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jhealy: I agree with you 100% - today's share price is a gift. I'll take your advise and be careful what I wish for - door A or door B?
From what I am hearing Tamboran is giddy about the Origin/Beetaloo deal. They have big plans to move very aggressively in the Beetaloo. Tamobran will be drilling the next two wells this year but in the meantime will be working to bring in other operators/partners to help drill the Beetaloo. Tamboran will also be moving towards a listing in the US market to help raise the funding to pursue their aggressive plan. IMO, the biggest problem Falcon will have with the Tamboran deal is keeping up with their drilling commitments. Hopefully, if Philip doesn't pull a rabbit out of his hat, he works long and hard to develop a plan to keep up with Tamboran in 2023 and beyond.
With the market exposure Tamboran can bring to the Beetaloo through self promotion and bringing in other companies; Falcon's share price/value should grow with the Beetaloo excitement. So door A or Door B? I don't see either option as being anything but good for Falcon - both have their good and bad points and both certainly have their unknowns. I'm willing to accept A or B and then deal with the what follows. Either way I'm comfortable where I sit today and see a bright future for Falcon over the next couple of years.
Oleo - Regarding your concerns of potential dilution when/if Falcon gains control of the Beetaloo - There are many ways for a deal to be structured. What if Falcon brings in a new JV partner in the process of this transition?. Just how much dilution did Falcon undergo when POQ brought on Origin? I think a new JV partner could be expected to bring $$$ to the table in exchange for a percentage of the Beetaloo - we might even get a few more carried wells out of the deal!
Many ways for all this to play out - I have decided to sit back and watch at this point. Either POQ raises the funds required for ROFR or he doesn't - I can see upsides to either scenario. As to potential dilution we will just have to see what type of deal our CEO delivers. If at the end of the day its status quo then let Tamboran drill the next two wells and then Philip can go about his business of raising funds hopefully based on a higher stock price for the following wells.
I don't see our current situation being a negative for Falcon - I don't understand the pressure currently on Falcon stock but then I have never understood its price action.
Good Luck either way!
BtoB: Thanks for the feedback. It's appreciated and IMO serves the purpose/intent of this board - Posters such as you, amongst many others, want to contribute to the board and express relevant opinions while some would rather sit back, belly ache and complain - all boards have those types. I don't expect everybody to agree with that last "IMO post" but hopefully it makes some people think and express thoughtful responses - Thanks for yours.
I'm not pushing for #2 - but a negotiated settlement with Tamboran would meet one big requirement of a potential partner - they hold the right pedigree which from what I understand is important to the powers to be in Australia. Santos could also meet this requirement but are they even interested? From my understanding, Falcon's partner/deal needs more than just the funding - it needs the blessings of the Aussies. The Beetaloo is a national strategic asset of Australia and their approval of an alternative potential deal will not just be rubber stamped.
IMO, a negotiated settlements seems to come out of these types of deals. Would I like for Falcon to tell Tamboran to pound sand - certainly my top choice but only if that is a really practical/workable outcome.
gnoles: So step up and spin the wheel of fortune! As I see it four spots (likely more)on the wheel so place your bets accordingly:
1). Falcon Raises the money and acquires a JV partner agreeable to the Fed government. Tells Tamboran to pound sand.
2) Falcon Raises the money in full and plays a tough negotiating hand with Tamboran working out a deal to let Falcon add to their ownership in the Beetaloo, Tamboran absorbs Origin's ORI on acquired acreage, and remains the operator and commits to drilling/caring Falcon on the planned additional 2 wells at $80 million cap adjusted for changes in ownership. Falcon comes away with some additional % ownership caring a burden of Origin's ORI on their additional % acquired.
3) Falcon raises a large % of the required funds and negotiates with Tamboran prior to expiration of ROFR - uses the ROFR as leverage to negotiate better terms with Tamboran. Strong incentive to Tamboran to negotiate if Falcon shows potential of additional funds being raised in window allowed for contract execution after ROFR.
4) Falcon fails to raise the funds required for the ROFR and goes hat in hand to Tamboran. Falcon comes away from negotiations basically with a status quo situation.
Likely many permutations of the above. Philip seems confident he can raise the funds required but IMO he then negotiates from a power of strength for additional ownership and moves forward with Tamboran as operator as they are approved by the Federal Government. The big unknown - does Santos have an interest in acquiring Beetaloo acreage?
Sickdude: The $80 million has been a widely publicized figure in Tamboran's news releases. Google Tamboran/Beetaloo and it $80 million will jump out at you as its been mentioned up front in large text. This $80 million firgure has also been widely published in nearly all news outlets covering this deal. What, interestingly , is not mentioned is Falcon's ROFR which is a little bit of a puzzle.
Oleo - You are right in that Hess was involved in something like 37 countries and their board was wanting that trimmed down. The Beetaloo was not that far along so it was a casualty of management. Hess told Falcon they were in negotiations with a world class oil company as a partner but needed more time to work that angle. POQ told them to hit the road and took about $35 million (?) in seismic data. POQ did this without having an active backup plan which was a gutsy move. It all worked out as he negotiated the Origin deal in short order.
So yes Hess may not have been motivated but Falcon didn’t know that at the time but when Hess wanted more time Philip jerked the rug out from under them and went on to find Origin.
That’s the way I understand it came down.
JamesL: Article from 2013 when POQ basically told Hess to go Fk themselves. He took all their seismic data and didn't even say thank you. You don't want to get in a poker game with this guy unless you hold all the cards. Hess found out the hard way.
Chief executive Philip O’Quigley says there is no technical reason for Hess’s decision not to move forward with the Beetaloo Basin project in Australia.
The explorer’s shares fell 7% today after it was revealed that Hess Corp’s proposed five well drill programme would not go ahead.
In a dramatic twist to events the American giant asked for an extension to the June 28 deadline in order to conclude a farm-out with a third party described as “one of the largest oil and gas companies in the world”.
This request was rejected by Falcon, which means Hess forfeits its right to earn 62.5% in three Beetaloo permits, having invested an estimated US$80mln exploring the area.
Falcon gets to keep 100% of four permits in the basin in Australia’s Northern Territory, which the AIM and TSX-listed explorer says leaves it in a “stronger position going forward”.
Newtofo - I am repeating myself but Tamboran/BS, knowing about the ROFR. why would they ignore Falcon on this deal? Maybe they thought they will steamroll Falcon but then again what if that doesn't work - then what? Not the way I would have approached Falcon's 22.5% and ROFR. If Falcon succeeds in their financiering then Tamboran/Sheffield will be coming to Falcon with hat in hand. Will they work out a negotiated deal - probably IMO - but knowing Philip he is one hot/mad Irishman. I have heard he can be as tough and ruthless as they come - the guy knows how to play hardball. Mild mannered POQ has another side that will come out if he senses he has gained the upper hand. Interesting times ahead.
Guernica - Interesting point and probably correct. We are not privy to the Right of Refusal contract clause. A contact requested that ROFR from Falcon/Tamboran but was told it was not public information - probably because it is part of the Origin contract which has not publicly been disclosed. What officially triggers that right and when it has to be funded would very likely be different dates.
Newtofo: I don't doubt that those wells have to be drilled - I have that on good sources. Its the exact timeline we do not understand and I'm sure that is defined in the permits. Falcon could pull a Tamboran Maverick style move and just drill the vertical wells and drill the horizontals and frack later - Riddle indicated that the Maverick well was vertically drilled to meet the gov drilling requirements and that it would be horizontally drilled/fracked next year - once again to meet the government drilling requirements.
IMO, one much more likely scenario is that there is a negotiated settlement to all this mess. As I have mentioned, Falcon holds a big point of leverage with its first right of refusal - this is why I don't understand why Falcon was ignored in all these negotiations. This Origin deal is a have to have situation for Tamboran and a nice to have situation for Falcon - that FROR can be used to gain concessions from Tamboran and at the end of the day everyone walks away happy. The Beetaloo is such a huge area that there is plenty for everyone. Will cooler heads prevail - time will tell.
dprussky - Your not clueless by any means my friend. As I said I think Falcon is fine in the deal as proposed by Tamboran. If Falcon executes the FROR then they own all the prime acreage in the Beetaloo. Yeah, there will be some type of dilution and certainly disruption but for what Falcon shareholders receive in increased value they would accept any delay. Once Falcon acquires 100% of the 4.6 million acres they may in fact have to put off the next two wells - not a big deal with the all weather roads. When the dust settles maybe Tamboran and Falcon kiss and make up and Tamboran is given a farm-down to drill those wells plus others - With Tamboran's less than stellar acreage they will continue to be a potential partner of Falcon - it will just be on Falcon's terms.
From a Falcon shareholder's perspective it will be a fun game to watch. For a Tamboran shareholder this game is much more serious. It will be an interesting 4 weeks.
dprussky: Its not a bad deal for Falcon! That's what I pointed out when I said Falcon's downside to not being successful with their FROR is much less than Tamboran's downside of their deal not working out. I have no doubts that Tamboran would do Falcon a good job over the next 2- 4 wells - I just don't really trust them after that - Sheffield and Tamboran have shown their true colors. You are only wanting to look at what might be bad with Tamboran being the operator - for the next 4 wells I would much rather have Tamboran than Origin. But Falcon shareholders are looking past these next 4 wells. Surely you realize what's at stake after that.
I have followed you too long to believe you are clueless as to how this could be a potential windfall for Falcon going forward. Ironically, Falcon wouldn't have this opportunity if it weren't for Tamboran's aggressive desire to take over the Beetaloo. I respect your views but you really need to be more objective in evaluating this deal from both sides.
The real shame of this deal is there is so much damn acreage involved in this concession that Falcon could have been brought into this deal from the start and treated as an equal partner - there is plenty of potential for Tamboran and Falcon. Why Origin and Tamboran would go behind Falcon's back knowing that Falcon held a first right of refusal has me scratching my head - This could have been a much more friendly deal all the way around. Maybe we get to that point in the end but right now, IMO, it was not handled properly.
dprussky: Are you serious when you say "Falcon also can choose to exercise the ROFR if they so chose, but since Tambo will do the same thing (but probably cheaper and faster) what Origin was planning to do , why would Falcon even bother with it". Why bother?? How about Falcon takes 100% control of the prime acreage in the Beetaloo and then farms-down that vast 4.6 million acres for a carry or $$$ upfront. If Tamboran plays nice going forward Falcon might even farm-down some real prime acreage to them - for a price of course. Why bother ??- are you keeping us with what's at stake? You might need to take off those Tamboran glasses you have purchased and look at the deal objectively. If Falcon swings this deal their market value based on land value alone goes from what is currently about $125 million market cap to about $675 million market cap for the cost of $175 million dollars. That's about $375 million reasons on why to bother.
Newtofo: I suspect Mr. O'Quigley is not taking Mr. Riddle or Mr. Sheffield's calls at the moment. Philip is likely very busy exploring his other options. Hopefully the next time he holds any discussions with these scoundrels it will be from a position of strength.
Dprussky: If POQ pulls a rabbit out of his hat then it should still be no problem for Tamboran shareholders - they still have their Top Tier 1 Plus "prime core assets of the Beetaloo" to invest all that money into. Funny how quickly Tamboran appears to be kicking their prime acreage to the curb in their future drilling program. If, and I acknowledge that might be a big if, Falcon pulls this off you Tamboran shareholders are going nowhere fast with your crap acreage. Falcon's downside in this coup attempt is not nearly what Tamboran's downside looks like. High stakes poker guy - place your bets accordingly.
Newtofo: I agree 100% that there were no behind the scenes agreements preceding the deal announcement.... Furthermore, if I read Philip correctly, we will not hear anything more regarding the ROFR prior to the 30 day expiration window. I can see POQ letting Tamboran and Origin twist in the wind with the uncertainty of what Falcon's next move will be.
IMO, at some point over the next couple of weeks Tamboran is going to be asked by journalist to address the potential ROFR - at least these questions should be asked the closer we get to the 30 day expiration window and with no indications from Falcon. The market should be able to expect more visibility of the ROFR other than buried in the footnotes of the risk involved - it seems Tamboran is glossing over a big potential risk to their deal - the ROFR is no small detail! Maybe that's just me talking out of frustration - I'm certainly not unbiased in this takeover bid.
Philip knows when to play his cards - I guess we'll have to see how the game plays out.
Newtofo: I'm scratching my head over that one also. We need to find someone with a lawyers cap on to tell us what that means. I'm assuming that maybe they are required to complete all the financial transactions such as BS getting his 38% of possibly their existing permits?? - Really don't know.
kmjliveson: Nice post and to a I agree to a certain point. I think Tamboran would do a good job on the next two Origin planned wells and also the following two Amungee 3 and Amungee 4 wells which are the beginning of their pilot program. Its after that I think we need to be watching our back - we have seen/experienced they are not the most ethical bunch of people to work with.
So yes - maybe for the next four wells things well on the surface. Its after those wells that I suspect Tamboran/Sheffield's greed kicks back in - their goal IMO is to take over all the 4.6 million concession. Also if Falcon rolls over, it gives up what could be a immediate 4X growth factor in their stock value. I have seen numbers that if Falcon can pull this off their market cap could be $650 - $700 million before the games even begin. If we are in the driver's seat then Falcon is the one doing the farm-downs and determining their future. We have seen where sitting in the back of the bus has gotten us over the last few years - I for one would like to be the driver of the bus for a change!
I'm praying that Philip can work his magic and pull this off. If that doesn't pan out then I'm praying that Falcon can survive long enough to reap some decent rewards from this 15 year odyssey. This next 28 days will be very important for we Falcon shareholders - let's see what happens.
Hey Oleo: Saw the listed risk this morning. At least they know we exist :^)
From Tamborans risk section of their funding offer:
"The completion of the acquisition by Tamboran of the Origin Assets will result in Tamboran being required to offer its new joint venture partner, a subsidiary of Falcon Oil and Gas Ltd, the joint venture participating interest which Origin held on the same terms as Tamboran obtained for the acquisition of the Origin Assets, modified to be relevant to the sale of the joint venture interest. It is uncertain whether Falcon will exercise its purchase option. If it does, Tamboran will still be required to complete the Transition irrespective of Falcon's position. If an exercise of Falcon's purchase option was to occur Tamboran will need to consider alternative uses for the relevant portion of the capital raise."