George Frangeskides, Exec-Chair at Alba Mineral Resources, discusses grades at the Clogau Gold Mine. Watch the full video here.
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.
805slo -- your question has validity -- if you read what this less than diligent research piece has stated in error about which companies are currently involved in the Beetaloo and the crap they state about Viktor Vekselberg.
"Sheffield is strategically positioned within two of the three companies operating in the Beetaloo" -- with no mention about Sheffield's over 9% interest in Falcon.
Then a bit further on the following misleading statement: "Moreover, Sheffield’s collaboration extends to Russian oligarch Viktor Vekselberg, the largest shareholder in Falcon Oil & Gas, who remains a non-operating partner of the Origin assets within the Beetaloo".
Sheffield has had absolutely zero collaboration with Vekselberg -- as for all intents purposes Vekselberg has zero input into Falcon affairs anymore -- since the sanctions against him were put on two years ago. BS only deals with POQ as far as his large investments in Falcon are concerned
The three companies that are operating in the Beetaloo currently are -- Tamboran, Empire, and the largest permit owner in the Beetaloo Basin -- Falcon Oil and Gas (as Santos has suspended all of their Beetaloo operations currently).
There is no mention in this article of Falcon's long 14 year history in the Beetaloo -- nor any mention that it was Falcon that created ALL the forward momentum in the Beetaloo by fracking the very first horizontal just before the moratorium kicked in 6.5 years ago. Without that frack going ahead 6.5 years ago -- (proving the existence of the massive gas resource in the mid-Velkerri shales) -- the forward momentum in the Beetaloo could easily have ceased due to all the Pepper Inquiry's somewhat restrictive new recommendations that were adopted.
More importantly -- Brian Sheffield's investment to date in Falcon is almost twice the percentage of his Empire investment at just over 9 % interest in Falcon (and most likely higher if BS has been snapping up cheap shares of late like he was doing a year ago). Sheffield's total dollar amount invested in Falcon is much more than double his investment in Empire -- especially when his extra $6 million purchase of the 2% ORRI is added in to the equation.
Shanker11 -- Origin789 is correct about the Lower Kyalla well that drilled a few years back with minimal successful flows, which was another one of many disappointments -- as that zone, if the experts can eventually frack it successfully, is almost 100% located only on Falcon permits.
However, there was a vertical well drilled on EP76 into the mid-Velkerri formation and the eastern side of Falcon's three permits -- that the DFIT tests showed a much higher level of condensates. That EP76 vertical well is the closest well to the three mid-Velkerri Empire's wells that have shown higher condensate levels too, and appears to be at the same depth. This EP76 well certainly has added value for any future buyer of Falcon's interest in EP76, but the lateral extent of that formation is not fully known. and the shallower depth of the mid-Velkerri on the eastern flanks seems to have considerably lower overall flow rates as evidenced by Empire's three wells.
By comparison -- the much deeper and higher pressure Core area, that the Pilot production plans are set for in the SSH1 area of the Beetaloo, has a much higher (dry) gas flow rate across what appears to be a one million acre similar depth mid-Velkerri zone. This one million acre (darkest blue on the Falcon Presentations) area is also much closer to roads and pipelines infrastructure than the EP76 flank well that Origin drilled. Plus the very high selling price for natural gas in Australia ($10 to $12 range as compared to under $3 in US and Canada) makes the SSH1 one million acre zone the first priority for us, Tamboran, and B.S.
Tnbird -- really really disappointing to see the old adage is back again with a vengeance -- sheesh. Maybe Marshmill is getting a chance to buy a few more, but I am never buying another share and would like to get rid of a bunch, but that is a long long way off now.
Tamboran is still holding very nicely at just under 20 Aussie cents -- so the only thing that makes sense to me is that Riddle has been on the promotion campaign for the past year and virtually nothing from Falcon over the past year!!!
Odie -- one thing for sure is that we don't EVER want to have "good news again" with Falcon!! -- as I will go broke on any more good news -- sheesh
We are down 25% from the highs on absolutely stellar news on flow rates from the SSH1 well and just as soon as we have our first real confirmation of commerciality -- down down down this stock goes. My only take is that there has not been any promotion at all -- with only long term holders and no new buyers even remotely interested in a 500% return over the next 18 to 24 months. There needs to be the same as in prior years -- when lots of dog and pony shows drummed up new investment banks and new investors -- as we have none of that now.
You would think that there would be many oil and gas investment houses that would seriously want to have a piece of what the Northern Territory's Chief Minister is calling a game changer for all NT residents, but not a single one!!
Smallfish9 -- I have the same request as Oilcountry99's question below about a reasonable valuation in the next 12 to 24 months -- (knowing that there are a lot of unknown variables that can change any estimate of that valuation in the next 18 to 24 months).
Here are a couple of paragraphs from my earlier posts (in reference to POQ's old chart from 2015 and the four stages of acreage valuations. From your perspective, and given the current pricing for nat gas in Australia -- do these valuations have any current validity -- when Falcon finally has some serious buyers looking at the DATA room, like Inpex or EQT??
"If we look at JUST the one million acres in the Core deep blue area of the Beetaloo (after "production" is happening by 2026) -- and we give Falcon that same valuation of $4009 per acre for Falcon's (22.5%) 225,000 acres share of that one million acres -- we would be looking at $900,000,000 US to Falcon's side of the ledger".
"We might be looking at a larger valuation -- if a buyer wants all of Falcon's entire net 1.04 million acres -- which could move that sale to something closer to $1.5 Billion (maybe if we have a nice bidding war with more than one suitor)"?
"If we get to that "Appraisal" level by producing and selling gas from the Dark blue core area of one million acres -- then hopefully some of the major oil and gas companies will see the prospect of drilling one or two thousand wells in that Dark blue core area as being repeatable across that entire one million acres and pay up $900 million for Falcon's share of that Core area".
"There is very little chance that any major oil and gas company would put that same $4,009 per acre valuation on Falcon's remaining 800,000 acres (out of Falcon's net total of 1.04 million acres in the Beetaloo) as there won't be any production coming from those shallower areas for many years to come. That would indicate that on that same valuation chart from 2015 -- that additional 800,000 acres might be assessed at the "Undeveloped" second stage (with some flow tests, seismic logs etc. but no producing wells). That chart shows a $844 value per acre -- which could potentially increase Falcon's selling price by another $640 million -- which might be a bit of a stretch but still possible"?
GingerAle, Falcon's full original nine well free carry from the original Origin deal ended with the SSH1.
Falcon got an extra $3 million contribution out of Tamboran's pocket on the Amungee 3H one km horizontal that H&P completed last November ($3 million out of the $6.75 million that POQ negotiated as a Tamboran extra payment towards one well in 2023 and one well in 2024 -- when POQ acccepted the revised Tamboran/Origin deal). However, the cash balance for Falcon has gone down significantly -- as Falcon still had to cover their remaining 22.5% from both the drilling costs on the Amungee 3H along with 22.5% of Tamboran's G&A overhead (which is generally a ridiculous amount of G&A).
Falcon has the remaining amount of $3.75 million Aussie added/extra contribution by Tamboran -- that can be used anytime after July of this year -- so that will help reduce Falcon's 22.5% of the next two 3 km Pilot wells . Falcon will still need to come up with another approximately $15 million for Falcon's remaining 22.5% of the next two Pilot wells -- plus 22.5% of Tamboran's ridiculous G&A.
RobRoy -- great article and the most encouraging part comes from the Chief Minister and the Resources Minister for the Northern Territory. There comments below bode very well for the EMP getting passed fairly soon, (and fortunately the anti-frack bunch missed the deadline of December 31st to submit any written dissensions to the full Pilot EMP). Maybe the politicians will buy a few Falcon shares and get this darn stock moving up instead of down -- sheesh.
"Northern Territory Chief Minister, Eva Lawler, said, “The Northern Territory is on the cusp of immense economic growth, and will be at the forefront of the nation’s transition to a net zero future".
“Today’s results released by Tamboran, who are also proponents of the Middle Arm Sustainable Development Precinct, paints a prosperous picture for the Territory as we strive towards a $40 billion economy by ensuring we capitalise on our world class energy resources".
“It is critical we continue to enable growth in this sector, because with growth comes a predicted 13,000 more opportunities for Territorians to work in new sectors, more reliable energy sources, lower emission production and lower power bills,” Ms Lawler said.
Northern Territory Minister for Mining, Mark Monaghan, said, “The Beetaloo Basin has globally significant Natural Gas reserves which will transform clean energy production in Australia".
“Sitting 500km south east of Darwin, are projects which will create multibillion dollar growth to our economy, and Tamboran’s 30-day flow test results is a key step in delivering on this vision".
“We will be the jurisdiction to deliver cheaper, more reliable and lower emissions gas to the rest of Australia for decades to come,” Mr Monaghan said.