Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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I heard certain parts of the call today and would have to agree POQ handled the meeting reasonably well. The one item I thought could have been handled better was as I heard it the actual vote tally for each proposal. Instead of showing a. "no brainer poster listing each of the proposals and vote totals, POQ sidestepped what I suspect were a fair number of dissenting votes (as in NO). Could one of our friends on this board who can speak to POQ ask the company to post the vote tally either here or more properly as a shareholder release. My suspicion is the not everyone was pleased. POODS
"The timeline to monetisation is now finite and reasonable"
Really? I certainly didn't hear anything which remotely convinced me that monetisation would be both finite and reasonable.
Did I miss something concerning this coming to fruition any time soon and if not, what would you consider as being finite and reasonable ... 2 years, 3 years, 5 years, more than 5 years? Do tell.
1. It's heading in the right direction
2. The timeline to monetisation is now finite and reasonable
and dilution is part of the course for small resource companies like FOG. It's positive dilution if it accelerates monetisation rather than destructive dilution to 'keep the lights on and to pay salaries'
the price and the optimist will come once we hear the results from our friends
There are some very optimistic comments here following this afternoon's presentation.
Unfortunately, at least so far, this optimism has not been shared by the market, where there has been very limited turnover in the shares and a minimal movement in the share price and in view of its already subdued level, it seems clear that not everyone is convinced that FOG rates as a buy.
Perhaps some, like me, believe that the potential big elephant in the room centres on the extent of the potential future financing required, which might still involve very substantial sums over and above the remaining amount yet to be provided by Origin under the existing arrangements. Reference is made below to the $9 million currently held by the company ... with respect, this is absolute peanuts in relation to the sort of numbers involved here.
Fun post Darnit, -- but fortunately not a scenario that Falcon will be subjected to.
I don't believe that POQ will be giving up any further percentages of Falcon's permits in the Beetaloo, but it does clearly illustrate how brilliant his decision was back in 2018 to get the capex commitment by Origin up to $263 million by giving up 7.5% back then. Without that move in 2018 -- capex by Origin could have been reached before the re-test was done on the Amungee -- and that newly calculated flow rate on the Amungee is exactly why POQ won't be reducing Falcon's percentage ownership any further. The amungee re-test has clearly shown the path to commerciality is now on the horizon and POQ now knows that any further reduction in Falcon's ownership is not in Falcon's best interest -- whereas the reduction back in 2018 was clearly in Falcon's best interest -- as there were no clear signs of commerciality at all back then.
As DAVO5 mentioned -- Falcon still has $9 million in the bank. Therefore, if Falcon had to contribute 22.5% for another horizontal down the line -- the most that Falcon will need to raise would be another $5 to $6 million if another full length horizontal comes in at the exorbitant $50 million price point as expected.
On a separate note -- there was a question as to why Falcon is not clearly stating how much of the $263 million has been spent and how much is left. Falcon is not is position to release Origin's financial position whatsoever, as that is something that Origin would have to release on their own either publicly or internally --- so we most likely won't know that number until it is very close to being reached.
Darnit: Don't be so sure that a potential raise in not in Falcon's future. Once we get a declaration of commerciality the share price of Falcon will better approach 'fair value'. At that point it makes sense do a raise for the EP76 well if that well makes sense to help prove up our value.
Newtofo: I am confident there remains sufficient carry for the two 'proposed' Amungee wells. As previously mentioned, it it highly likely based on economics of proving commerciality that these two wells will be consecutively drilled/fracked on the same pad as the existing Amungee well. Falcon would not enter into the drilling of these two wells without having sufficient carry to complete both the drilling and fracking - I think we would have already seen preliminary indications of a capital raise if that was being contemplated. I have heard that due to timing/rig availability, the EP76 horizontal test well would not be drilled until 2023 and that a raise would likely be needed for that well. The EP76 well is contingent based on potential buyers interest - it will be drilled if that is what it takes to get a maximized price for our acreage.
I am still hopeful that after commerciality is proven that a new company might be formed by Origin and Falcon's Beetaloo interest with their interest purchased by stock in this new company - that is simply my pipe dream at this point in time but IMO it makes too much sense to just ignore that scenario. At that point farm outs and capital raises could be completed to move the Beetaloo development forward. All just IMO.
we know the acreage valuations, but it was again interesting to see these in his presentation. Our share price reflects a 100 dollar valuation per acre. Typical North American values, albeit in proven commercial areas, are 1,000 (exploration), 4,000 (appraisal) and 12,000 (production). Not news for most, but for me in the context of the overall positivity this was again underpinning the scale of this thing, the toenail of the elephant chestnut came up again. Big talk also of the remoteness of the Beetaloo but proximity to major pipelines and investment (Inpex, Total). Not all new but as a package, this 1 hour was very, very compelling.
regarding funding, yes that was interesting. POQ did say there is 9.4 mio in the bank as a result of the 2019 capital raise and that we don't need funding, but to extend any exit timeline to be on our terms, it may be needed - there was a huge emphasis on the word MAY - unlikely across 2022 in any case from what I read but for sure, this is uncertain. He was not to be drawn on the Origin spend and how far into the carry we are, but this was encouraging, with caveats (?!). I liked his wry smile at the mention of our noisy neighbours 'core Beetaloo' - POQ stated clearly we believed back in the day we had the best acreage and that end commerciality decides what is core or not, but we are v happy. What I liked is that the better our neighbours do, the better for everyone - this may be obvious, but the news expected east of us at end December is very, very important to the overall perception of the Beetaloo.
new,
So, the only downside to Origin's ****ing away $10s of millions on their obscenely expensive fiddling is they can acquire more of FOG's percentage holdings of the Beet?
I imagine the following taking place in Origin's head office:
CEO: What the Hell? !@#@#%& We've spent $70 million and got nothing?
VP of Exploration: Don't look at it that way, we can pass the cost on to our customers and force FOG to give up more of their holdings in order for us to continue.
CEO: Oh, that's kind of smart and kind of dirty....I LIKE IT.
FOG will never be able to dilute their Billion shares, they only thing they can dilute is their percentage position. Sigh.
Thanks DAVO5 -- as I think you covered the quality of the presentation perfectly. There were a couple of cautionary points to keep in mind for 2022, but overall I think Falcon is going to have a very significant and exciting 2022.
It was noted by POQ that since Origin's 9 well program goes back to 2014 -- there is no "acceleration" of exploration expenditures and thus Origin won't qualify for the up $7 million in government contributions for accelerated drilling plans.
The second cautionary note may be on when has Origin completed their $263 million Aussie dollar CAPEX commitments from 2018 onwards when they picked up the extra 7.5%. There appears to lots of funds still to be spent at the beginning of 2022, but given how darn expensive these exploration wells cost -- there "may not -- ?" be enough to complete two full length horizontals. This was NOT stated categorically by POQ, but given how much the Kyalla well has cost plus EP 76 and
Amungee re-tests -- I would not be surprised if Origin's 100% carry commitment runs out before the end of 2022.
I thought the meeting was excellent for shareholders. Not much new but you can glean a huge amount of positivity - key words used often - hugely exciting, Inpex mentioned a lot, monetising through sale of CAD co / topco, exit route on our timing and terms, commercialisation will no doubt attract supermajors but on our timing - I thought POQ came across very well, hope they do this again as governance and disclosures allows. May invest more on the back of this, the undercurrent of positivity was very strong, 2022 looks like finally being our year (or early 2023) as all stars are aligning (my words).
Scott Sheffield head of Pioneer Resources gave an interesting interview in the last few minutes on CNBC. Pioneer Resources' shares forecast 2021 yield is over 11% and the company, Scott said, will be debt free by the end of 2022. He echoed the comments of Aramco on the oil outlook. He sees Brent back over USD 85.00 quite soon as demand worldwide continues to rebound (with reducing anxiety over the latest COVID variant) and is bullish on prospects for oil and LNG end 2022 and 1H 2023. (Interesting to see if FOG share his outlook in the next 90 minutes). Scott commented too on high LNG prices in East Asia and how much higher they are compared to other markets.
The FOG call is at 15.00 GMT or 10.00 EDT. It ought to be quite interesting.
Just a reminder for anyone that has the time and has not registered yet -- here are the details again that Lockview kindly posted last week.
30 November 2021 - Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG) is pleased to announce that CEO Philip O’Quigley will provide a live presentation on recent operations in the Beetaloo Sub-Basin, Northern Territory, Australia via the Investor Meet Company platform on 7 December 2021 at 3:00pm GMT.
The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet Falcon Oil & Gas Ltd. via:
https://www.investormeetcompany.com/falcon-oil-gas-ltd/register-investor