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Yeah the problem with that idea is the JV in play with BS. Bryan won't want to sell necessarily and unless they have a JV that allows them split up the 77% then it might stalemate. Looking at YTD Tamboran and Falcon are both down 20%. From a logically stand point it makes no sense as before the results the Gov risk was the same, demand was the same and it was obvious all parties would need to raise capital. Only thing that has changed is the gas flow rates which have delivered way over expectations so it's either both companies are being hollowed out by a trading strategy that is designed to crash the share price which I don't believe or a combination of day traders who love volatility and jumpy retail investors are driving the price down in low volumes which I think is much more likely. Either way the next 3k well will either be the final nail in the coffin or the start date for pulling a prospectus together. Not sure Falcon can start a sale process on the back of the last shortie no matter how good the results. It's like waiting for a bus....you keep being told to wait but you get colder and wetter.....some people pack up and go home others stay and wait it out. The bus either comes or it doesn't and depending on what happens you have winners and losers.
To be fair to Riddle. Selling that gas to the gov is a nice move as it will make blocking the development of the gas fields, processing plant and pipeline harder when they have a seat at the table..
Longknife not sure your maths is correct there. 3.6 million pounds at a 6p price is 60m shares or about 6% of the free float. It's defo a small raise. Not worth raising any less, probably the smallest raise that could be done to be fair. If you are saying it's not a great time to raise that's another point.
I'd say we'll be sold by then because we'll have proved 2 3km wells (hopefully) and a heap of the directors options expire early the next year
Just thinking about it and a few things jump out at me.
Why did Falcon jump the gun on the RNS? I understand the gov having to sign off on it but the legal agreement hasn't been agreed yet?
Then thinking about the idea of giving away royalties is interesting too. It's usually a bad move as you are giving away the real future value at current depressed valuations. Would we have been better off at 0% participation for these 50k acres rather having to give away 2% royalties on the total block. The other side of that coin is that when someone has royalties the value of those royalties is only unlocked when it's producing so ironically the more Royalties someone like Sheffield has will make it more important that falcon is in a position to be producing which will only really happen in a sale. I just hope we don't lose our shirts in any sale. There's the small raise now I'd say we'll have a sale before the end of 2025. Good luck all
I hear you Oleo. While a seller may have what they spent over the years in the back of their mind a buyer will only care about the horizon and what's to come. If oil and gas was still a thriving industry and not in wind down mode then maybe Falcon could do better but the reality is there is likely 20-30 years left in oil and gas at any significant level (as it will go on at a reduced level for way longer) and any buyers will know that Falcon can't unlock the value in the asset and the longer we have to give up stakes in drills thr value reduces. While share price isn't necessarily a good guage of value in this instance, it is what the market values the company at whether you like it or not and any purchaser will reference it as a jumping off point in any sale. If we book significant gas to our reserves that will help. It's just my opinion at the end of the day and certainly not worth too much contemplation from anyone to be honest. I just enjoy all the machinations on this forum and throwing mine in the ring. have been on both sides of a few deals in my time but every deal is different and what you really want in any deal is competitive tension between two interested parties. No doubt what the falcon board will be aiming for when the decide to execute their exit plan..
The board are limited to 10% of the free float so they are about half way there. Hard to justify to your shareholders issuing many more options though when a share price is falling. Fastest way to get a vote of no confidence. We are at an interesting intersection. Real value is being created with these flow rates and will further increase with the results of the next 2 wells but if the share price stays static or declines it will make the route to more options very risky. I don't think you'll see the board issuing any more options this year unless the share price increases significantly. After all it's their fiduciary responsibility to create value for the shareholders, hard to justify it even if it's happening when the share price goes backwards. It's walking a tightrope. I'd say we'll sell in the next 18 months especially if the flow rates are good in the next two wells. Falcon hasn't the resources to unlock the real value and any purchaser will want to pick the company up cheap and not be paying anywhere close to the NPV that the empire article is putting out. I'd say it will be bought within 18 months for between 500m and 1bn and there may or may not be one more small raise before then.
Well the grant price is between 8 and 15 so they are only valuable above those prices and they you have to pay CGT on anything above that price. When they lapse if you haven't exercised they are gone. So they are worthless below the exercise price and they are worthless after the lapse date so if I was a beating man which I am because I'm invested in Falcon I'd say it would be safe to assume they don't want to lose the 20m at 8p that lapse in 2026 so I'd say you'll see a sale before then
If you want the best indicator of the minimum price we will sell for and an indicative timeline. Check out note 9 on page 12 on the last set of published financial statements on their website.
https://falconoilandgas.com/download/falcon-financial-statements-30-september-2023/
I don't know many boards who would let 60m of share options lapse before extracting the value.
Yeah but none of that reflects what we see. There was talk about 6-7k acres not 25k acres. There are less than 200 25k lots in the 4.5m. I'm not sure there will be buy backs either. The question is how long will it take them to work their way through the estimated 138 wells. While FOG won't be a producer a potential buyer will care about their ability to par take in the short to medium term as the window for oil and gas globally is closing due to the green initiative. I'd say we are fine but realistically I think being able to buy into these 2 wells at 22.5% would be the ideal scenario and once we buy into the first well in the 25k acres at 22.5% we have the option to go in at 22.5% for every well in that 25,000 acres thereafter. At 5% we are limited to 5% or less for the next 138 wells if they stay in this area. If a big producer buys us out they may look to do a checkerboard deal with the JV over the whole 4.5m acres to allow them get moving at pace and not be tethered to the pace of the JV.
The participation agreement was a master stroke to be fair as it gives us options and stops us from being forced to sell early because we can't pony up the funds I'm not sure if dropping to 5% would have been better than doing a raise though. Only time will tell.
Market not loving the news for Tamboran. Down 3% since release. Hopefully that inverse will be true for us and market will reward stewardship of cash and resources. If the two wells are commercial our value will climb significantly regardless so I guess it's more of forget about the share price until we have a sale. Good share appreciation can only help so in the meantime fingers crossed
Will be interesting to see what the market makes of this news. We are seeing the participation agreement play out. Two choices were to dilute and fully participate or not to dilute play at a level that can be supported by cash and carry. 138 wells is a lot of wells to be locked in at a max of 5%. But 50k acres in a lot of 4m is not much I guess.
Well it is of you think someone on this board is going to nail the trajectory or heaps of unknowns. Gov appetite and oversight, geology, drilling process, investor appetite, timing, personalities etc.
However if you come to the board to widen your perspective and get some insights, debate, challenges from others then I think it's really valuable.
Personally I'm not one to follow or look to follow blindly bit I do appreciate all the debate and dialogue as it helps me make my decision on the likely outcome and set my risk parameters.
I think we are all a little sore after the recent share price movement but no point in venting in the wrong direction.
On the raise point I think a raise would actually increase our share price long term. If you are and investor who would you rather invest in a company without the means to carry out the full pilot or a company that has the means to financially support itself. I think a 10% dilution would amount to at least a 30% share price increase and would be well worth it.
Either way we don't need to do anything. If we sit out on the pilot program and it's successful our acreage becomes way more valuable and if we do participate we start potentially generating cash in 2026.
I'm loving all the thoughts and scenario modelling.
It's going to be an exciting year for sure.
Just watched the investor Q&A and to be fair. It's really positive. To summarize it looks like we want to stay in for the full pilot programme at our 22.5%. we are not looking to dilute or divest any of our holding. While we aren't fully funded for the six wells, we aim to be through a number of avenues available and if worst comes to worst we can reduce or participation on a well by well basis. We should in production by 2026 and generating cash.
We should see real significant value creates over this year and next as we repeat the recent results on longer wells.
We don't see any major environmental issues looming and while we are not looking to court potential suitors now the horizon for a sale is during the pilot program (12,18,24 months).
We have 5m in the bank and a 2.something carry that ladders up to AUS$16m Gross cost.
We are staying in the current formation for the 6 wells.
While he was coy on a valuation or share price. Terms like Multiples of current share price and
significant value creation were used which gives me comfort that the goal is to sell but not give away the family jewels.
Worth a watch if you are in the fence about staying the course.
Really disappointing share movement so far this week but maybe a placement is imminent or maybe not. What I'm sure of though is the pilot program goes ahead with or without us and unless we divest our 22.5% of give away mental royalties our asset will be worth much much more in 2 years.
Finally we can do nothing and see value add. But thankfully it sounds like the intention is to partake in the full 6 well program.
This summary of the Q&A is not financial advice. Haha
Really disappointing but I'm honestly not worried. Played with the idea of selling yesterday to buy more shares back at a level like we are seeing today. But I didn't because for the first time since I've owned these shares Falcon is viable. We have enough cash to see the next long drills through to completion this year then we can sit out on the next 3 (and won't lose access to the acres just those wells) as we are already on the pad that they will be drilled off. But my guess is once the market sees two longer wells giving commercial level gas our share price will move or we'll be scoped up for multiples.
While I could try and scoop up another 50k of shares on the meantime it's not worth the risk which is thos share moves without me on board.
Not trying to sugar coat it either. I'm as disappointed as the next person on the share movement but it hasn't moved on fundamentals or risk. It's moved on human speculation and at low volumes.
Be brave now as for the first time we are commercial and sitting on a dragon's horde of gas. We have 22% and don't have to be dragged through the bush backwards to see value accretion. We don't have to give any holdings away or do a raise at these low levels. Get the two wells drilled and things will change for the better.
What's 6 more months for a much happier ending
I'd keep the faith here guys.
My two cents for what it is worth. The results are a brilliant foundation that is all. it was still a shortie (after 3 lackluster wells) and the market will probably wait till the next two 3km wells are drilled and flowed. why pile in now when they can just wait 6 months to get assurance.
then when the initial money does flow I'll bet more goes to Falcon than Tamboran as we are the sale option. we'll likely sell within the next 2-3 years so as an investor I can see people placing bets on us this summer after we prove up the to longer wells.
Don't be worrying about the share price today. it's nowhere near reflecting what we just saw. It will move this year though. the tides are changing.
Yep,
Pretty much spot on. But not necessarily a bad thing. The market just reflecting the work yet to be done. Hopefully we'll see steady increases over the next few weeks and months as investors start to take this play seriously, as the 90 day flow rates come out.
I think a modest increase today is not necessarily an indicator of where we end up more an indicator or where the market is/was on beetaloo. It will take a few weeks for the finance lads to sharpen their pencils and start doing the math. But when they do they'll want in but will still need a little more assurance for their capital.
If the 90 day holds up and a good plan is firmed up and stood up by Tamboran and Falcon I can see us going from strength to strength.
There is also the political environment to take account off too. If the Gov gets behind this in a more guaranteed way things will start to move. Still too much uncertainty around the political will and what party/ies will be in play.
It's a super opportunity. We've caught the tiger by the tail here. Let's hope we can hold on.