Member Info for smallfish9

If a range of 6-10X free cash flow to market cap is utilized that places that component of the valuation in a range of $54-90 million.

Ok, let's back off Trillions of TCF..haha, honest mistake.

138 wells at 25 BCF EUR per for 3.45 TCF flowing over 20 years @ 5% = 172 BCF net to FO. Let's say those wells push an average of 12.5 mmcf/d stabilized due to the rate of drilling, pipeline access. Oops, that's 1.725 BCF/day. It's a high estimate, but it makes the point.

So no need to drill past that block for 6+ years or so. Perhaps there's some activity outside the bkock with Sheffield and Tamboran dividing and conquering on checker board blocks post '24 and racing to fill a '27 or '28 1 bcf/d line yet to be FID'd.

The industry generally uses a 10% discounted cash flow to handle the delayed value of money. How much discount do you apply I'd the lion's share of income is well in excess of 5 years out? Most want their return in 5 years, not wait five years.

There's a conceptual gap here, you can't value every molecule of gas, the only molecules that have value are those that can be produced within a reasonable investment timeframe. LNG and pipe capacity present practical limits.

Second problem, valuing Falcon at $500M AUD is 60% over Tamboran's current valuation. What is Tamboran's valuation at the point of Falcon being worth $500M?

How does this compare to EEG?

I think you nailed it.

Newtofo. Great job on the volumes, how many years do you think it will take to drill 3.5 million acres? 1 million? 51,000? How will the value of the gas vary over the forward life of the investment?

So, somebody is going to jump at the opportunity to pony up for a non-op interest with no decision making capacity on an asset where the next ten years of drilling activity will return 1/4 of the rate that the wells after the 130th one will? Not to mention being ruthlessly abused on fees and JV expenditures to get the gas to market?

I hope you're young, because the chance there's any value in the next ten years is inferior to every other player in the basin's potential tomorrow.

I'm guessing that's an American account?

I'm sorry in advance. But why would he ever take Falcon out?

At every stage along the way POQ's inability to create a viable array of funding options just results in further dilution of the interest? Sheffield isn't stupid, he will play that cycle as long as he can.

There's no sign of it stopping, the pattern is relentlessly consistent.

I think there are a number of people close enough to call a spade a spade.

Sad to see this deal you all, many have been invested for a very long time.

I'm reminded of POQ, answer when I asked him about his technical team (he did subsequently introduce a few faces):

"We don't need a technical team"

I've tried to put a sock in it, but I'll keep it as brief as I can.

Falcon is well known for the Mako asset, it went nowhere. South Africa is to say the least is uninviting, but it has gone nowhere.

The Beetaloo showed potential, and still demonstrates profound potential, but was challenging. It was farmed to Hess who exhibited nothing but conventional exploration interests, they spent a lot of money looking in the wrong direction, the product was nothing. Zero. Falcon then demanded that Origin 'delineate' and explore across incredible scale on Kyalla and Velkerri targets. Objectively the result was nothing.

I began looking at this basin 14 years ago and the target was as obvious then as it is now. Yes, multiple crisis have plagued the play, but I'm lost on how Falcon has advanced the case. Truly lost.

There's a great tale of a virtual genius who traded a paper clip for a house through a number of transactions.

https://en.m.wikipedia.org/wiki/One_red_paperclip

You know where I'm going with this, Falcon has steadily and consistently traded shareholder value from the potential value as the planet's most valuable single shale position (see Sheffield engagement) into a vanishingly small filament of interest.

The recent pre-mature election (PME in short) to further farm down Falcon's interest for the foreseeable future which includes the likely potential build to 1 bcf/d is, for me, is the final chapter in Falcon holding the premise of investment.

Circus provides great entertainment, indeed there is a balance between performer, viewer and the promoter.

The only one here who benefits is the latter. Sold, done, out.

Insane, the board should be cleaned out. Just stupendous.

I tend to agree with you, he has an advantaged position with access to all the technical data across all operators. Combined with a tolerance for early stage activity he is in a very good position.

It will be difficult for a laggard to value this heavily without production history, almost impossible really. The caveat I would put on this is that a vertically integrated producer from Japan, Korea or China would have both the tolerance for risk due to greater reward and motive to be a non-op going forward.

That's the only challenge Sheffield faces but he probably has ROFR's on everything anyway. I'm in agreement with your take.

Here's my quick calcs on the value and spacing units from a while back:

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Indeed, 6400 acres/185 acres is 35 spacing units (@ 2,500 by 300m). At 15 bcf EUR (a humble starting point of 6 bcf/1000m) you would be relinquishing about half a TCF of 1P at development. Using $4/mmcf you end up forgoing 22.5% of the value or about $470 million.

And it would probably come with a back-in penalty and further abuse in terms of being unable to access a facility.

Better off to just get abused.

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I would add that this is on a single shale, with facilities paid for and the development of the C shale understood there would be approximately double the value and well count considered above, albeit at a significant delay to the initial shale being developed.

You could say that 3,000m wells will be executed but that only cuts it to 29 wells to develop 6,400 acres - the point is you don't want to be there.

There is some thinking that non-participation the 6,400 acre block would somehow benefit Falcon. While it would certainly reduce the short term need to raise capital, the whole point here is to leverage money to make more money. Disposing of some portion of a half-billion dollars in developed value (and more in long run) is not constructive to Falcon's valuation. I understand the idea that 'you're just going to flip it and move on' but I consider that unlikely without well defended valuation. Non-participation signals to the market that you can't or won't be bothered with raising the money. I'm curious whether that's even a defensible fiduciary posture for a CEO? You'd have to assume risk and scenarios that are not likely. If you're optimisic it signals you're going to ride out your ownership stake and see what you're going to get, a more critical evaluator would say that you're just going to dead-beat it for the long haul and continue farming down and relinquishing value/influence. Insert comment about a more engaged CEO here...

I've not lived one of these clauses out in the court of time, to me they feel like relatively poorly conceived offshore sourced clauses where you have an exploration block to consider. IE, you don't believe the block has the potential to succeed so you just back away and don't participate. If you get it wrong and the first well is a rager, you pay your penalty and can back-in and participate going forward.

Shale wells aren't designed to be independent of each other, additional wells are not added to accelerate the production of a given pool. Rather, they are drilled on spacings and fracked in a manner that drives the optimum economic KPI for a given operator (free cash flow, reserves, ROI, NPV). My point is that you cannot be part of some of the wells and not the others and have a defensible position. In my view, the certain endpoint is a dispute where you're arguing that you deserve to hand-pick individual wells for participation.

Generally, once you're out, you're out. There are back-in penalties sometimes that would allow you to participate at a later date for 2-3x of the original cost. You would also be out the entirety of the 6,400 acre block, or as I previously calculated ~30 wells. And you could be sure TBN would place every producer in there...you'd also have some disadvantages in accessing any production infrastructure any time soon. 30 wells is going to be more than are needed to fill the 500 mmcf/d intial dev line. So...2029 or later would be next opportunity to participate.

If you get enough liquids in the well your facilities and compression projects get more complex and have higher and harder to manage costs. With dry gas flowing freely in a shale at $12+ there is no reason whatsoever to pursue liquids at the expense of dry gas production.

It's exceedingly consistent with the previous views, there's a measurement tool on the page and it is within a few meters each passover that we can see it. IE, nothing is happening rate wise and bodes well for the 90 day average.

No surprises.

Per acre valuation metrics are useful where:

-development is imminent

-development will capture the majority of the land base

-land acquisition is competitive (ie land sales/privately held rights

-a significant number of transactions guide the pricing

Its an interesting exercise, but the factors above combined with their dated nature affect the utility.

Developing plays are typically valued at rude 1P reserves metrics and more kindly 2P reserves levels. 2P is often cited in acquisition or divestiture. The 'tint' on the 2P value tends to be the number of legitimately developable wells relative to the 2P reserves. IE nearly fully developed lands will hold lesser 2P metrics vs very early stage developments.

Given the lack of capacity to produce in the basin at this time, Contingent Resource is the most appropriate metric. Contingent means, in this context, that the pipeline and facilities are still not available. Upon availability the volumes that are associated can be converted to a more highly valued proven reserves class.

The earliest stage measure is Prospective Reserves, this is the reasonable (2U) volume that will be recovered in the long term.

My point is that per acre pricing is really tough with this much land at this early stage, prospective/contingent resources over this much land can have a very wide spread between conventional structural plays and unconventional plays like shale.

We are entering a phase where a reasonably developable chunk of land with 17-27 TCF of 2C has been identified. The next six wells (mainly the next two) will allow the booking of said 2C and deliver this valuation.

In time a 2P or Free Cash Flow valuation metric will be appropriate l, but that is into the late 2020's and will probably still be inappropriate due to potential scale and LNG opportunity.

Generally I'd expect that you need to continue to participate to hold your spot in the block. Certainly there will be details, but 'backing in' and changing your mind generally comes with extremely heavy penalties to re-enter the block. IE participate and keep participating or forget it.

50m stage spacing is almost certainly over capitalized in a dry gas play. But, that's what you want ahead of a plant sanction.

With the establishment of considerable 2C, where is everyone's opinion at on raising cash via debt?