Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Longknife -- you may be right in that I absolutely blame Riddle for wasting all the funds allocated to our #8 well under the original Origin agreement, and that well is now a dead issue with nothing to show for that $40 million dollars thrown down the proverbial H2 drain.
I don't trust Riddle in the slightest to make the right moves on our very last free carry #9 well, but there may finally be some level of control and accountability in the mix with the two new directors that Sheffield will be appointing to BOD at Tamboran.
I am not sure what POQ could do by way of promotion -- except maybe riding on Riddle's coat tails by doing a bunch of road shows telling everyone exactly the same thing that Riddle is saying, and those plans are good for Falcon in the long term just as much as they are for Tamboran. However, spending a lot of Falcon funds by going on the road and saying the same things as Riddle is out there talking about doesn't seem like a very fruitful exercise. Any investment bankers, with even the slightest level of due diligence, will already understand that Falcon will win big if Riddle can eventually complete just one single commercial well, and that Falcon is just along for the ride with no direct say so in whatever mistakes Riddle wants to make!! That is why I am hoping that Sheffield is going to step up in a much bigger way and make sure there are no more mistakes like the H2 fiasco and to get some financial controls in place??
Tamboran's share price has almost completely shaken off the waste of $40 million on the dismal Amungee H2 flow rates, and is back trading at 20 Aussie cents. Falcon by comparison is still down over 33% with virtually no buyers and lots of sellers -- sheesh.
There is no question that Riddle is doing a good job of talking about everything -- except his spending of 1/4 of a billon Aussie dollars with zero commercial flows to show so far!! The Hot Copper bullboard seems to be totally happy with Tamboran's performance to date, and Tamboran's retail investors are happily buying the cool-aid -- purchasing more shares under the private placement option.
Falcon, by comparison, appears to be stuck at this 7 P (12 Cdn) price range -- even though Falcon's valuation metrics appear to be much better overall. This seems to show that being a non-operating JV partner on our own Beetaloo permits really restricts the ability of POQ to get out and promote Falcon's position in the Beetaloo. Falcon gets basically ignored by all investors, including Sheffield, in all the hype that Riddle is jabbering about non-stop in Australia.
Here is a clip from the latest Macquarie update that is indicating that Tamboran will have to raise another $250 to $280 million Aussie dollars to get commercial gas just to start flowing to all the buyers Riddle has promised to deliver gas to.
Macquarie noted:
“Amungee-2H has been challenging (potentially due to a reservoir skin issue), with an uninhibited gas flow yet to be achieved. Management will be seeking to better understand this completion issue for future wells.”
“Agreement with APA on a 500MMscf/d pipeline is positive, in our view.”
“We have factored in the dilution from the $71.4mn capital raise. We estimate another $250-280m needs to be raised prior to commercial production; if flow tests strengthen, this becomes less dilutive.”
Tamboran currently trading down 12% in line with the current equity raise at 18 cents Aussie. I think that once the news that Tamboran was just diluted by another 295 million shares with absolutely no commercial gas flowing for the last $250 million that Tamboran has spent -- the stock might drop further. On the flip side -- we have Falcon with no new shares issued, no debt and enough cash on hand to cover the next two wells without any new stock issued. Falcon should be trading at least 20% higher than it is now and it would still be a much better buy than Tamboran!!!
Tamboran Resources Limited (TBN.AX)
ASX - ASX Delayed Price. Currency in AUD
Quote Lookup
0.1800-0.0250 (-12.20%)
As of 01:23PM AEST. Market open.
It will be very interesting to compare tomorrow's trading price on Tamboran (when the halt is lifted) to Falcon's recent almost 40% drop in share value?? With the current financing being done for Tamboran at only a 10% discount to the last trades on the ASX -- there appears to be a real disconnect between Falcon's current share value and Tamboran's value metrics.
Tamboran will have close to 1.65 billion shares outstanding versus just under 1.1 billion for Falcon. Tamboran will have an ORRI obligation on all future gas sales of 9% versus Falcon's 3%. Tamboran will have a number of debt obligations including the recent H&P Convertible note, along with other equipment debt obligations, versus zero debt for Falcon and $16 million US in the bank.
I think we will see more price appreciation coming for Falcon and possibly a significant drop in trading value for Tamboran the rest of this week?? That being said -- there doesn't appear to very much negativity towards Tamboran's absolute disaster with the Amungee H2 well in Aussieland currently -- as all of Riddle's side deals (that actually require commercial production at some point) seem to be overtaking the Amungee bad news.
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Kmj -- I am fairly sure that as the operating partner in the JV -- that Riddle was making most of the decisions and that POQ and Tom Layman had no input on the completion design.
Unfortunately -- in order to start the fracking process the Amungee H2 well has already been fully cased and cemented all the way along the horizontal length, which I am fairly sure means they can't just use the existing well bore to do any remedial work. Unless the lab results indicate that the formation damage is temporary situation (very doubtful) -- then most likely it would require a new well being drilled and a new frack -- so that appears to be the main reason for stepping down 60 km to the old Kyalla well pad.
A very valid question Northern, without a very clear answer on success!!
There should be some clarity on why the completion process went to badly wrong on the Amungee H2 well -- that should help improve our odds of success on the proposed Shenandoah well. However, this proposed Shenandoah well is a much deeper Velkerri B shale (closer in total depth to the two Santos wells) they will be targeting is below the lower Kyalla zone that didn't flow very much of anything four long years ago.
That being said -- the various vertical wells that Origin drilled seem to show a very consistent geology for the Velkerri B shale across most of the Falcon permits. There will some added benefits of drilling this new one km horizontal 60 km south of the existing Amungee pad -- as it will help to prove up a much larger overall foot print for multiple drilling sites going forward.
Before any drilling will get started -- Tamboran will have to complete a fairly large stock offering and we will to wait and see how that goes -- along with who is going to have majority control over the entire drilling and completion processes in a few weeks time??
If there are others out there that might be looking to average down on Falcon (from a much higher average cost like myself) -- just a quick note of caution might be warranted until we get some clarity on a couple of things.
1. It will be useful to hear what the Paisley lab in Texas has to say about what caused the reservoir damage and more importantly how to change the completion process to ABSOLUTELY avoid the same results on future wells.
2. It is even more important to find out how successful Tamboran is on raising at least another $60 million and who participates. If Tamboran is unsuccessful or has to dramatically dilute the existing shareholders to get this kind of new financing in place (after the complete failure of the Amungee H2) -- this could significantly impact how and when any new wells are going to be drilled. If Brian Sheffield isn't fully supporting this huge new dilution of Tamboran stock (and I don't think he will without obtaining a much higher level of control over all operating decisions) -- then we could see significant delays on the start of the next well until such a time as either Riddle finds a new deep pockets partner or Sheffield possibly forces Riddle out??
3. There appears to be many months left to average down -- as even POQ said that he doesn't expect the share price to get back to the levels we had four days ago -- until new flow test results are imminent again (hopefully by the end of this year).
4. If Riddle remains fully in charge of all forward operations on the Falcon permits in the next month -- (after burning through $250 million in two years and screwing up the Amungee H2) -- I will be looking to sell Falcon shares and not be averaging down.
Somm -- I am fairly sure that POQ was indicating that both wells could be drilled by year end, but I don't think there will be enough time for more than one of the two (the new Shenandoah well) to be fracked and put on flow testing before year end.
The will be more than enough time for the new H&P rig to drill the first well at Shenandoah in probably late August or September, and then move over to the Amungee site and drill the second well in November while the fracking and then production tubing is completed at the first well.
The greatest risk right now to any of these timelines -- is who is going to be running the show. Riddle has burned through a 1/4 billion Aussie dollars in just two years and his G&A spending ($34,337,000 over the past two years) is higher than even Bruner was pising away at the height of his lavish Denver office days. Now -- another $70 or 80 million needs to be raised for these next two wells. After the fiasco of the current Amungee H2 it remains to seen when Riddle can actually get this raise done (and who will be running the show after the next massive dilution of Tamboran shares is completed)??
Somm, I believe you are correct. The report back from the Paisley connected lab in Texas will tell us much more, but the following is what could have been the cause of the skin damage.
The best that I understand of what might have caused damage to the surface of the quartz rock formation was Riddle pushing the envelope on getting the highest amount of sand possible mixed into the frack! By using a sort of gel mixture added to the water and sand -- the gel allows for higher concentrations of sand in the frack fluid -- which opens up more of the lateral fractures.
The problem is most likely related to Riddle pushing the fracking company for the gel mixture without knowing how that gel might react with the surface of the existing quartz rock geology. This gel mixture most likely caused damage to the surface quartz formation that is now preventing most of the gas further along the lateral fractures from reaching the well bore.
It is very doubtful that any further funds will be spent on trying to fix this Riddle caused disaster of a well -- as funds will be extremely tight for Tamboran going forward. Tom Layman said very clearly that if there was cash flow coming from already producing wells in the Beetaloo -- that they would go back in to try and fix that well, but with limited funds the focus should be on the two new wells first.
If you look at what Riddle has spent since April of 2021 -- it makes Origin look like a spendthrift. Riddle has burned through over $250 million in Aussie dollars and still doesn't have any gas flowing to show for this. Just look at the cash flow statement from Tamboran's own records and you will see that Tamboran maybe has $10 million left and needs at least $50 million over the next six to eight months.
Q421 FY21 Q422 FY22 Q123 Q223 Q323 Totals April May
A$'000 A$'000 A$'000 A$'000 A$'000 A$'000 A$'000 A$'000 Report Report
Est Est
Opening balance 15,519 5,594 55,363 63,084 26,810 26,722 60,949 5,594 29,058 20,158
Capital Raise 61,004 83,030 34,965 39,200 101,217 258,412
Brokers fees 3,652 4,077 -56 3,493 911 8,057 369 16,907
G&A 1,343 6,736 2,804 11,013 2,616 8,024 5,948 34,337 2,000 2,000
Acquisition of entity 3,141 4,717 1,028 5,745
Property plant & equipment 15,228 15,228 8,823 9,518 1,235 34,804
Exploration & Evaluation 5,303 10,381 10,042 39,657 16,618 15,163 59,830 141,649 6,900 4,700
Investments 10,276 30,367 -39,643 1,000
Proceeds from disposals -4,455 4,454 -1
Misc -371 535 820 44 316 -302 507
Closing balance 63,084 63,084 26,810 26,810 26,722 60,949 29,058 29,058 20,158 13,458
Thanks Hardrock. We might find out a bit more when the lab results from Paisley's lab in Texas come back, but from what Tom Layman was saying (about damage to first few feet of the reservoir, but not farther in) this sounds like the Amungee H2 is dead and gone for all intent purposes.
Tom Layman said that if there was a good cash flow from existing wells -- then going back to the Amungee H2 would most likely be done, but with limited funds -- it appears like the next well will be at the old Kyalla site at greater depths and getting pressures. Only one more year to wait -- sheesh.
Hey Wet -- this is just my take on it, but I don't think POQ had much choice about releasing the news ahead of Tamboran.
POQ would have been waiting for Tamboran to get out ahead of this disastrous result for days now, but with the AGM and the Investor Meets -- I don't think POQ could allow any more investors to keep buying 18 cent Cdn. shares when 11 cents is the new reality?? Hope we get some clarity on Tamboran's financial quagmire shortly and how that might get resolved??
Drussky -- at this point Tamboran owes Falcon one more 1 km horizontal well in order to complete their purchase of Origin's 77% of the Falcon permits. That could be either be this new very high risk well at the Kyalla site 60 km to the south of the Amungee pad -- or it could be another one km horizontal well (3H) at the Amungee site.
Allot will depend on who owns and controls Tamboran after this disaster 2H well -- as Riddle will most likely be gone soon that then it will depend on what concessions Brian Sheffield (and partners) will demand from the remaining Tamboran (and Falcon) shareholders before he coughs up another big chunk of his cash.
Current bid and ask on the TXS is 9.5 cents -- so too late for most to think about selling after holding for a dozen or more years -- sheesh.
This Falcon update is not only disappointing on first read, but the second and third read are even worse!! This release makes the original 1.1 mm flow rate of the Amungee H1 look like it was the correct number and not the so-called normalize rate of 5.5 mm that was released in 2021.
POQ talks about TRYING to figure out the skin issue at the H2 well, while he also mentions drilling another well at the Kyalla fiasco location 60 km south -- with that particular Kyalla well not being the free carry well owed, but rather a possible 3H at the Amungee site at a later date. This sounds more like a 2017 news release indicating at least two or three years of flailing around to trying to figure out what Empire is doing right -- sheesh.
I am somewhat surprised that I am not totally bummed out with this news release, but then realized that after so many disappointing press releases over the past dozen years -- this was kind of expected. Origin must be feeling pretty smug right now about what everyone thought was a giveaway sale of their 77% of the Falcon Beetaloo permits.
Lotsofgas, If you go onto Investor Meets website -- I am sure you can still get registered to partake tomorrow -- which is when the Investor Meets takes place. Alternately -- if you get registered with Investor Meets -- you can watch the replay at any time over the next week or two I believe. The Investor meets takes place tomorrow at 4:30 pm British Mean Time -- which for example is 8:30 am Vancouver time.
Good article Thij, as this middle arm development seems to shore up Empires view that 9 to 10 mm cf/d flow rates from 3 km long horizontal wells will be commercially put into production. This maybe gives us some added confidence in POQ's original comments that 3 mm per day from this Amungee H2 should be enough to move the Pilot Production plan forward??
The following two paragraphs, from this article, seem to add strong support to the NT government's economic push for both Beetaloo commercialization and the Middle Arm project:
"Since the end of a construction boom in the previous decade, the NT’s growth rate has fallen to 1.5% – below the national average. Investment and population continue to fall while unemployment is rising. The territory’s revenue position is vulnerable. Debt is expected to approach $16bn – double current levels – by 2030".
“Without sustained and courageous effort to grow the economy, economic decline will continue, resulting in falling relative living standards and challenging social cohesion,” the reconstruction commission said in its final report, released in December 2020".
While we wait for a few more anxious days -- it would be interesting to hear what others think on the following??
If the flow rates are in the 3 mm cu.ft/day range or lower -- I think we will see serious selling to the downside -- with new lows established on all three exchanges that Falcon is currently trading on. If we get anything around 5 mm or possibly a bit higher -- then we should see a short term doubling of the current Falcon price for a few days. Shortly after that initial flurry higher -- my guess would be that day traders will bring the stock back down by 20 or 30% over the following couple of weeks before leveling off. Then, I think will see Falcon's share price slowly climb back up -- with both the widespread news that the Beetaloo is moving into Pilot Production, and some increased speculation on whether Falcon is now entertaining offers to sell all or part of it's 22.5%.
From my own personal perspective -- I will be more than happy if we see something like 4 mm cu.ft/day on flow rates. However, with that lower 4mm rate -- I would be hoping for some technical clarifications by POQ (during the Investor Meets) -- about why the Faron Thibadeaux team has determined that the flow rates aren't higher, and have a plan in place to be get higher flow rates on the last of the original Origin 9 well commitment.
Frackme, I am fairly sure that any shareholder can attend the AGM.
To be sure your name is on the list of attendees (when you arrive at Conrad hotel) -- you should send an email to Falcon letting them know that you would like to attend, asking for confirmation that you are on the list.