Member Info for newtofo

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

Excellent post frackme -- and most likely the correct scenario for Falcon over the next 18 months!!

Frackme -- since we are currently trading just above 7P -- hopefully (LOL) we don't see 20 million of new options being granted at this year's AGM in July -- with a 2028 expiry???

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??

Interesting article ITguy -- but not very well researched by the Sydney Morning Herald, as they must not have any reporters that know shale gas or know the Beetaloo Basin.

This clip talks about Empire having 3mm acres in the Beetaloo, but if sand and dirt is what you want then 3mm is accurate, but 90% of that 3mm acres is totally outside of any shale gas indications. That is the reason that Empires four wells to date are all inside that remaining 10%.

"The leader of that pack is probably ASX-listed Empire Energy, the largest landholder in the basin by far, with an extraordinary 3 million net effective acres of ground under its control".

This next bit from the article is hilarious -- as it describes EQT's Marcellus one million acre holdings in the Marcellus as tiny when compared to Empires Beetaloo holdings. EQT's Marcellus shale gas wells flow three or four times better than Empire's shale gas wells, and all of EQT's acreage is in the core of the Marcellus versus Empire's shallow 10% of the Beetaloo.

"A fun fact is that Empire’s landholdings in the Beetaloo are roughly similar in size to core areas within the Marcellus shale. Notably, not even the leading producer of gas in the Marcellus shale, the US$16b EQT Corporation, comes close to the scale of Empire’s holdings with its 1m net acres".

EQT's one million acres is more comparable to Falcon/Tambo's dark blue Core area of the Beetaloo -- which the current SSH1 flow rates, depths, pressures, gas saturation etc etc are all confirming. All of that being said -- Alex Underwoods promotional efforts have been excellent given the less than stellar flow rates from Empires two horizontals.

This last bit from the article is so ridiculous and so beyond reality -- that the Sydney Morning Herald should be sued for misleading readers and potential investors in Empire!!

"And the rub? Well, Empire’s preliminary financial modelling shows a project net present value for phase 2 coming in at A$2.5b and phase three is showing an NPV of wait for it……A$14.5b".

You are correct bonjourno. I am not sure what the exact cost is, but I believe it is fairly steep. However, any deep pockets buyer of Falcon's 22.5% interest in the Beetaloo will have that option going forward, and in the interim Falcon continues to husband it's remaining cash balance.

Marshmill -- unfortunately my old adage is still in effect and you are correct -- as we have very few new buyers and lots of tired old ones like myself that can't hang on forever -- LOL. Therefore -- you should get a chance to pick up a few added shares lower -- but if ever there was a time when I wouldn't want to be out of Falcon (in case of a wild card buyer stepping in unexpectedly) -- this is getting very close to that time -- (hopefully -- LOL).

Just in case Smallfish doesn't repost (here) his comments from the Tamboran HotCopper bulletin board regarding today's Sentinel satellite flare shot -- it is worth taking a quick read over on HotCopper. Smallfish made some interesting comments regarding the overall slightly larger flare size of the flare from this weeks satellite shot.

Fleurs -- Falcon's interest in the 51,000 acres that surrounds the new SSH2 and SSH3 well pad will now be down to 5%.

When you include the remaining $3.75 million in Aussie funds that remains from the deal POQ negotiated on the Origin sale to Tamboran -- Falcon may only need to contribute another $1.25 million on those next two extremely expensive 3 km horizontals. Falcon still owns 22.5% of the 20,000 acres that surrounds the SSH1 well site as Falcon paid it's full share on the current SSH1 one km horizontal.

Taken together -- Falcon will have approximately a 10% interest in the entire 70,000 acre blocks that covers both the SSH1 and the SSH2/H3 well sites.

It is worth remembering that this 70,000 acre block (that Falcon will still have a 10% interest in) is only a tiny fraction of the total 4.2 million acres that are covered by Falcon's three permits, and only 7% of the deep blue CORE area of one million acres -- leaving 930,000 acres in the deep area.

The brilliance of this decision (IMHO) to reduce Falcon's actual risk on these next two 3 km horizontals -- is keeping Falcon's dilution to a minimum while Sheffield and Riddle take on 95% of the risk on what is an untested new well pad 4 km away. There is still a fair degree of risk on what are going to be the most expensive wells drilled to date in the Beetaloo -- especially if Riddle is going to drill blind without doing the 3D seismic program first -- so letting BS and Riddle pay up 95% of the expenses seems to make great sense.

Here are five different aspects on this Falcon update -- to think about over the next few weeks while we wait for the 90 day flow rates to be announced.

1. With this reduction to only 5% in the upcoming SSH2 well pad, and the two 3 km horizontals to be drilled there, Falcon is now almost FULLY CARRIED on those two very expensive horizontals. Given Tamboran's normal rate of spending -- these two wells could run close to $100 million Aussie by the time they are fracked and flowing for 90 days. Falcon's share could be as high as $5 million -- but Falcon still has a $3.75 million Aussie dollar carry on those next two wells.

2. Tamboran's excessive cost structure, with new wells costing two to three times what Empires spends -- when the very high General and Admin costs at Tamboran are added in -- is NO LONGER a big concern for Falcon with this drop to 5%.. Tamboran just raised $55 million in Aussie dollars and they already know that is not enough to cover Tamboran's 47.5% of the first two horizontals (even with Daly Waters covering 47.5% of the total expenditures).

3. Falcon's stock price HAS NOT BENEFITED from the stellar flow rates, but rather has moved significantly down on great news. This means that any full 22.5% participation in the SSH2 pilot program would have required POQ selling a couple 100 million shares around 10 cents -- diluting Falcon to the tune of 20% -- for very little gain in the future selling price. It has become depressingly clear that even great news is not helping the stock move up. Therefore diluting the stock at this point would only have benefited Tamboran and Sheffield by reducing their costs. It is becoming too darn apparent that our real potential win with Falcon is not coming from any of the day to day gyrations on the various stock markets -- but rather from POQ making the best deal possible in the next two years to sell the entire 22.5% in Falcon's full million remaining acreage.

4. Falcon's decision to put 95% OF ALL EXPENDITURES onto Tamboran's and Brian Sheffield's shoulders could potentially help motivate B.S. to find someone like his associates at EQT or Chesapeake -- to make an offer to buy out Falcon. I would think that B.S. would much rather have a deep pocket partner paying up their 22.5% in all costs -- rather than tiny Falcon just getting an almost free ride -- while the Core area is proven up??

5. If the eventual buyer of Falcon's potential 5 TCF of gas is someone like Inpex -- then this move to cut Falcon's forward costs down to 5% is brilliant. Inpex does not need Falcon's 22.5% of the Beetaloo gas for AT LEAST THREE or four years time. Inpex has already told the northern Territory government that they want to build a third LNG train in Darwin, but Inpex won't have that third train completed till the end of this decade, so any delays now while we wait for the 3 km flow rates is ok...

This is very worrisome news out of Tamboran today -- as Falcon will now have a tiny 5% interest in the next 138 wells to be drilled around the 51,000 acres surrounding the SSH2 Pilot Program well pad. Those next 138 wells could take five years to get completed and during that 5 years Falcon will get next to nothing in revenue for five long years.

What the heck is going on that POQ is basically giving up on the Beetaloo for that many years -- as I for one can't remotely think about hanging on for another five years to see any chance of revenue or a buyer. It is very doubtful that POQ will ever find a buyer in the next 18 to 24 months -- as any buyer won't get anything more than 5% of the gas until those 138 new wells have all been drilled -- sheesh.

• Tamboran has increased its working interest in the proposed Shenandoah South Pilot Project to

a minimum of 47.5% following a decision by Falcon Oil & Gas Australia Limited (Falcon) to limit

its participation to 5% in the Beetaloo Joint Ventures’ second Shenandoah South well pad (SS2)

and the two wells in the 2024 drilling program.

• The two wells in the 2024 drilling program will create two Drilling Spacing Units (DSUs) totaling

51,200 gross acres around the new SS2 well pad, where Tamboran and Daly Waters Energy, LP

(DWE) as 50/50% owners of Tamboran (B2) Pty Limited have agreed to pick up the non-consent,

increasing interest to 95%.

• Tamboran and DWE will carry Falcon for up to A$3.75 million gross (A$1.875 million net) for the

first well post 30 June 2024.

• The 51,200 gross acre area has the potential to accommodate 23 well pads (138 wells based on

six wells per pad, 3,000-metre lateral sections and 500 metre well spacings) and it is expected to

support the wells required to deliver gas to the proposed Shenandoah South Pilot Project.

The following link is courtesy of craigaus69 on the HotCopper Tamboran board and has good indications for the forward pricing of nat gas in Australia -- that might help Falcon get a better price in 18 months time. However, two or three months time would be much more appreciated -- hopefully -- LOL.

https://aemo.com.au/newsroom/media-release/gas-market-outlook-signals-need-for-new-investment

P.S. -- it is also worth keeping in mind that Falcon had the ROFR on Origin selling of their interest, and so any ROFR might be with Falcon, but certainly not with Sheffield or Tamboran. That ROFR that POQ originally put into the Origin deal back in 2014 was the reason that POQ negotiated the extra $6.75 million contribution by Tamboran towards the next two wells, (after the 9 well Origin program was completed), and how POQ was able to also negotiate the opt-in or opt-out clause on all future expenditures. That opt-in or opt-out clause is for Falcon's benefit and will belong to Inpex or any other purchaser going forward -- so certainly has added value to any buyer of Falcon's 22.5% interest in all three permits.

Note -- after all the years that I have been invested in Falcon -- I will tell you (and will tell the same to POQ) -- I would rather see Falcon go bust trying to get this deal done in the next 18 to 24 months for six or seven times the current price than to ever sell for two or three times (and would vote for that position as well if it came to a vote)!!

Smallfish and Longknife -- I am fairly sure that Sheffield does not have any kind of a ROFR (right of first refusal) on Falcon selling their interest to a third party -- as POQ has never brought that up in any discussions nor investor presentations. I would agree that Sheffield most likely has a ROFR with Tamboran -- as he has more invested in his partnership with Tamboran -- plus bought out the other 38% of Origin's interest almost two years ago, so ROFR would surely be in place with Tamboran.

There is almost zero chance that POQ -- nor the BOD -- would even entertain an offer for Falcon that was 2 or 3 times where it is now, but any offer that was five or six times what Falcon is currently trading at would have to be taken to the Board of Directors for their input. If you talk with Cavendish's analyst, James McCormack or the analyst at Tennyson -- they will tell you clearly that Falcon should be trading two or three times higher NOW on this stellar flow rate, but certainly not a chance that Falcon would entertain this low of an offer.

Keep in mind smallfish's caveat about a vertically integrated producer from Japan, Korea, or China having a greater tolerance for risk and a motive to be a non-op going forward. Inpex has spent over $35 billion dollars developing the Browse basin and their two LNG plants in Darwin. Inpex wants to build a third LNG train in Darwin, but needs access to 5 TCF of gas before they can commit to have that third train built by 2030. I don't know the exact figure, but there is good reason to believe that the Core dark blue area in Falcon's permits, which covers one million acres, may have around 5 TCF of recoverable gas to Falcon's side of the equation. After spending $35 billion for their two existing LNG trains in Darwin -- it may not be a very big gamble on Inprex's part (or one of the other asian integrated players) to spend another couple billion to access Falcon's share of that gas without any interest in being an operator at all. Inpex would have to buy out Falcon's interest for something like 800 to 900 million and then have another $billion to cover their share of forwarding operating costs as the one million acres gets developed, but that is a significant discount to what it cost Inpex to develop the Browse underwater gas basin -- with it's 12 TCF of recoverable gas in place.

Very informative post smallfish9.

Given the successful flows from the SSH1, it is also good advice on Falcon participating in the next two horizontals -- even if it requires something like a ten percent dilution of Falcon's stock to make sure Falcon is going to reap the benefits of that 6400 acre block. I am fairly sure that POQ intends to participate -- as something like a 15 bcf EUR on the next two 3 km horizontals will only add strongly to the valuation metrics that will help any sale going forward.

I am also fairly sure from previous investor presentations -- (going back to when Tamboran and Origin were structuring their deal) -- that the real benefit of the opt-in or opt-out clause was described as a safety valve if any of the Tamboran planned future 6400 acre blocks were in a very questionable zone. A good example of where Falcon would maybe want to opt-out would be if Tamboran was planning on going back into the Lower Kyalla -- which we already know is going to be a very difficult zone to crack. In this scenario -- opting out might be the wisest choice until that Lower Kyalla zone proves up. However, the SSH1 area has already proved that it is a winner -- and doesn't have the risk profile that would require POQ to even think about using the opt-out clause in this situation IMHO.

805slo -- here is a step out link from the one you posted -- showing the Tambo EMP is still under assessment -- which is understandable as it was only submitted at the beginning of December and is a massive 300 plus pages long.

The good news on this Pilot Program 9 well EMP is that the 30 day timetable for written submissions contesting that lengthy EMP by the anti-frackers -- expired at the end of December, and in the interim we have had the stellar flow rates confirming commerciality -- which should help get the EMP approved in the next 30 to 60 days.

https://depws.nt.gov.au/onshore-gas/environment-management-plan/emps-under-assessment

Just "One" more small but important clip from the Tamboran report out today -- (and then I will stop posting -- for this week anyway) -- so that other LTH posters can get a chance to get a word in edgewise -- LOL!!!

This paragraph below in reference to the amazing flow rates announced two weeks ago -- is where I think Brian Sheffield will be focusing his conversations with big shale gas players in Texas -- as he works towards finding partners to develop the first one million acres in the Beetaloo. While there has been some issues with Tamboran (like the Amungee H2 fiasco and the exorbitant G&A overhead expenses) -- it is worth noting that Falcon might not have reached this proof of commercial gas flows with the SSH1 well -- if Origin was still our lead operator. I am fairly sure it was the engineering expertise brought to the Beetaloo by the ex-Pioneer team and their new completion engineer -- (along with all the expertise from Faron Thibodeaux's team) that finally got us that long anticipated proof of commerciality in the Beetaloo.

"The result, we believe, has de-risked more than

1 million acres of high-quality shale at depths

below 2,700 metres (8,202 feet) and validates

the Company’s view that deeper shale areas

in the Beetaloo Basin are likely to be the most

prolific and optimal areas for the location of the

proposed pilot development.".

"This normalized rate is the highest rate

delivered in the Beetaloo Basin to date and

exceeded the Company’s pre-drill modelling

expectations"

A bit of weekend reading for any that are interested -- while we wait, and wait and wait a little more!!

This update has a paragraph (copied below) that shows that Tamboran has completed all the obligations that Tamboran inherited from Origin regarding the 9 wells and total dollar commitments. Falcon still has another 3.75 million dollar credit remaining that will most likely be used with one of the two full length 3 km horizontals to be drilled later this year.

"During the SS-1H well drilling activities,

Tamboran gave notice to Falcon Oil and Gas

Australia Limited (Falcon) that all farm-in

commitments have been fully satisfied, having

reached the associated cost carry commitment

in accordance with the 2014 Falcon farm-in

agreement".

https://hotcopper.com.au/threads/ann-half-yearly-report-and-accounts.7905312/?post_id=72912624

.

Longknife -- I am almost positive that Falcon will be sold for at least twice your 30 cents US number, but the biggest question still remains the same -- WHEN??

Brian Sheffield will most likely be the driving force to see Falcon taken out by one of his Texan associates -- like EQT or possibly Chesapeake amongst others. Having Falcon hanging around beyond the Pilot Production program makes no sense for someone like Sheffield -- as he will want to have one of the major US shale gas companies as a long term deep pocket investor, with a buyout of Falcon the most logical long term solution.

Just the Dark Blue Core area of the Falcon permits in the Beetaloo will require anywhere from 1000 to 2000 3 km horizontals to drain that low CO2 shale gas over the next 15 to 20 years. That will be a very lucrative purchase of Falcon 22.5% interest for any big shale gas player (for most likely something just under a $billion). However, that Falcon purchaser will need to have another couple of $billion to invest in their 22% share for all of the very expensive infrastructure, pipelines, dozens of new well pads, and a huge gas processing plant for the next five years -- before the really significant profits from $12 Aussie gas start to offset the forward costs, (at which point the potential buyer will will be on a roll towards $billions in profits over the following 10 to 15 years).

Rsacas -- promoting this stock to some of the big oil and gas investment ETF's and brokerages would certainly help generate new buyers -- as there doesn't appear to be more than a couple of day traders wrecking havoc and pushing Falcon down.

That being said -- without new deeper pocket investors we are somewhat stuck with this ridiculously low price point on Falcon due to the fairly clear timeline on smoothing the path forward to the full Pilot Production plans. Tamboran and Falcon both need to secure more funding to cover the next two full length 3 km horizontals later this year, and position themselves for further funding steps in 2025 for the remaining four horizontals (if POQ hasn't found a buyer before then).

Tamboran needs to complete their move to being a US listed company, and we need to see how strong the EUR is after the 90 day flow test is complete -- with both events taking place around the end of April. The satellite shot seems to be indicating that the 90 day flow rate should be solidly in the higher EUR category!!

However, without some solid promotion to the bigger gas investment banks -- that can clearly see that Falcon's side of the recoverable gas in the Deep Blue Core area alone is in the range of 5 TCF of gas -- I am very concerned that we won't see any respect for Falcon's position in the Beetaloo until the full length horizontals are completed.