Member Info for schlemiel

The income from our Beetaloo stake could range from between $5m-$8m per day. That's around $42m per week. That's almost $2.2bn per annum. FFS. Deduct costs, god knows what they are but the profit is surely huge?

'Price Fluctuation: The value of 1 Bcf of natural gas can fluctuate between $2.50 and $4.00 per MMBtu as of 2023. This means the value of 1 Bcf can range from $2,500,000 to $4,000,000.'

The 5 million acres are “flat scrub. It’s development-ready,” Riddle said.

'DEVELOPMENT-READY' - Bingo

For horizontal development, “this is as good as it gets. There’s very little faulting. It’s a very quiet basin.”

It’s not your typical sweet spot. Riddle said, “The whole basin is sweet.” In holes made in the Velkerri north, south, east and west, “there it was, right where it was supposed to be.”

In 2013, his dad phoned. “He said, ‘Bryan, I saw some logs. I’ve never seen anything like this in all the fields in the world.’

The elder Sheffield had built producing properties from West Texas to Tunisia, Argentina, South Africa and Canada before eventually refocusing Pioneer to its Permian Basin roots upon U.S. wildcatters’ success in extracting oil from tight rock.

He continued, “It’s stacked pay.” The reservoir is dry gas and looked like the Marcellus Shale, he added.

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Bryan Sheffield first heard of an Australian shale opportunity in 2013.

He heard about it from his dad—Scott Sheffield, a more than 40-year wildcatter and the now-retired founding CEO of Pioneer Natural Resources, which was sold to Exxon Mobil in May.

The elder Sheffield had contacts in and out of Australia for years. Pioneer’s predecessor—Midland-based Parker & Parsley Petroleum, which was co-founded by the younger Sheffield’s late grandfather, Joe Parsley, who retired in 1984—bought Australia-based Bridge Oil in 1994 for some $330 million.

At the time, Parker & Parsley put Bridge’s U.S. property into its own operations and made the Bridge entity its international subsidiary. Bridge’s portfolio included production from conventional rock in the Timor Sea offshore Darwin.

When Bryan Sheffield’s dad bought Bridge, “my father brought us to Australia a couple of times when I was in high school while he was growing the asset there. We spent a lot of time in Sydney and the outer areas.”

He enjoyed it and was anxious to return. After graduating from Southern Methodist University in 2001, he found a Sydney-based energy-sector job with Credit Suisse First Boston.

Later returning to the U.S., he continued to work in finance until 2006 when starting school at Pioneer to learn how to make oil and gas wells. In 2008, he founded Parsley Energy, starting with Midland Basin wells his grandfather owned.

In 2013, his dad phoned. “He said, ‘Bryan, I saw some logs. I’ve never seen anything like this in all the fields in the world.’”

The elder Sheffield had built producing properties from West Texas to Tunisia, Argentina, South Africa and Canada before eventually refocusing Pioneer to its Permian Basin roots upon U.S. wildcatters’ success in extracting oil from tight rock.

He continued, “It’s stacked pay.” The reservoir is dry gas and looked like the Marcellus Shale, he added.

Bryan Sheffield was intrigued but said, “I’m about to IPO. I have to focus on the Midland Basin.”

Yet it was noteworthy—for more than the play’s description. “You could tell that he was excited. We always talked about the Permian Basin. For him to talk about something in Australia, I took a mental note.”

Enter Aubrey

In 2015, Aubrey McClendon was on the front page of the Wall Street Journal—for buying into Australian shale gas. The late co-founder of Chesapeake Energy had been at the front of land grabs in nascent U.S. shale plays, namely the Marcellus and the Haynesville.

With a new startup, American Energy Partners, McClendon signed a deal to farm into the Beetaloo Basin.

The basin’s 11,000 sq miles are the equivalent of a dozen Midland Counties.

“And I am so upset because Aubrey has money and he’s beating us on every Midland Basin deal [too] right now,” Bryan Sheffield said.

“I could have been ahead of Aubrey. I could have beaten him, gone in and picked up some acreage for cheap halfway around the world. My father told me about it two years before.”

McClendon died in 2016, “and the play kind of fizzled during a Northern Territory frac moratorium.” The pause was lifted in 2018, but momentum had been lost.

And Sheffield was still busy building his Parsley Energy, which he sold in January 2021 for $7.6 billion to Pioneer.

Again, the Beetaloo

Australia found Sheffield again in 2020, while the Parsley sale was signed but not yet closed. “Funny enough,” he said, “Tom Layman, one of the most conservative geologists I’ve ever met who I recruited from Chesapeake, told me at the end of 2020, ‘Bryan, I just saw logs.’”

Layman had retired from Parsley in 2019. “He’s very conservative. Everything he did was low-risk. He was very careful.”

Sheffield had signed a confidentiality agreement with Sydney-based Tamboran Resources when considering whether to invest in the E&P. That Layman was enthusiastic about what he saw in the logs “caught my attention because I know that when a conservative geologist says there’s something I should look at, then I should look at it.”

The logs were from the Beetaloo. It was stacked pay. “And that makes me feel better because, if one horizon doesn’t work, at least you have a chance to try to make another horizon work.”

The rock of interest—the Velkerri—is similar to the Marcellus Shale. Total organic carbon (TOC) is up to 12%. Bottomhole pressure is 0.6 psi. Porosity is good.

Sheffield called Tamboran’s chairman, Dick Stoneburner. On the one hand, Australia was off Sheffield’s radar: He was building Formentera Partners, buying proved developed producing property onshore the U.S. with a model of paying out profits. He wasn’t wildcatting.

“So, I did a personal private placement with Tamboran.” The 7.4% stake closed in November 2021 for $20 million.

Now having equity in the Beetaloo, he bought into another interest-owner, Falcon Oil & Gas, which had a non-op in the same property with partner Origin Energy. The 8.66% stake cost $10 million. Sheffield gained an extra 2% overriding royalty interest for an additional $6 million. Falcon’s cash on hand at the time was $8.4 million.

“I bought into Empire [Energy Group] also. I’m trying to spread my chips with all the players,” Sheffield said.

Then, Origin, a top Australian utility, decided to divest its gas E&P business and focus on its power business.

In deals with Sheffield, Falcon and Origin, Tamboran became the largest Beetaloo acreage-holder, totaling 1.9 million net of the 4.7 million gross that are contiguous within the 7-million-acre basin.

And Sheffield became Tamboran’s largest shareholder with 16.7% of outstanding common. At press time, the E&P planned to list on the NYSE in a U.S. IPO.

Stoneburner’s entrance

Stoneburner got involved in the Beetaloo when approached to join the Tamboran board in 2014. He was scheduled to speak at Hart Energy’s DUG Australia conference in Brisbane that August.

He held renown Down Under as the geologist who was a lead developer of the Haynesville Shale with Petrohawk Energy beginning in early 2008, then making the Eagle Ford Shale discovery later in 2008.

He was already connected to Australia by way of BHP Billiton, which bought Petrohawk in 2012 for $15.1 billion. Stoneburner had stayed on for a year post-closing as president of BHP’s new North American shale division that consisted of the Petrohawk asset.

After the Hart Energy conference, Stoneburner dropped into Sydney to meet with Tamboran.

Joel Riddle, CEO, had joined the E&P in 2013. Prior, he had worked for offshore explorer Cobalt International Energy in the Gulf of Mexico and West Africa, and began his career in 1997 with Exxon Mobil, later joining Unocal and Murphy Oil.

Pat Elliott, Tamboran chairman, had formed the Beetaloo explorer in 2009 after having success in Australian coal-seam gas.

Stoneburner said of the visit, “I met Pat, Joel and a few of the other board members.” That was mostly the extent of the team. “It was a pretty bare-bones group.”

Precambrian

The story of the Beetaloo is nearly as old as Earth itself. The rock of interest—the 2,600-ft-thick Velkerri—was deposited some 1.4 billion years ago in the Proterozoic eon of the late Precambrian era.

At the time, the Velkerri was a sea of blue-green algae before Pangaea was formed. The eon spanned some 2 billion years, culminating with the Cambrian Explosion about a half-billion years ago.

“There aren’t near as many critters, if you will, living about 1.4 billion years ago,” Stoneburner explained. “Life didn’t really explode until about 600 million years ago. And since then is when most of the North American shale reservoirs were deposited.”

For its age, one would think the Velkerri would be over-mature, but “these rocks don’t know how old they are,” Stoneburner said.

Core pulled by past explorers contained “weird fossils,” geologists Matthew Silverman with Denver-based Robert L. Bayless Producer and Thomas Ahlbrandt with Australia’s Falcon told fellow geologists in 2011 in an American Association of Petroleum Geologists presentation.

They described the Beetaloo as an aborted rift basin rather than an intracratonic sag.

Stoneburner said, “This is the only 1.4-billion-year-old sedimentary rock that has been preserved in the world. There aren’t a lot of sedimentary basins around that are Precambrian.

“Before Cambrian, there’s just not a lot of sediment. You have granitic rock. But then, you have something like the Velkerri where you actually have preserved, 1.4-billion-year-old rock.”

Middle Velkerri B

The lateral target is primarily the Middle Velkerri B at between 8,000 ft and 11,000 ft. “It’s probably three to four times older than the oldest shale reservoir in North America,” Stoneburner said.

“I wasn’t concerned about the generation of what we call thermal gas as opposed to biogenic gas. What I was concerned about was that it would be over-mature—that you would have a basin that’s that old, that you’re either going to have the gas diminished or potentially a lot of inerts.

“You could have a lot of CO2; you could have a lot of nitrogen, which is common in Australia to begin with.”

Instead, vertical and horizontal tests showed the gas to be 92% methane with between 2% and 4% CO2. “So, you have very high-quality gas that we don’t have to process any liquids out of. We basically just have to strip the CO2.”

The Velkerri C member also tested well. “It’s very comparable,” Stoneburner said.

Unchanging facies

The Beetaloo’s core of 5 million acres became concentrated through uplifts, erosion and other geological events. So, facies are unchanging in the acres.

“You just have a core area that you can kind of depend on being pretty consistent,” Stoneburner said. “In this case, you have 5 million acres. It’s the core of the basin; everything else is gone. This is just one solid blue-green algae in three different [Velkerri A, B and C] blankets.”

For horizontal development, “this is as good as it gets. There’s very little faulting. It’s a very quiet basin.”

It’s not your typical sweet spot. Riddle said, “The whole basin is sweet.” In holes made in the Velkerri north, south, east and west, “there it was, right where it was supposed to be.”

Pressure rather than rock quality will define the basin’s tiers in the case of the Beetaloo, Stoneburner said. At the core’s northernmost end, it’s 0.43 psi per foot, while other wells show 0.6 psi.

The lower-pressure area will work, “but it’s just not going to work as well as a rock that’s got 0.6. You pack more gas in 0.6 than you can in 0.43,” Stoneburner said.

“So, you’re going to get higher flow rates and higher EUR. They’ll both work, but pressure always creates a better volume, a better resource.”

The surface- and minerals-rights situation is also quiet. The Northern Territory owns the land and minerals. “It’s similar to what you might see in the Gulf of Mexico,” Riddle said. “There’s no private land out here.”

The terrain is quiet, too. Across the 5 million acres, there’s no remarkable difference in elevation or vegetation. The 5 million acres are “flat scrub. It’s development-ready,” Riddle said.

As for the surface lease-holders, four ranches hold 99-year leases on most of the land.

The wells

Tamboran’s data points come from 21 wells that have been drilled through the Middle Velkerri by it and others. Tamboran participated in seven; it’s the operator of four.

Its newest well, Shenandoah South #1H, was drilled in August by a Helmerich & Payne shale-level super-spec FlexRig3, flowing 3.2 MMcf/d its first 30 days from a 1,644-ft lateral in a 295-foot section of Middle Velkerri B. It underwent a 10-stage frac.

The 60-day rate was 3.0 MMcf/d; the 90-day rate, 2.9 MMcf/d.

Normalized for a 10,000-ft lateral, the 30-day rate would have been 19.5 MMcf/d.

The pressure gradient was approximately 0.6 psi per foot; the initial wellhead pressure, 4,611 psi.

Tamboran has a 38.75% working interest; its partners are Sheffield’s Daly Waters Energy and Falcon.

The rig reached total depth in 21.5 days, averaging 500 ft per day.

Another new well, Amungee NW #3H, was drilled by H&P in September but it’s been DUC’ed, awaiting arrival of a Liberty Energy frac spread later this quarter.

The #3H hole was made from the same pad as the year-old Amungee NW #2H that was drilled by another rig operator in 38 days. The H&P rig did the newer job in fewer than 18 days—the fastest rate yet in the Beetaloo, according to Tamboran.

The Tanumbirini #1V, drilled in 2014, was completed in 2019 and flowed 1.2 MMcf/d, settling to 0.4 MMcf/d. After a COVID-related shelter-in-place order was lifted, the well was reopened, flowing 10 MMcf/d initially and averaging 2.9 MMcf/d in its first 90 hours.

Two Santos-operated horizontals that were made in 2021—Tanumbirini #2H and #3H—flowed 2.1 MMcf/d and 3.1 MMcf/d, respectively, in their first 30 days from between 2,000 ft and 2,200 ft of lateral in each. The #2 had been on test longer without tubing yet, resulting in reduced reservoir pressure when formal testing began.

The 10,000-ft rate would have been 9.5 MMcf/d and 15.5 MMcf/d for the two wells. Tamboran was non-op in these with 25% working interest in each.

“The Tanumbirini #3H ended up being the best flow rate the basin had seen up until that point in time,” Riddle said.

A U.S. shale job

The laterals weren’t very long, but it was clear that the early wells’ design wasn’t correct for a true U.S.-style shale completion, Stoneburner said.

“There are two things any horizontal shale well needs: 5.5-inch casing and, in a reservoir of this depth and this pressure, 15,000-pound wellhead equipment.”

Combined, up to 100 bbl can be pumped into the lateral per minute in that treatment. Santos had the 15,000-lb equipment but the casing was 4.5 inches.

“They would only get 60 barrels a minute,” Stoneburner said.

Tamboran also made a hole in the Beetaloo with 5.5-inch casing but had 10,000-lb equipment. “So, it was also hamstrung, if you will, in pumping the rate that’s necessary to effectively stimulate the rock.”

Tamboran’s recent Shenandoah South #1H is the first well to have been made with both 5.5-inch casing and 15,000 lb. Riddle said, “So, the performance is a 65% greater flow rate than Tanumbirini #3H.”

Stoneburner added, “And a much flatter decline.”

H&P, Liberty Energy

The trouble with getting both the hole and the frac to U.S. shale standards was behind Tamboran’s push to enlist U.S. shale driller H&P and pressure-pumper Liberty Energy into the Beetaloo.

Riddle said, “Our mindset was that we have to import the technology that had been developed for the last 20 years.”

In addition to making a $14.1 million investment in Tamboran in 2022, H&P sent a FlexRig3 last year. It’s operated by both the crew onsite and remotely from H&P’s Tulsa, Okla., headquarters.

While the short-lateral Shenandoah South #1H and the Amungee NW #3H were each drilled in about 18 days, the vertical Tanumbirini #1 had been drilled in 2014 in 100 days.

The H&P contract is for one FlexRig until August 2025 with a 10-year option for up to five additional rigs.

Pressure-pumper Liberty Energy followed H&P with a $10 million investment last year and had a frac spread on a ship to Australia in mid-June. Liberty has a two-year preferred-supplier deal.

Tamboran’s Shenandoah South #1H last year had a D&C cost of $19 million. The next wells are expected to D&C for $26 million with 10,000-ft laterals and bigger frac jobs, including more stages.

Later wells, upon moving into manufacturing mode, are expected to cost $16 million each at 9,800-ft depth and 60 stages.

Next plans

Having the H&P rig now, Tamboran’s laterals going forward will be 2-milers, Riddle said. At some point, it expects to make 3-mile laterals.

Two new-drills are expected by year-end, resulting in two drilling spacing units (DSUs) totaling 51,200 gross acres around one of the new wells, Shenandoah South #2H.

The 23 pads and six wells per pad will result in 138 wells, Tamboran reported.

For proppant, it hopes to have a local sand mine in place in 2025. Prospective locations are numerous in the field, it reported.

Baker Hughes is also providing services for the wells planned for this year and next. Also having a presence in Australia are Halliburton and Schlumberger, “so we’re not going to be short of potential options for oilfield services,” Riddle said.

All of Tamboran’s wells are shut in for now. It plans to put in a 40 MMcf/d gas compression and dehydration plant and lay a 20-mile pipe to the nearby Amadeus pipeline. The 40 MMcf/d is expected to be online in the first half of 2026.

The pipe runs along the western side of Tamboran’s acreage, traveling north to Darwin and beginning some 600 miles south near Alice Springs. It also provides access to Australia’s East Coast gas market, which is expected to be short gas later this decade.

Stoneburner said, “Think how fortuitous it is that we found the best part of the field and it’s only 20 miles away from 12-inch pipe.”

Up to 2 Bcf/d

With takeaway in place, Tamboran expects to drill up to 200 wells. Eventually, capacity is to total up to 2 Bcf/d.

Amadeus’ owner, APA Group (not related to Apache Corp. owner APA Corp.), plans to lay a new, northbound, 42-inch pipe alongside the existing pipe and a new 30-inch pipe to the southeastern Australian market.

A gas field at Alice Springs, Mereenie, had supplied the Northern Territory gas market, beginning some 30 years ago.

“But over time, that field has reached legacy status with limited upside,” Riddle said.

An offshore field, Blacktip, operated by Italy-based ENI SpA, was supplying the Northern Territory with gas, but it’s drying up. The Northern Territory’s power producer, Power & Water Corp., has been taking gas instead from a Darwin LNG plant under a pre-existing emergency-services agreement.

Once Tamboran’s volume to satisfy indigenous demand is assured, its excess production will be sold as LNG.

‘Something new’

In April, the awaited Liberty frac spread was being refurbished to make it remote-operations-ready. As of mid-June, it was expected to arrive in Australia later this summer.

Liberty had been asked for frac spreads abroad before, “but we’ve always had all of our fleets busy,” said Chris Wright, chairman and CEO.

“We’ve never had any spare equipment and I’m never willing to go to a customer and say, ‘Hey, sorry, we got better work overseas. We’re taking your fleet away.’”

But Liberty is building new digiFrac fleets now. “We have some older equipment coming off the back end that’s going to be idle.”

So it agreed to send one to Australia. The other reason Wright was convinced, “really, is Bryan Sheffield,” he added. Parsley Energy had been a good customer.

Sheffield got in touch with Wright about needing a modern frac spread in Australia. “Hey, look, I want to make this Beetaloo Basin work,” he told Wright.

The opportunity reminded Wright of the mid-1990s. At the time, his Pinnacle Technologies was part of an East Texas Cotton Valley breakthrough: a water frac on tight gas.

Prior best practice had held that a gel frac was necessary in the Cotton Valley. An operator, Union Pacific Resources Group, did a mostly water frac on a well. The cost fell from $4 million to $1 million. The gas flow was the same or more after 14 months online.

The idea was taken to George Mitchell, whose Mitchell Energy & Development Corp. had been trying for more than a decade to make economic amounts of gas from the Barnett Shale.

Mitchell gave the water frac a try. It worked. From there, the U.S. shale-gas revolution began.

“It was something new, getting economic gas out of shale,” Wright said.

‘Go’ boxes

Taking the American shale revolution on the road the past two decades, though, has been impeded in various countries by myriad facts. Most of the time, it’s the lack of economic amounts of hydrocarbon resource or the resource is stranded.

But in some areas, there is a ban on hydraulic fracturing or a political regime known for ignoring contracts and property rights.

Australia is different, though. It checked Wright’s “go” boxes.

“And this is a giant basin,” he said. “This is gas-in-place similar to the Marcellus.”

While Australia’s offshore production puts it among the top three LNG exporters, its population center in the southeast is increasingly gas-short. “They need new gas or they’re going to be importing gas from their own northern and western [LNG] coasts.”

Liberty President Ron Gusek told Hart Energy in April, “H&P was out in front of us by a year. They shipped the rig [to Australia] last year and we will ship the frac fleet this year.”

The North American frac fleet is unparalleled, he added. “The amount of work that gets done on a daily basis in North America is unrivaled.”

The Australian opportunity “is intriguing to us. The potential scale of the Beetaloo Basin is really quite something … I don’t know how that will play out. We shall see. It’s very early days … with only a handful of wells there.

“But it’s geographically well-located [near] the Asian [LNG] market. So, we view that as quite an exciting possibility.”

Https://www.hartenergy.com/exclusives/beetaloo-juice-us-shale-explores-down-under-209638

It is probably the most comprehensive and wide-ranging article I have seen on Beetaloo since becoming aware of Beetaloo. It covers Sheffield, geology, politics, resource, finance and the future....it's at least 4-5 pages of intense analysis

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