(Sharecast News) - Falcon Oil & Gas announced on Friday that its subsidiary, Falcon Australia, had received confirmation from its joint venture partner Tamboran regarding the completion of its 2014 farm-in commitments.
The AIM-traded firm said the development came with the fulfilment of the agreed-upon cost carry commitment, reaching a total of AUD 264m (£134.66m).
It said that over the years, Falcon Australia had been financially supported in its exploration activities by its partners, initially from Origin Energy, and more recently from Tamboran.
Throughout the period, a series of eight wells - five vertical and three horizontal - were drilled and tested.
The crucial data derived from the wells offered insights into the continuous nature and productivity of the Amungee Member B-shale located in the Beetaloo Sub-basin of Australia's Northern Territory, the board explained.
It said the AUD 264m carry was exclusive of an uncapped carry for the initial stage of the three-stage work programme, which came to roughly AUD 85m.
When taken together, the total expenditure in the Beetaloo Sub-basin by Falcon Australia and its partners stood at AUD 349m.
Further bolstering Falcon Australia's financial position was an additional carry that would cover future well costs up to AUD 30m.
That sum, of which AUD 6.75m would directly benefit Falcon Australia, was set to be distributed between 2023 and 2024.
Falcon said the financial arrangement stemmed from the terms set out in the binding letter of intent made public on 11 October last year - the same time as Tamboran acquired the participating interest in the exploration permits previously held by Origin Energy.
In addition, Falcon Oil said it retained an option to further its involvement in future exploration activities.
The company said it held the right to participate up to 22.5% in upcoming wells, which came after the recent introduction of drilling spacing units, previously termed 'proration units', as part of the binding letter of intent.
Importantly, the size of each unit was contingent on the specifics of the well in question.
While non-commitment wells establish a unit covering up to 6,400 acres, commitment wells could span a vast 25,600 acres.
"Falcon's group bank balance as of 24 August was $15.3m, and thus it remains in a strong financial position," the board explained in its statement.
At 1031 BST, shares in Falcon Oil & Gas were up 2.31% at 6.65p.
Reporting by Josh White for Sharecast.com.
Falcon Oil (FOG)