I am fairly sure -- given how this deal has been a bit of shock to everyone, (and that Tamboran and Origin would be working on this deal in strict confidential terms) -- that POQ wouldn't have known until that Oil and Gas industry news release last Friday. There was no obligation (in the JV) on Origin's part to formally ask POQ's permission before starting down this road with Tamboran.
I don't think that Inpex would be interested in replacing Tamboran in this kind of an exploration deal, as Inpex hasn't even done a single bit of E&P work on their own permit to the west of EP 98. The one thing that Inpex would be interested in would be the sale of 36 petajoules at a reasonable price, but the rest of the deal and the longer term drilling and production is probably more than Inpex would be interested in.
However, Santos is possibly an ideal match for Falcon -- as Santos knows as well as anyone exactly how much gas is in Falcon's CORE Beetaloo permits and they have become frustrated in their dealings with Tamboran to some degree. Santos wouldn't blink twice at the financial conditions for this deal -- I don't think -- as the financial commitments are at Origin's loss. That begs the question about whether the 5.5% royalty could be a major stumbling block or not with Santos replacing Tamboran??
From our perspective as Falcon shareholders -- it is hard to see too much of difference between Tamboran (with Sheffield and Partners being the most important part of that deal) and Santos??? Falcon's 22.5% would remain the same -- so no change from that perspective, but we know that Santos has much deeper pockets for getting production up sooner than Tamboran. Switching Santos in and taking Tamboran out of this deal would only make a great deal of sense -- if the Santos deal was backstopped financially to a greater degree than Tambo and possibly have some other improvements from Falcon's perspective??
schlemiel, this statement from Falcon is correct -- as the JV with Origin gives Falcon a first right of refusal for any change in control to match Tamboran's offer. However, for all intents purposes -- I don't think this makes for any real change. To meet the existing deal that Tambo and Origin have entered into -- Falcon would need to immediately find someone with very deep pockets to replace Sheffield and Partners, or alternately convince Sheffield and Partners to switch over to Falcon -- which would most likely not happen at this time.
This does not rule out a new very well capitalized player from stepping in -- like a Santos for example (who knows very well what we have in the Beetaloo) from stepping in to become Falcon's partner. Time will tell??
While this deal is certainly a shocking change from what was expected -- I personally think it is probably a much better longer term development than Tamboran buying up 40 or 50% of Origin's share of the Beetaloo, and having Origin's continued meddling on drilling progress???
This deal gets rid of Origin completely -- who has been dragging it's feet for years on Beetaloo drilling, and with Sheffield and partners on board -- now appears to be moving the drilling program onto the fast track. It will be interesting to hear exactly what Falcon's financial commitments will be after the last two horizontals are completed in the original JV agreement. I am expecting some sort of press release from Falcon in the next few days -- once the details of this radical change have been fully digested.
That is my biggest question -- "What has changed for Falcon investors"??
Falcon's 22.5% percent interest remains the same, but now we have a very experienced American shale gas development team driving the bus (that Calabria just threw himself out of -- LOL). Both Sheffield and the new drilling partner have now made a very significant financial commitment to getting gas sales ASAP from the Beetaloo and bring with them over 4000 shale gas production wells of experience to the table.
This appears to be very big win from Tambo's side, but the 5.5% royalty to Origin over the long term could significantly improve Origin's return on their investment -- without incurring any further expense. Fortunately, this 5.5% royalty does not apply to the Falcon side of the equation, which adds some limited value from our side -- even with Sheffield's more limited 2% ORRI, along with the TOG groups remaining 1% royalty in place.
Thanks schlemiel as the Vimeo presentation by David is worth a quick listen.
David mentions that the Ensign 970 rig will spud the Maverick well in the next week during this presentation, but just wondering if anyone knows that this will still happen without the six month water bore requirement?? Is Tamboran going to drill the horizontal Maverick well soon and then do the fracking in January or did the drilling get curtailed until the New Year too??
VillaMaria wrote: "150 000 000 for 15% of Origins 77.5% I calculated FOG value at .27 cad".
While it would make good financial sense that Origin would only give up 15% of the valuable Beetaloo permits for $150 million -- I think that because the idiot Calabria is doing this deal before commerciality is proven -- that Origin is giving away a lot more than 15%. I would not be surprised to hear that 40% of the Falcon permits are being handed to Tambo on a silver platter and that Calabria is the jackass of the day in this deal. That is why I am really hoping that it is only EP98 that this farm down is being done on -- as that would leave Falcon with a much better valuation per acre and still leave Origin with further upside on additional farm downs on the other permits.
This is just speculation on my part -- but I am hoping that this deal with Tambo, if it completes, is just for Falcon's Ep 98.
This would leave the other two permits completely out of any Farm Down at this point in time -- giving Origin the ability do a better farm down on those other permits down the line without any real funding obligations over the near term. Tamboran's focus is on getting the most low CO2 dry gas they can from Amungee B and C shales, and the current EMP (that has already been approved by the NT for Origin's two horizontals) does not require any delay whatsoever -- so drilling can start as soon as Origin gets this deal done. Tamboran on the hand has to wait until next year to start the Maverick well, but doing a deal for EP98 with Origin gets the drilling back on right away. I am sure that the recent delay we have seen for any rig getting started at our two horizontals is all about the negotiations that have been taking place with Tamboran for the past month or two.
Really hoping that jackass Calabria hasn't given something like 35 to 40% of all three Falcon permits away for peanuts, but since Origin is looking to get out of any carbon emitting before 2030 -- who knows what that jackass has given up??
Falcon's momentum from a deal with Tambo, Sheffield and Helmerich & Payne for both drilling and exposure to big Texas gas entrepreneurs gets a real boost with this kind of a farm down, but the value per acre could see a temporary drop if Origin has panicked and given up too much?? We should know more next week -- as we need to see some actual drilling getting started fairly soon.
Longknife -- I like you calculations better. However, the article talks about Tambo raising $150 million -- which would most likely be in Aussie dollars I am assuming. Therefore, the valuation metrics for Falcon would probably be somewhere between my numbers and your estimate, but hopefully this deal is for a much smaller % of the Beetaloo than 20%.
Below -- is the first couple of paragraphs from the article -- where it is speculated that Tambo is looking to raise $150 million to buy into Origin's Beetaloo holdings. My biggest concern with this speculation is the size that Tambo would get for $150 million. If they buy a 20% share out of Origin's 77% share for that $150 million -- that would value Falcon's 22% at a whooping 16 cents Cdn -- so really hoping this deal, if it comes to pass, is for a lot less than 20% of Origin's share??
"Gas junior Tamboran Resources is seeking to join Origin Energy in the big leagues with a deal to buy into its potentially huge assets in Northern Territory’s Beetaloo Basin.
Street Talk understands Tamboran’s been in talks with brokers and investors about a $150 million funding package, with proceeds used to buy into Origin’s Beetaloo.
The Beetaloo is one of the gas fields the government plans to further develop as part of its planned “gas-led recovery” from the COVID-19 pandemic.
Sources said Tamboran had investment banks Credit Suisse and Canaccord Genuity involved in the raising, however the bulk of the funds were likely to go to its strategic investors from the United States.
The deal with Origin, and the funding talks, were said to be well advanced, with investors including Sheffield Holdings and Helmerich & Payne lined up to back the venture.
Helmerich & Payne, a drilling rig owner from the United States, was also expected to help out with equipment, sources said.
Tamboran’s talks come after Origin Energy told investors at its annual results last month that it was seeking to crystallise value in the Beetaloo Basin via a farm down".
Today's posts by schlemiel are MUCH MORE IMPORTANT than just what the headlines might indicate!!!
First KEY POINT. This newly proposed Tennant Creek to Darwin infrastructure corridor starts not in Alice Springs to the south - which would be the logical starting point, but rather this new corridor starts at the very south end of Falcon's permits -- in almost the middle of nowhere. This is very positive news coming from the Labour Party in the Northern Territory -- where the young guns in the recent annual convention voted against all fracking. The Labour Party gov't in the N.T. just keeps adding new infrastructure spending to support the Beetaloo gas -- which is huge cost savings for all the gas developers. Tennant Creek is also where Origin has been supporting business development for companies that want to bid on future contracts as the Beetaloo gets further into production. By starting this new corridor at Tennant Creek -- it is most assuredly all about Beetaloo gas and virtually nothing else.
Second KEY POINT. The hiring of a top quality 12 month contract full time nurse to be based right at the Amungee well sites is HUGE. This is a 12 month consecutive hiring for the Amungee site and nowhere else. In the past -- after the fracking was completed and the first couple of weeks of flow testing complete -- the well pads were down to just a few on site engineers monitoring the flows and the big portable work camps virtually empty -- with no need for any kind of full time nurse (beyond one of the engineer's having their first aid ticket). Origin is giving us the first very clear indications that the work program at the current two well pads is not stopping after the first couple of weeks of flow testing. An expensive full time top quality nurse would not be needed if Origin wasn't already putting people in place for the next phase of development, beyond the initial flow testing IMO.
Thanks for another great post schlemiel. I am fairly sure that a gas export pipeline would be to move Beetaloo gas to either the Inpex LNG hub or the smaller Santos LNG hub in Darwin for exporting the gas to Asia (and maybe Europe too).....
Great post BtoB, as next year will be a turning point for Falcon and Origin's directions in the Beetaloo -- with hopefully without too much drag from retail investors selling at the wrong time!!!
Be extra careful travelling in Angola and the Zambia/Zimbabwe border areas -- as your voice on this board is a valued one -- and your input here will be appreciated next year. I had an old business partner from S.A. years ago, and his wife was born right on the Zambezi River where they had to watch carefully every day for crocodiles and even worse were the hippos -- so tread carefully -- LOL.........
scinceday1 -- ITguy is entirely right as most of these Labour declarations are coming from the junior wing of the party which is high school kids and a bit older. Their head is somewhat in the right place -- as global warming must be hindered as best we can, but Beetaloo gas will do more good offsetting coal fired plants in China, India, and other parts of Asia than it will do bad in Australia. The low CO2 gas in the Beetaloo -- along with CO2 sequestering planned for Darwin, and carbon offsets will go a long way to making the Beetaloo gas a better option going forward.
It is also worth taking note of the fact that if the Labour gov't in the N.T. doesn't stay fully supportive of the Beetaloo gas development -- they will be kicked out of power at the next election -- as Australia needs this gas quite badly and the northern territory needs jobs and taxes just to stay afloat.
Oleo, just a couple of quick thoughts on your suggestions for what Falcon should be doing.
In South Africa -- you should maybe keep an eye out for the government to finally pass the legislation that would allow Falcon and a partner like Sasol to finally just apply for an exploration permit in the Karoo. This proposed legislation has been kicked from the Supreme Court back and forth with the Ministry of mines and energy for seven years now with no resolution passed that would allow Falcon to even waste a penny in S.A. until the legislation is passed. Without the legislation finally getting enacted -- no one can drill (except the gov't) in the Karoo. Almost 9 years ago Chevron paid Falcon a million dollars just to have the option of being Falcon's JV in SA, but after watching the idiots running the gov't in SA for a couple of years -- Chevron gave up and quit the JV option.
I believe that your following Beetaloo comment is already in the works and has been for months now:
"Send a seconded engineer to the Org office, working together with the Org Beetaloo project team to get first hand information which can be used for talks with the Org management".
Tom Layman, (with 4000 shale gas well completions, and is now on the Falcon BOD) has been in discussions with advice and suggestions with Alexander Cote -- the Beetaloo chief engineer for Origin. Alexander Cote is also a top notch engineer now with Origin -- but also has an excellent CV from his seven years with Talisman.
Origin Energy
Senior Petroleum Engineer - Unconventional Exploration
2014 - Present
Talisman Energy
Field Operations Engineer
2007 - 2014 • 7 years
Iaminnow -- I thought Tamboran's reference to the C-Shale might have been a typo on first reading as well, but the wording was a bit too specific after reading through their update a couple of times.
After reading schlemiel's post on Tamboran's latest Presentation (by Falcon's good working friend, David Close, from his time at Origin) -- it seems fairly clear that Tamboran is referring to the C shale in this page 3 reference to Stacked Plays -- as the C shale is the only zone that is thick enough in the Velkerri to warrant a stacked play.
De-risked, stacked shale
play (500-metre thick) with
reservoir quality similar to
Marcellus Shale.
Interesting additional comment shown in caps (my addition of caps just to highlight this fairly significant comment by Tamboran). Tambo is upping their contingent resources partially based upon what the additional DATA has shown for the"C shale". While the B shale appears to be the thickest zone with a slightly higher TOC than the C shale -- there has been fairly consistent indications from all six exploration wells across Falcon's three permits -- that the C shale zone would ideally make stacked plays a reality.
The A shale zone, while having decent TOC levels has so far not been shown to be thick enough across the Beetaloo to warrant a stacked play, but Tamboran's update is another strong indicator that the C shale could warrant stacked plays. This is a very positive comment by Tambo -- as it another step towards commerciality by helping to reduce drilling costs and increasing overall flow rates when two zones are fracked from the same platform sequentially.
"“These extended production tests, an updated development strategy, which includes drilling 3000-metre horizontal wells, and ADDITIONAL DATA SUPPORTING THE RESERVOIR CONTINUITY OF THE MID-VELKERRI 'C SHALE' -- have led to a 73 per cent increase in Tamboran’s estimate of unrisked 1C contingent gas resources."
Thanks ITguy, the fact that there was even a little prep work last July is very encouraging -- as Origin has a deep understanding of all the Pepper Moratorium regulations -- so I am pretty darn sure that the water monitoring bores would have been drilled more than six months ago.
Northern -- your question on valuation and the eventual selling price has certainly gotten more complicated with the potential for the Pilot Production plan. If the next two one kilometer horizontals flow at 2.5 to 3 mm per day -- then I think we are looking at a probable three to maybe four stages before all of Falcon's Aussie assets are sold completely.
We should ideally see extended commercial flow rates by next spring with Falcon shares starting to trade closer to 40 cents Cdn on three sets of strong forward progress news. There will be the commercial flow rates from the two new 1 km horizontals, plus news by then on who Origin is negotiating a Farm Down, along with news that a very detailed and expensive Pilot Production plan is moving forward.
With this kind of positive news going forward, (including updates from Tambo and Empire) -- I think we will see POQ announcing sometime next spring -- a private placement (Sheffield or someone they introduce POQ to) for something like 100 to 150 million shares at close to 40 cents Cdn. to cover Falcon's 22% share of the Pilot Production plan. There is also the possibility that a similar level of financial commitment might be negotiated through some sort of new JV that may only include the proven Amungee commercial area covered by EP 98 -- with the EP 76 and EP 117 potentially left out for further exploration and future sales or JV's.
Any material progress on the Pilot Production plan should see Falcon shares continuing to move higher -- especially as the market starts to grasp the size and scope of Falcon's three permits, along with the very real potential for cash flow with gas being sold into the Carpenteria pipeline. The completion of the Pilot Production operation in 2024 (most likely 2025 -- darnit) should see Falcon trading closer to $1 Cdn I believe -- with future development of the liquids rich EP 76 and maybe the Lower Kyalla adding to the equation beyond 2025???
Thanks ITguy -- as I had to switch to Microsoft Edge for the satellite links to come up -- as Google Chrome is getting to be a major pain with all of their excessive security updates to prevent any website that Google doesn't have an authentication connection. Great pictures from above and what looks like lots of work done over the past month.
Does anyone know what the status would be with the water monitoring bores for the second site, and whether the massive delay that Tamboran is facing will effect Origin if the water monitoring bores haven't met the six month timeline?
I know that Origin originally ran a huge number of water bores at the existing Amungee site -- so there is a possibility that the first water bores may have encompassed the new site ten km away. Alternatively -- Origin may have initiated those water bores for the second site many months ago -- as Origin has much better working relationships with the pastoral lease holders and would have known months ago that water monitoring would be an issue.
ITguy -- thanks for posting the Sentinel links on the new well pad. I have always been able to see the satellite view when cliking on the links that you or dprussky post, but today the link starts to load with Sentinel and then stops without showing the satellite view at all. Is there a new step that I am missing -- as it appears like others are not having this problem?? Thanks for any help.
Poods -- if you read WetWater's first excellent post from yesterday you will read that WW has heard a rumour (which WW has very clearly referenced as just that -- a rumour at this point) as per the following from WW:
"I have heard very exciting rumors as to whom Origin is in talks with - if rumor has is right, that transaction will be sooner rather than later. Falcon is on the verge of greatly improving its shareholder value - yours and mine"!
WetWater has been pressed by a couple of the regular posters to tell us the name on the rumour, but Wet has very correctly stated: "My information is from a very sensitive source - posting such information on a public board is not going to happen".
I fully understand and completely agree with WW's stance here -- as I have been caught in a similar position in the past, and appreciate very much WW's post on this rumour and I am totally content to wait and see what we hear from Origin down the line -- as Origin has clearly and publicly indicated that they want to get a Farm Down in place. I still believe that any Farm Down that might be announced before the flow rates on the next two horizontals are released -- will be subject to some sort of verification of commerciality (which is looking more likely every week).
Great reply by WetWater and a similarly great reply by Longknife -- as this is what a good discourse Bulletin Board should be.
WetWater clearly makes a strong case that much has been accomplished by Origin (and now others) in the Beetaloo!!! It is worth remembering that without Origin's 9 well JV program, and David Close's fortunate hard push against Origin's management to go ahead with fracking the Amungee H1 just before the moratorium back in 2016, -- there most likely would be no Beetaloo as that frack ahead of the moratorium completely changed the trajectory of the Beetaloo.
Longknife, and many others, have totally valid concerns and complaints about Origin's snail pace of work on the JV and how others have taken some of the lead away from our "Core" Falcon permits. I believe that we will see and hear some seriously material progress over the next few months -- as Origin has to move from a tortoise to a hare if they want to get to their desired Farm Down -- as any Farm Down will assuredly be based on whether they can show commerciality before the deal in finalized.