is being spent -- so that is why the details have to be released by Origin and so far they have kept those numbers in house.
Hydro,
It says we are 75pct carried and the rest will be funded through cash. I thought we had about $9M US in the bank? If so, that means we would have no more than $27M left from the carry correct? So if we want to do more, or pay the $7M someone was talking about, we have to raise new funds soon- meaning late 22, early 23. Not sure what you mean by “killing” or spot trade but I don’t trade this stock unfortunately. I wish I had the cajones but I’ve been in at least 7 years and w my luck as soon as I sold, Falcon would sell for $5/share.
Newt,
To me the carry position of Falcon, or what’s left of it, is an asset of Falcons, no? Why wouldn’t this be Falcon info? I would certainly want to know this if I was an analyst valuing the company.
Newt, when you say “dilution at a higher price point due to the run up”, do you mean where we are now or at a new higher price?
Longknife. Just so you know -- Falcon would release the exact balance left in the JV funds if it was possible. However, Falcon cannot release proprietary Origin financial data that is not directly under Falcon's control. Falcon can only release it's own financial position -- so unless Origin wants that financial data made public -- there is no way for Falcon to put it out.
Northern. There are quite a few scenarios that could come into play when there is an offer on the table. Now that Origin will be focusing on the Amungee permit primarily -- we could potentially see an offer to buy Falcon's 22.5% of just that permit.
Alternatively -- we could see a reasonable offer that includes all three permits, but if the offer is discounted due to lack of clarity on Falcon's remaining two permits -- then it would make sense to separate those two permits out of the deal and continue working on those two permits to prove up a higher selling price.
Any offer would be presented to the BOD for approval and could move forward from there without all shareholders voting on that offer. If a deep pockets suitor wants all three permits -- then Falcon would most likely sell off the Canadian holding company to avoid double taxation and all remaining shareholders would get bought out. The Karoo assets would be spun out to a Newco most likely and all remaining shareholders would get a prorated share in that Newco.
If only the Amungee permit is sold -- then a chunk of those proceeds would have to be allocated towards further exploration work on the two remaining permits. In this scenario -- there would most likely be a large dividend paid out to all remaining shareholders. There are of course other scenarios -- including additional farmouts on the remaining permits by Falcon and Origin.
On a separate note about current cash balances and the next two Amungee horizontals. Since both new wells will be on the existing pad -- there should easily be enough cash in Falcon's bank to cover any shortfall in the remaining JV funding formula. However, Falcon also has a $7.5 million dollar payment on the final ORRI coming up in May. Therefore -- we can expect some small dilition from a private placement but at a higher price point due to the run-up in the share price.
Schmeiel,
That’s exactly what they have been telling us for years. What makes you think THIS time it would lead to commercialization? Just sell to a real exploration company now and I’ll hold w them vs holding w Falcon for a possible greater deal 2,3, 20 years down the road! Also, at what point do we start to hear about elections again? At what point could the political climate change?
Beetaloo,
I am concerned as well. It sounds to me like POQ is setting us up for more dilution. Why he couldn’t have told us exactly what was left of the carry at end of 21 -IDK. But apparently the money and our cash will be gone before the end of the year and we will either have sold (I hope) or we will dilute one way or another. Not a good release as far as I’m concerned.
I'm still uncertain what would happen in the future. Assume e.g. all goes well amongst all the companies drilling in the Beetaloo and it comes to the time when Falcon come to monetise the assets. Is it Falcon that decide on how much they agree for their share? Or is it that the offer will be put to shareholders. Presumably the result will be a number of multiples of the current 11.20p i.e. Market cap jumps to reflect the price but what happens then is it for shareholders to them sell, or do people envisage a bidding competition for the company?
Atb,
Northern
Tend to agree Origin. We've got it covered for now so no immediate need for funds.
I thought this was interesting. 'Positive results here will provide a further line of sight to the commercialisation of the Beetaloo and could lead to a pilot development program in 2023.'
As with any RNS, one can read in to them all sorts of things. For me, this tells any potential bidder that the price per acre could increase significantly if we are successful at Amungee.
Could be quite an exciting year
Do we have any information on how much of the agreed money from Origin for Beetaloo has already been used?
If e.g. 100 million are still available, but we need a total of 200 million for our planned projects, that would be around 25 million for Falcon (at 75%) according to my calculations.
A placing would be eagerly gobbled up for it would create real value and be supported by the knowledge that commercialisation would be achieved triggering some form of hefty monetisation....I don't see a placing as a negative in these circumstances now FOG is finally on the cusp of delivering equit value to shareholders
The carry and what remains.. I think that's the unknown, and we are unlikely to know until the time arrives for money to be sought, unless we receive an offer we can't refuse before the time comes.. We would hope that FOG is in a stronger position should there be the need for a raise!? GLA
“Falcon remains largely (circa 75%) carried for 2022, with the balance of costs being funded from existing resources"
Sorry, I don't quite understand now.
Does that mean another farm out of land or a partial sale of our company? I'm a bit surprised. I thought that with the money that was available or not yet used, it should be possible to easily drill 2 more holes with everything else.
Best regards
Beetaloo
''We expect these results to be communicated to the market shortly and believe that these will prove to be another important moment for the nationally significant Beetaloo Sub-Basin."
Sounds like POG already knows the flow rate results...a subtle hint if ever there was one