Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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??
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.