focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
The following is worth a quick read.
This article indicates the NT gov't support for the Beetaloo gas is strong and the new Federal position that more gas needs to be secured until 2050 -- with the Beetaloo as one of the key drivers of that gas security. I think this NT gov't position, (along with the contract to buy 40 mm of gas per day from the Pilot project) should guarantee that the EMP will be passed fairly soon.
Now, we just need to see Tamboran complete their US Fund raising program -- and then we will get clarity on when the next two horizontals get underway.
https://energyproducers.au/all_news/nt-budget-underscores-importance-of-gas-in-bolstering-the-territorys-economy/
Smallfish -- if you are talking about Falcon's valuation in the $54-90 million range -- that seems a little low, but if you are talking about Tamboran's valuation (that may not BS's support anymore in 2025) -- then your valuation is very accurate!!
You can reply whenever you feel like trashing Falcon, but my apologies as your posts are filtered out from now on -- so I won't see what you post any longer. Good luck with Riddle in the future -- BYE!!!
Oleo -- posted "Did we ever hear that sleepy POQ set up a relation ship, started to talk with these companies for selling FOG".
I am fairly positive that POQ and the CEO for Inpex have met in Darwin during past oil and gas conferences, and that Inpex has been following the entire Beetaloo gas story with great interest -- especially given Inpex's desire to build a third LNG train in Darwin before 2030.
Before Inpex can even start to build that third LNG train -- they will need a secure and reliable source of at least 5 TCF of gas to keep that third LNG train in operation for 20 years. Inpex could also benefit from Beetaloo gas, once the pipeline for large quantities of Beetaloo gas are flowing to the Darwin LNG plants, as the low 4% CO2 gas from the Beetaloo can be mixed with their very high 18% CO2 gas from Browse basin -- to help reduce their CO2 footprint on gas going into Japan.
One of the major hurdles with Inpex, and other large LNG importers into the Japanese and Korean markets -- (like JETA, and Japan LNG) is they are run by civil servants and are somewhat risk averse. These type of Sovereign Wealth Fund managers will generally be happier to pay a much higher price for access to large quantities of Beetaloo gas -- once the big new pipeline (that will be required to move trillions of TCF of gas to the Darwin area) is almost complete. These civil servants are very unlikely to spend a half billion dollars for Falcon in the next year or two (with no guarantees on when that pipeline will be completed) -- as the lengthy environmental and gov't approvals have not even reached a starting point yet. These mandarins at Inpex, and others, would rather buy out Falcon's interest for twice that amount once the pipeline is fully underway and they have a guaranteed access to Falcon's Beetaloo gas in 2028 or beyond??
For those reasons -- I am looking to hear, (after the next two 3km horizontals), that either corporate associates of Brian's, or wealthy family trusts in Texas -- (that have seen the DATA room), are looking more at Falcon's future potential 20 TCF of gas from the Beetalooo. Maybe we could see one of these family trusts, or someone like EQT, pony up $500 million US next spring -- for the very real potential to wait five or six years for that $500 million investment to be worth upwards of $2 to $3 billion??
Thanks smallfish -- but I am only expecting just enough gas to light my cigar in the next year or two -- while Tamboran gets diluted to around 3 billion shares!! Therefore -- I couldn't give a dam about how many million years it takes to drill the remaining 3.5 million acres.
Correction on my estimate of 12 TCF of gas net to Falcon from the one million acre dark blue CORE area. After redoing the numbers it looks more like 10TCF of gas to Falcon's side of the equation -- my bad. Not sure exactly what the Falcon's share of the remaining 3.5 million acres would be, but given what we know from the Amungee H1 -- I think it is very reasonable to expect that area would hold another 12 TCF to Falcon's side of the ledger.
Correction on the numbers for the 51,000 acre Postage Stamp is: – 136 wells X 18 BCF EUR = 2.44 TCF for the 51,000 acre zone. if we increase the acreage by adding on the other DSU (which is the 21,000 acres around the SSH1 drill site) -- we get to a larger 72,000 acres for a potential of 192 wells at 18 BCF = 3.45 TCF.
That’s a massive 48 TCF over the 1 million acres. So a net 10 TCF to Falcon over the dark blue CORE area.
WetWater, just a minor correction, that I believe is correct.
Tamboran is planning for two 3km horizontals at the new SSH2/H3 site for later this year -- and then four more in 2025 for a total of six 3km horizontals before the end of 2025. This will be six new wells that will be required for the 40mm proposed flow rate going to the Amadeus pipeline in 2026. There could be a seventh drilled in 2027 to keep the production running at 40 mm cu.ft per day when the natural decline rate is taken into account. That could potentially lead to very little additional drilling after 2026 by Tamboran -- until the big new pipeline by APA to the East Coast is completed by 2028??
However, I believe that scenario may not be taking into account what the next two full length horizontals are going to indicate from that tiny -- almost Postage Stamp area of 51,000 acres -- that POQ has very wisely decided to let Tamboran and Sheffield spend $400 to $500 million Aussie dollars proving up!!
A very quick off the cuff calculation (based on 136 full length horizontals, that Riddle said could be drilled on that Postage Stamp 51,000 acres-- indicates that there is a potential of 3 TCF of recoverable gas in just that 51,000 acres alone. This would seem to indicate that there are approximately another 20 Postage Stamps in just the dark blue CORE one million acres alone!!
Those kinds of numbers would seem to indicate a massive 60 TCF of recoverable gas in just the CORE area -- with a potential of 12 TCF to Falcon's side of the equation.
Given what is indicated for recoverable gas in just the dark blue CORE area of one million acres -- I think that (with the slowdown in any new giant shale gas fields in the US, along with the bigger companies like Chesapeake buying Southwestern -- just to get added volumes and new drilling locations), -- that there is some possibility of serious interest from the US after the next two horizontals?? I think it is very possible that we might get companies like EQT, Chesapeake, or any number of mid-sized shale gas explorers that could step in and take Falcon out at a ridiculously low 50 cents per share -- after the next two horizontals?
Even though the big new APA pipeline back East hasn't even gotten to the first stage and will be at least 3 to 4 years away -- I am wondering whether big players like EQT, or Chesapeake -- or possibly others in the US that would buy out Falcon's very realistic potential of 12 TCF in the CORE area (and potentially another 12 TCF in the remaining 3 million acres), would look very closely at joining up with Tamboran and Sheffield to build a much shorter, less expensive and faster to complete -- 600 km smaller pipeline to Darwin that could feed gas into either the Inpex LNG system, into Santo's LNG plant, or alternately into a third LNG train that Riddle wants to build?? With Sheffield fully involved -- the success of the next two horizontals will be big news in Texas.
Beetaloo, that is just a legal requirement that is in every financial Prospectus -- due to the fact that the funding agreement with the underwriters (some heavyweights with Citigroup and RBC Capital Markets) is only proposed right now!! I think that with these heavyweights taking up the underwriting on the NYSE -- the funding on the first stage anyway should go through in next few months.
Fortunately -- Falcon with it's current $20 million Aussie dollars ($12 million US) appears to be covered for their 5% share of the Full Pilot program -- with both Tamboran and Sheffield having to cover the remaining $195 million EACH in Aussie dollars.
After reading that Tamboran's share of the "Full" Pilot Production plan (six wells, 20 mile pipeline, and compressioin facility) could be as high as $250 million Aussie dollars -- POQ's corporate decision to reduce Falcon's exposure to only 5% -- (while we let Riddle and Sheffield prove up the Beetaloo) is looking much better!! The last two paragraphs below (from the Tamboran prospectus) indicates that Tamboran may have to go other routes (like handing more control to Sheffield etc) if all the funding required by Tamboran, with the new listing in the US, can't be raised??
"We estimate the capital required to deliver the first development phase to production will be approximately $125 million (A$195 million) to $165 million (A$250 million) net to Tamboran. We expect to spend approximately $70 million (A$105 million) to $80 million (A$125 million) net on drilling and completion costs, $10 million (A$15 million) to $13 million (A$20 million) net on costs related to the development of the compression facility, $23 million (A$35 million) to $30 million (A$45 million) net on related pad construction and gathering infrastructure and $26 million (A$40 million) to $40 million (A$60 million) net on transaction and general and administrative expenses".
"We estimate that we will need to invest approximately $57 million for fiscal year 2024 in order to progress our development plans. We expect the proceeds of this offering, together with our existing cash on hand (which is $33 million), to be sufficient to fund our planned drilling and testing program at least through the end of fiscal year 2025".
"However, we may require significant additional funds earlier than we currently expect in order to execute our strategy as planned. We may seek additional funding through asset sales or public or private financings. Additional funding may not be available to us on acceptable terms or at all".
Gonoles -- at the end of the Tamboran 1/4ly update that I posted earlier -- there is the following statement:
"In April 2024, Tamboran and the Beetaloo Joint Venture (BJV) have signed a binding long-term GSA to
supply the NTG with 40 TJ per day (~19 TJ per day net to Tamboran) from the proposed Shenandoah
South Pilot Project for an initial term of nine years (131.4 PJ Total, ~62.4 PJ net to Tamboran), starting in
H1 2026".
The BJV (Beetaloo Joint Venture) is all three parties -- being Tamboran, Daly Waters, and Falcon. Therefore, Falcon is included in the gas sales agreement with the Northern Territory but only to the tune of 5%. This works out to 6.55 petajoules to the Falcon side of the equation over the first nine years (or the equivalent of two shrimp on the BBQ and a beer each year -- LOL)..
Smallfish9 -- while your concerns about Falcon having almost zero value (5%) over the next 130 wells to be drilled around the SSH2/SSH3 site -- even Tamboran's own press release this morning (below) seems to challenge your position that Falcon's value is next to worthless.
While Falcon has pulled back on its fund raising requirements to 5% on that 51,000 acre block (and pushed Tamboran's and Daly Waters massive funding commitments from 38.75% each to 47.5% each on the next 130 wells) -- you seem to have discounted that Falcon, (and more importantly any buyer of Falcon) still has a 22.5% interest in both the remaining 950,000 acres in the Core deep blue area, along with 22.5% interest in the remaining 3 million acres that are covered by Falcon's three permits in the Beetaloo.
"The 1 million acres of deep shale in the Beetaloo West have potential to deliver
Tamboran’s gross Beetaloo Basin production ambition of 2 Bcf/d (~775 MMcf/d net to Tamboran)
(equivalent to more than 13.0 million tonnes per annum of LNG export capacity) for 40 years from a single
landing zone".
Smallfish -- even after discounting Falcon's share of the Pilot area of 51,000 acres (which is only 5% of the entire deep blue core one million acre area) -- Falcon is still has a forward discounted interest of 400 MMcf/d of that gas out of that 2Bcf/d total for just the dark blue core one million acre zone.
This is enough gas (just from Falcon's share of that one million deep blue core area) for someone like Inpex to commit to building their third LNG train in Darwin before their projected start date of 2030 for that third LNG train. What makes Falcon's non-operating position even more important for a potential buyer like Inpex -- is Inpex has no interest in being an operator, but rather just wants access to that Beetaloo gas at the very discounted cost of production (even after the ORRI's and gov't 12% tax rate are included).
Someone like Inpex couldn't care less about Falcon cutting it's interest down to 5% on that current 51,000 acre block -- as Inpex won't be looking for Beetaloo gas to be flowing to that third LNG train until 2030 for their third train proposed start date. While the fit with Inpex as a buyer of Falcon's share of the Beetaloo gas in nearly perfect-- their are numerous sovereign wealth funds in Asia, or other gas companies like EQT -- that won't be too concerned about Falcon missing out on that first 51,000 acre block, but rather will be paying more attention to the next two full length 3km horizontals (that Tamboran and Daly Waters will be paying 95% of the very exorbitant costs to prove up).
Great post gonoles -- and maybe some of Tamboran's constant promoting will rub off on the other JV partners who have very little??
Here is a short promotional video on Liberty (from a post by fitz65 on the HotCopper board) -- who will soon be in the Beetaloo for the next two horizontal fracking jobs. Seems like allot of the pieces for technical expertise are moving nicely forward in conjunction with gov't support, funding and infrastructure capabilities.
https://www.youtube.com/watch?v=-1MjeC46Pag
Kmj -- Sheesh -- I am going to check my security cameras -- just to see how you were able to verify that I wet the bed the other night (just after my heart attack -- LOL).
Here is the Cavendish update:
A Defining Moment for the Beetaloo: The SS-1H well achieved IP30 and IP60 rates of 6.4MMscf/d and 6.0MMscf/d, respectively (normalised over 1,000m), significantly exceeding pre-drill expectations and the 3.0MMscf/d IP30 rate required to progress the sanctioning of the proposed 40MMscf/d Pilot Project at Shenandoah South. The SS-1H flow rate is the highest tested in the Beetaloo Basin to date, and combined with the geological data gathered, puts Shenandoah South on par with the most prolific shale gas basins in the US. The IP60 exit rate trajectory show a steady, low decline type-curve (c2.8MMscf/d) and downhole pressure implying a highly effective frack that is connected to a sizeable volume of gas. The SS-1H well is planned to be flow tested until IP90 to allow for an assessment of the well’s 20 year estimated ultimate recovery (EUR) with results expected in late April 2024. -
SS-1H Results on par with the Prolific US Shale Gas Basins: Results from the SS-1H well have confirmed the similarity between the Middle Velkerri B Shale and the Marcellus shale dry gas window – one of the world’s most prolific shale gas basins. Most importantly, the pore pressure gradient for SS-1H is consistent with the core Marcellus, highlighting the ability to extract gas from the shale formation. -
Advancing to a 40MMscf/d Pilot Project: Front End Engineering and Design (FEED) on the proposed 40MMscf/d Pilot Project continues, with FID expected in mid-2024. The Pilot Project is expected to consist of six, 10,000ft horizontal wells drilled from the same well pad 4km to the north of the SS1H well. Two wells will be drilled and fracked in 2024, with a further four wells in 2025. A gas processing plant will be connected via infield gas gathering lines to a 35km export pipeline, connected to the Amadeus Gas Pipeline. While first gas is targeted for H1/26, commerciality will be further proven by the end of 2024, once the initial two production wells are fracked and flow tested. -
Significant US Expertise and Capital: To date, >US$115m has been invested across the Beetaloo by Bryan Sheffield, the founder, and former CEO of Parsley Energy. H&P, a drilling industry leader has imported a 2,000HP rig into the Beetaloo, which is expected to support a material reduction in drilling times and costs. Operator, Tamboran also has a right of first refusal until 2033 on future drilling rigs. Tamboran has also signed a strategic partnership with Liberty energy to import a modern frac fleet to the Beetaloo in 2024 for a stimulation campaign with leading operational and subsurface engineering expertise, reducing delays mobilising equipment, increasing efficiencies, and reducing costs.
Hey Marsh -- my heart attack was yesterday morning when I read the press release -- but starting to feel a tiny a bit better today after digesting this latest bit of bad news on our wounded bird -- sheesh. A bit surprised that Falcon hasn't dropped even further on the TSX -- just so you can get your stink bid filled -- LOL.
There were two disappointments with this latest press release -- with the 6P price on the extra 133 million share dilution being only slightly worse than having to give Sheffield (and most likely Liberty) another almost 2% ORRI over all of Falcon's three permits. The 6% ORRI over the 51,000 acre block surrounding the new SSH2/SSH3 wells was not too disappointing -- as we have already dropped down to only a 5% interest in that block anyway -- so selling BS that 6% ORRI interest for the extra cash infusion seemed to make good sense. However, the extra almost 2% over all the remaining four million acres was a bit more disappointing, but as Frackme clearly stated -- the gas has to flow in very large volumes before BS (and now to a very small degree -- Liberty, I think) will ever see any true benefit for their addition of $millions in new Falcon operating funds.
The 6P price was a much bigger shock -- especially given the stellar flow rates on the 30 day, 60 day, and next Friday the 90 day flows!! It is almost impossible to imagine what the punters that bought into the 25P funding 10 years ago think about this price point of 6P???
The only good news that I can see, (after my heart attack medicine finally kicked in :-) -- is that Falcon is now funded right through the next two full length horizontals, including the 300 sq. km of seismic, and all ancillary costs. While a private placement at 8P would have felt better -- the difference is only about an extra 33 million shares added to the total float or approximately a 3% increase -- which is disappointing but maybe necessary to get the deal done.
Now that Falcon is funded through the next two 3km horizontals -- my only real concern through to next year -- is when do we finally hear from Tamboran about their US listing and their critically important funding raise to cover Tambo's 47.5% of the next two very expensive 3km horizontals -- (along with all the seismic and ancillary costs)??
P.S. -- if anyone thinks that Falcon's dilution of 133 million shares was extreme -- just wait to see how many billions of Tambo shares are out there when their next funding is complete!!!
PS -- don't miss the part in Alex's interview where he talks about his recent travels to gas conferences in the States, and how everyone he meets is saying great things about the SSH1 flow results -- (which bodes well for an EQT level of buyer interest in Falcon down the line).
MANY THANKS dprussky -- as Alex's comments from the 10 minute mark to the end of the interview about Brian and the SSH1 well are probably the most positive comments about the SSH1 and the future strength of the Beetaloo to date!!!
Alex has nothing but praise for how the SSH1 well, with it's 5.5 inch casing and slick water frack design is performing. Alex even commented about the decline rate being an extremely low decline rate -- which the recent Sentinel shot seems to be indicating too. Worth listening to again -- anytime I get nervous about our bird's future prospects. GLA
Northern, while a $1.50 US price range is not totally out of the upper range on a sale, it is worth keeping in mind that there is no cash flow and no infrastructure in place -- all of which will be very expensive for any buyer of Falcon's 22.5% interest.
Any buyer of Falcon's 22.5% interest will have to have a very large cash reserve in order to cover their share of what will be very expensive wells in the first couple of years, plus their share of an expensive gas processing plant, gathering pipelines to the processing plant etc. etc. -- all long before any cash flow starts to offset some of the forward costs.
Camelot -- you may want to hope that POQ hasn't been reading all your posts -- as he might sell for 5 cents -- just to see "how you like them apples" -- LOL.
On a separate note -- Tamboran's share price took a small hit today in Aussieland, but still holding up better than Falcon (but then again everything holds up better than Falcon -- sheesh). Tamboran could be down as those investors start taking into account the fact that the rest of the Pilot Production wells will cost Tamboran a great deal more now -- since Falcon's move to let Tamboran and BS shoulder 95% of the costs going forward.
Tamboran shares could also be down a bit as those Aussie investors start to take into account the reality that Riddle is going to be diluting Tamboran by a massive amount when the listing in the US finally gets completed. Even Falcon needs to see that listing in the US happen for Tamboran fairly soon -- in order for Tamboran to match the over $100 million in US funds that BS has raised to cover his share of the Pilot Program.
In reviewing the poorly researched article on Empire's 3mm acres -- (that only has a limited amount of their permits in the actual shale part of the Beetaloo) -- I started thinking more about how and why EQT could possibly be the first in line for Falcon's 22% and maybe already in discussions with both POQ and Brian Sheffield???
I have long thought that Inpex would be our most interested buyer of Falcon's 22% of the Beetaloo gas -- as that share of the Beetaloo gas would give Inpex the confidence level to move forward on the 3rd LNG train they want to build next to the existing two LNG trains in Darwin (why do the call them trains -- as they don't look like any that I have ridden -- LOL). The other reason Inpex could be very close to the top of Falcon's potential buyers -- is that Inpex has indicated that they have little interest in being an E&P driller in the Beetaloo, but rather just needs that 5 TCF of potential gas at a very good discounted price point to help offset the 3rd LNG train expenses. Inpex could obviously just buy the gas from Tamboran or even Empire or Santos down the line, but that 5 TCF of gas would cost Inpex a great deal more than just buying out Falcon's 22% interest and getting that 22% of the Beetaloo gas at the net cost of production and transport -- which could be one-third the price of buying in the open market in 5 years time??
However, I am now thinking that EQT could very well be moving into position as Brian Sheffield's partner in the Beetaloo -- due to a number of very nice coincidences. Who owns one million acres in Marcellus and who owns one million acres in the Beetaloo?? Who is very well acquainted with and most likely good friends with Brian Sheffield (and most likely has access to all the drilling data) versus who is Brian Sheffield already a JV partner with in the Beetaloo?? Who is now reaching the point of limited drilling locations in the Marcellus versus who has 1000's of drilling locations in the Beetaloo?? Who has a $16 billion market cap and needs to find new Marcellus quality new shale gas basins versus who happens to own three valid permits across 4.5 million acres in the Beetaloo that compares highly with the Marcellus for shale gas?? The answer to all these questions is pretty easy for those that STILL own Falcon shares -- LOL.
EQT could take out Falcon's 22% interest in the Beetaloo with breaking a tiny sweat folks. EQT could do a very minor 5% share offering (using their stock that is currently worth $16 billion) taking out Falcon's 22% for around $800 million. This minor stock dilution for EQT might cause a minor drop in their stock price on the American exchanges, but that might be very short lived when EQT investors realize that EQT has just snapped one million acres again in the next Marcellus without having to pay a penny in cash. This scenario would also allow Falcon owners to stay invested in the Beetaloo or sell out??