focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
“If we are successful in drilling those wells then some of the biggest companies in the world who are looking for their next growth project will definitely be interested in what we are doing here in the Beetaloo,” Mr Riddle said on a conference call.
Gas flowed in the well test at a normalised rate of 6.4 million cubic feet per day, more than 20 per cent more than expectations and at the highest rate ever recorded in the Beetaloo.
The company is targeting a final investment decision this year on the pilot plant, which would supply 40 million cubic feet a day of gas. A second phase would involve production of up to 1 billion cubic feet a day to the east coast, and involve the construction of a new pipeline. The focus would then switch to supplying a proposed LNG export project in the Northern Territory, targeted at 6.6 million tonnes a year.
Tamboran’s Australian-listed securities initially rose as much as 11 per cent but closed down 13.3 per cent at 19.5¢.
https://www.afr.com/companies/energy/tamboran-records-better-than-expected-fracking-results-at-beetaloo-20240226-p5f7t8
Tamboran records better-than-expected fracking results at Beetaloo
Some of the world’s biggest gas producers may look to the Northern Territory for their next big project after better-than-expected results from fracking in the Beetaloo Basin confirmed the commerciality of the resource, according to Tamboran Resources CEO Joel Riddle.
Mr Riddle said the results of the Shenandoah South well were good enough to fast-track a pilot project at the site, some 500 kilometres south-east of Darwin, with the aim of delivering gas to buyers in early 2026, depending on financing and approvals.
“The industry has really been waiting for this moment where we could see a commercial flow rate,” Mr Riddle said, pointing to the Beetaloo resource as one of the largest undeveloped gas resources in the world.
He added the limited development of large gas reserves in the United States, combined with the Biden administration’s recent pause on export approvals placed Tamboran’s project in a position to draw interest from potential partners in the next 18 months.
“We think this has all the ingredients to provide a lot of interesting strategic opportunities for the company to consider in the months and years ahead,” Mr Riddle said.
But the junior explorer faces an uphill task to secure the environmental approvals it needs and proceed into development amid staunch opposition from green groups and others due to the impact on emissions and worries about damage to land and water.
Tamboran, which switched its primary stock listing to the US last year amid lacklustre interest from domestic investors, has already fended off three legal challenges.
While Tamboran has a target to be net-zero emissions for direct emissions as soon as it starts commercial production of gas, the Environment Centre of NT said Australia’s greenhouse gas emissions could rise by up to 22 per cent if Beetaloo gas was developed.
NT Chief Minister Eva Lawler said the results “paint a prosperous picture for the Territory as we strive towards a $40 billion economy” based on its energy resources.
But that drew condemnation from activist group Central Australian Frack Free Alliance, which said it was “very worrying” to see Ms Lawler openly supporting the fracking plans when it should be impartially assessing whether the project should be approved.
Tamboran raised its estimate of 2C gas resources in the Beetaloo Basin to 2.1 trillion cubic feet after a successful production test over 30 days at Shenandoah South.
It raised its estimate for 1C resources, a more certain category but which still does not qualify as “reserves”, by 33 billion cubic feet to 284 bcf. The estimates have been certified by Netherland, Sewell & Associates. Six more wells are due to be drilled over 18 months.
CONT...........
SE Asia to Facilitate 50% Increase in Global LNG Demand. Shell, in its LNG Outlook 2024, has forecast that global demand for LNG will rise by >50% by 2040 to 625-685mtpa (2023: 404mtpa). This increase will be primarily driven by China’s industrial decarbonisation and strengthening demand in other Asian countries, as several countries transition to LNG importers as domestic production declines. Falcon’s Beetaloo acreage is ideally situated in close proximity to the Darwin LNG hub, providing ready access to the high demand South-East Asian markets.
end
FALCON OIL & GAS* A Gamechanger for the Beetaloo
The SS1H well (Shenandoah South) has achieved an IP30 rate of 6.4MMscf/d (normalised over 1,000m), significantly exceeding pre-drill expectations and the 3.0MMscf/d required to progress the sanctioning of the proposed 40MMscf/d pilot project at Shenandoah South. A final investment decision is planned for mid-2024, with first gas in H1/26. The SS1H flow rate is the highest tested in the Beetaloo to date, and when combined with the geological data gathered to date, puts Shenandoah South on par with some of the most prolific regions of the Marcellus Basin – the world’s largest unconventional shale resource, which currently produces more than 20Bcf/d. - 40MMscf/d Pilot Project. 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. Whilst it is expected that all six pilot project wells will be put into production by Q1/26, commerciality will be further proven by the end of 2024, once the initial two production wells are fracked and flow tested. -
Comparable to the Core US Natural Gas Basins. The SS1H 6.4MMscf/d normalised IP30 rate proves the deliverability of the Shenandoah South region and is comparable with that of the Marcellus in the US, where the average normalised IP30 rate in 2020 was 6.5MMscf/d.
- Sizeable Volumes. Beyond the initial decline, both the gas flow rate and wellhead pressure have remained consistent, suggesting a highly effective frack that is connected to a significant volume of gas.
- Significant North American Expertise in the Beetaloo. Liberty Energy, a leading North American energy services firm plans to import a modern frac fleet into the Beetaloo Basin in 2024 to support the stimulation campaign with industry-leading operational and subsurface engineering expertise for the Shenandoah South Pilot Project. Liberty plans to dedicate a frac fleet and crew to the Beetaloo to reduce delays in mobilising equipment to site and increasing completion efficiencies while reducing costs of future stimulation programmes. Liberty’s presence in the basin follows on from a similar arrangement with Helmerich & Payne (H&P), the largest drilling solutions provider in the US, whereby H&P imported a 2,000HP rig into the Beetaloo, which is expected to support a material reduction in drilling times and costs. cont.........
FID by mid-2024 is a key date. At this point FOG will have to make its own decision as to whether it should raise more capital (dilution) or sell itself (monetisation)
All looks good on the operational front.
'Biotechnology company PureTech Health headed in the other direction after the company it founded remained on track to be bought by the US pharma giant Bristol Myers Squibb for $14billion during the first half of this year.
Karuna Therapeutics, which is developing a treatment for adults suffering from schizophrenia that is being reviewed by the US regulator, agreed the takeover in December 2023.
Shares in PureTech Health surged 11.6 per cent, or 22.1p, to 213.5p.'
https://www.thisismoney.co.uk/money/markets/article-13119317/MARKET-REPORT-Fintech-firm-CAB-Payments-axes-boss-flotation-flop.html?ico=mol_desktop_moneymarkets-newtab&molReferrerUrl=https%3A%2F%2Fwww.dailymail.co.uk%2Fmoney%2Fmarkets%2Findex.html
'So what lesson for Greatland Gold and its 30% owned Havieron project? It has now been confirmed by Newmont that it will be divesting its 70% Havieron stake, which – with substantial cost to develop (that Newmont seemingly thinks not worthwhile) looks to be much too big a mouthful for GGP to swallow on its own. It means, like Cascabel’s effect on Solgold’s shares, that investors will worry about the effect on GGP’s share price of whatever large new partners might demand to come aboard and help fund Newmont’s 70% Havieron stake. Its why it’s still wise to stand back and watch GGP -instead of assuming that its large project means a large profit for its small shareholders.'
https://masterinvestor.co.uk/commodities/february-mining-update/?mc_cid=18c2ce247a
It was that basic strategic mistake stemming from Mather’s ambition that has been playing out up to now, with a series of management clear-outs including Mather, and a share price too low to maintain spending on the 10-12 other exploration projects he was pursuing, and, more seriously, even to maintain development on Cascabel
Now, following a long needed merger with key Cascabel shareholder Cornerstone, the latter’s management has taken over, although hadn’t yet been able to lighten the gloom.
Since the 2019 feasibility study, Solg has been bending to shareholder demands for a more easily funded plan, if not for a sale of its various projects, so now it has come up with a new Cascabel study for a cut-down plan showing an initial capital cost of only $1.6bn, still (at a higher $1,750/oz gold price) showing a 24% rate of return, but over a mine life half the much-too-long 55 years of the previous plan. At what are fairly conservative copper and gold price assumptions, and with scope to expand production from other nearby resources, Cascabel looks a much more feasible proposition, with a far better chance that some bidder or funder will come along.
But the shares are still depressed – not only through uncertainty how any funding will affect value for shareholders, but also because Solg has spent most of its remaining cash on the new study, so that investors worry about another fund raise (which the company has said might have to be) to keep the company running.
What happens next I don’t know. But maybe things can’t go on like this? Even if funded now, it will take ten years before Cascabel is making the $450m annual cash profit the feasibility study estimates for the first 5 years in production, before doubling over the next five – at the conservative $1,750/oz gold price it assumes, and $3.85/lb for copper. The current $2,000 gold price would add nearly 20% to those economic returns.
But meanwhile could be the sale of one or more of the other projects (to help fund Cascabel – a step Mather was refusing to take) among which Porvenir in southern Equador has already found over 7Moz of gold equivalent (mostly in copper) – a substantial find in its own right
So what lesson for Greatland Gold and its 30% owned Havieron project? It has now been confirmed by Newmont that it will be divesting its 70% Havieron stake, which – with substantial cost to develop (that Newmont seemingly thinks not worthwhile) looks to be much too big a mouthful for GGP to swallow on its own. It means, like Cascabel’s effect on Solgold’s shares, that investors will worry about the effect on GGP’s share price of whatever large new partners might demand to come aboard and help fund Newmont’s 70% Havieron stake. Its why it’s still wise to stand back and watch GGP -instead of assuming that its large project means a large profit for its small shareholders.
end
https://masterinvestor.co.uk/commodities/february-mining-update/?mc_cid=18
I haven’t mentioned Solgold – market cap £204m @ 6.8p – for some time. But its experience also provides a lesson right now for Greatland Gold, which is why it’s timely to update.
Although SOLG is in that dangerous category of miner with project not yet built, it has just published an up-to-date economic study for a drastically revised mining plan at its flagship Cascabel copper/gold project in Ecuador (which we can assume takes account of that frightening cost inflation) which looks so much more easily handled than previous ones, that investors are starting to take more interest. Especially because, as a result of a long recent history of disappointments and problems, Solgold’s valuation has sunk to a level that would have seemed unbelievable only 18 months ago.
Now, at 1/5th its then share price, Solgold’s £204m market cap compares with £117bn worth of gold and copper measured and indicated resources ‘in the ground’ at Cascabel alone – regardless of other promising exploration prospects. That is a value only 0.2% % of high quality resources, when in healthier mining markets valuations for most mining projects would be in the 1-2-3% ranges.
I first recommended Solgold here in March 2016 at around 3p, and made a healthy packet as I hope readers did – that was at first when the size of its find at Cascabel made it seem destined to be one of the largest in the decade. But then, despite BHP and Newcrest taking key stakes, things started to go pear-shaped – essentially because management did as well.
By about 2019, fears Cascabel would be too expensive to develop were confirmed by the first of a series of feasibility studies, which showed an initial cost of $2.5bn, and would be followed by $6.7m of discounted cash profit over an enormously long 55 year mine life subsequently (although most would have been earned in the first 15 years).
And although that would have delivered an annual rate of return of 25-26%, it was considered a bit too marginal for such a risky project in a risky-looking Ecuador, quite apart from the cost being too hefty for a small company like Solgold to manage.
Allied with that, a key issue was – as I started warning here – that then CEO and founder Nick Mather was following the wrong strategy to monetise his fast growing portfolio of other attractive looking finds. He wanted to create a monster mining conglomerate – whereby all would be kept within one financial group, whatever each project’s different needs and timetables would be for development funding. That meant that coming to shareholders to fund each project as it developed would produce a share price below what the furthest advanced would have attracted on its own.
cont.....
Yes, it seems wrong that AT's can play with the price in this manner which has a huge and disproportionate impact on the market cap of the company....
disappointing though a lot of oilers seem weak so maybe sectoral