Member Info for WetWater

Newtofo: Origin has the right to negotiate farm-downs on the Beetaloo but not necessarily the right to farm-down Falcon's 22.5% interest. One might see a situation where Origin does a farm-down with say Inpex, Santos or Total for part or all of their Beetaloo acreage but then Falcon would still retain their 22.5% interest in that farm-down acreage. This would be a fantastic situation for Falcon as it would immediately benefit the Beetaloo by giving further credence by attracting serious players and of course that could result in a higher interest of other potential suitors to Falcon's acreage. If Falcon were to stay around long enough to see some of this acreage developed then of course their acreage value goes from $1000/acre to $4000 - $12000/acre at no cost to Falcon - In my opinion, we do not want Falcon to participate in any farm-down which is not required - Philip appears to have done us a huge favor by allowing Falcon the option to continue sit back in the cat-birds seat while our Beetaloo assets appreciate in value - he may be earning his stock options after all!

Newtofo: This speaks volumes regarding all the naysayers of the recent Santos well. For this guy to step back up and raise his ante at this point makes me smile. Thanks for posting sclemiel.

Marshmill: The 2H and 3H well's laterals were drilled longer than 600 and 660 meters. Santos/Tamboran drilled the 2H and 3H wells landing in the Middle Velkerri B shale for about 1000 meters each (their lateral length). For some unstated reason they only elected to frack 600 meters in one well and 660 meters in another - IMO about 40% of the rock formation in those laterals didn't appear worthy of spending the $$$ to frack. Furthermore, IMO, some of the remaining 60+% they did frack was probably less than 100-% ideal - possibly this was the reason for the lower normalized rate than we expected? Too early in the game to be saying but possibly EP161 might not be the sweet spot (core) of the Beetaloo. Where might that be??
Following is part of the press release for the 3H well.

“We are pleased to report that our latest well in EP 161, T3H, operated by our joint venture partner Santos
QNT Pty Ltd (“Santos”), was successfully drilled to a total measured depth of 4,857 metres, with the
horizontal section once again intersecting over 1,000 metres of Mid-Velkerri ‘B’ shale.

Oleo: Done Because....? Origin flowed the Amungee well for 57 days and then issued a declaration of discovery. My thoughts were that the flow rate likely stabilized to the extent that they could call the Amungee well a success and then claimed a discovery as required by the Northern Territory. Was I saying the well was completed and finished - certainly not as we have since seen by the continued work being done on the well. I'm not sure if this answers your 'Done Because......?" but that was the purpose of my comments on that Amungee's 57 day test.

Longknife: Does not mean the flow rate will drop off after 14 days. Usually an initial flow rate can be provided once the well sufficiently cleans itself up - I always think of 30 days for the initial but I'm sure that's not cut in stone - Oleo or someone with more experience can provide a better explanation. I do know that what is more important and meaningful is a 60 or 90 day rate - that number more to you and me but more importantly the 30, 60 , 90 day rates provide the engineers with valuable information on how to predict the decline curve for the well. Some companies wait even longer than 90 days to provide a more accurate decline factor for the well. The Amungee well was flow tested for 57 days before it was shut-in. Falcon/Origin probably saw the flow rate numbers holding steady for a period of time and called it done.

I wouldn't go to the bank with a 14 day rate and it looks like Santos will not either - they have announced they will continue to flow test the 2H and 3H wells for an extended period of time.

WillowGrove: 30 days is not the magic number. 30 days is considered an initial flow rate - what really is important is the 60 or 90 day rate - by then the engineers can get a better idea of how the well is going to hold up.

Schlemiel: Let's let the short term traders move on down the road - many will be back soon enough.

Looks like the Santos/Tamboran wells were mediocre at best - Can't say I'm not disappointed. I was hoping for something in the neighborhood of 10 - 12 mmcf/d with these wells being deeper. Instead it appears they got less which IMO is not what Mr. Sheffield or Mr Santos was expecting. I am not qualified to express any opinion worth repeating so we need to wait for the experts to weigh-in. I think we can safely say that Origin/Falcon were looking for a comingled rate of 10+mmcf/d - that would have gone a long way to proving up their acreage between the Amungee and these two Santos wells. At this point I think the biggest takeaway is that possibly this Santos/Tamboran play may not be in the 'core/prime' area of the Beetaloo - that's still to be seen. I would think the JV saw some writing on the wall when the logs showed only 60% of the lateral worthy of fracking. If one makes that assumption then its not a long jump to assume that possibly some of that remaining 60% might have been a little marginal - once again just a guess on my part - may be the reason for the lessor flowrate.

So right now I'm pretty happy sitting on my side of the fence. The good news is that this is all coming to head this year. If Origin can replicate the Amungee well with two 2000 meter wells flowing a comingled rate of +/- 16 - 20 mmcf/d then we are in great shape - just keep those fingers crossed!

Newtofo: At the annual meeting, after the drilling of the Amungee well, I asked POQ and Gabor why the Velkerri B was picked over the Velkerri C shale since both had the same basic characteristics and approximate thickness - it was originally thought the two shales were a toss-up over which to target (Dr Close?). The answer I got had something to do with intermediate rock structures in the C shale that weren't as conducive to fracking, therefore they targeted the B shale. Just a WAG but possibly Santos has run into a similar situation and elected not to spend the time or money to frack areas which likely wouldn't be productive or take a frack. If that is the case, I would think seismic might offer up some clues in the future - I missed that PE class so that assumption is a WAG! Could be a multitude of things - maybe Santos will offer an answer to your question in in a future report - good catch and thanks for bringing it to the board's attention.

Chipdale: Basically, you are correct. The surface boundaries of the permit extend down through the formations to be drilled. Interestingly, here in the states there can be arrangements where a company leases a drill site on a neighbor's property so that when the well is drilled the bit lands in the target formation close to the permit boundry line. I say close because there are restrictions as to how close a company can produce oil/gas to their boundry line. This prevents a company from drilling right on the boundry and producing the neighbor's oil/gas. Likewise, if a company is drilling towards a boundry line then the well bore is stopped when it approaches the boundry - you can't drill right up to the edge of your property and produce the neighbor's oil. This is probably more than you care to know but it's all about maximizing recovery while protecting adjoining acreage's reserves.

Even if you are not dealing with permit boundaries, spacing between wells is extremely important. Too close and you can frack into one of your other well bores or unnecessarily bleed off pressures from an adjoining well bore reducing the amount of oil/gas recovered from a lateral. If your spacing gets too far apart on your laterals, then you leave oil/gas in the ground - this is where a petroleum reservoir engineer earns his keep!

Newtofo: I wouldn't fret too much over the Santos/Leaseholder situation - I have heard Santos intends to be in a position to drill wells this next dry season. There will be 'arrangements' negotiated to move the project forward. If I was going to fret over the situation it would be more about what Santos has to give up in the process. Any workout between Santos and the Leaseholder could likely set a precedent for negotiations in the Beetaloo Basin going forward.

Here in the states oil companies sometimes pay a crazy amount of money to non-mineral landholders. Upfront access fees, fancy fences/gates, paved roads for ranchers, yearly damage checks - all in the name of keeping peace with the non-mineral landholder. In a way it makes sense to work with these people - damages are a way of life and a good source of income for those who have no mineral interest - Santos needs to take care of this leaseholder but keep it reasonable. I've said on this board in the past that Origin/Falcon needs to pay damages for roads/pads/tank batteries, pipeline right of way, etc. Being a good 'neighbor' can go a long way when people start punching holes and building roads, pads etc., here, there and everywhere during the development phase.

Newtofo: I wouldn't be too concerned with regard to Tamboran's share price. If you will recall, the day before Origin announced the Amungee discovery (with all the excitement it generated) Origin/Falcon stock was flat to down. I found out later that Origin had some really tight controls they held over their employees/contractors and Origin was monitoring their stock trading very closely. If Origin could contain the Amungee discovery information then I expect Santos could do the same - these oil companies operated under these standards all the time - they can't afford to have information leak out prior to their release of public information - the Halliburton's/Schlumberger employees are likewise used to operating under these 'tight hole' restrictions.

LongKnife: If you are referring to the dampened stock price I think that could be a couple of things. There might still be some pressure on the stock from year end tax planning, but I think the real dampening is a result of people not fully understanding the court ruling - as most on this board know, it has absolutely nothing to do with Falcon - now or in the future - it is a non-event for Origin/Falcon. I'm as optimistic/bullish on this stock as I have been in a long, long time. All we need at this point is a 'blow-out' (not literally :^) initial flow test followed up with a really nice EPT in 30 - 60 days. Fingers Crossed!

Nami: IMO the 'end of the year' is just for guidance. I don't think even TBN can tell you exactly when the wells will clean up sufficiently to run the initial flow test Timing could be this next Tuesday as you say but it might be the following Tuesday, Wednesday, etc.. Being some of the first fracked wells in the Beetaloo the exact timing is a bit of an unknown. With that said we should know in short order - I for one, based on the vertical well bore flow rate and Sheffield's interest in these wells and the Amungee revised flow rate, believe that we are going to see strong flow test rate(s). What I don't know is if they will be reporting a comingled flow rate or rate for each well. I am hoping for a combined flow rate of about 10MMCF/d or better - GLA

Curious: Did the You-Tube playback work properly for you? I have tried to watch it twice but the voice and slides do not match up. From the higher pitched voice quality, it sounds like the voice portion is playing back faster than a normal playback which then gets farther off being synced with the slides as the video is progresses- this makes it hard to follow. I watched the event live and know enough to follow the video but it likely would be pretty confusing for anyone who trying to familiarize themselves with Falcon and the Beetaloo presentation.

From Scott Sheffield's mouth to gods ears! He sees the huge potential in LNG prices in Japan (Asia market). This is coming from the largest shale producer in the Permian Basin and who's son Bryan is now a new Tamboran stockholder.
"Sheffield also said he is concerned with the possibility of oil pricing following what is happening with LNG prices in Europe and Japan. “That’s equivalent to $200 oil,”

Pioneer CEO Scott Sheffield told CNBC this week that he sees oil prices headed north of $100 in 2022. Sheffield in an interview with Brian Sullivan said he was surprised by President Joe Biden’s release of oil from the Strategic Petroleum Reserve into the market, saying it was a “Band-Aid” approach and similar attempts won’t have much of an impact because demand will create a tight market by the end of 2022 and into 2023. “Oil is moving back to Brent $75 (Tuesday) morning and will probably be back up to $80 or $85 here in the next few weeks as demand comes back,” Sheffield said. Sheffield also said he is concerned with the possibility of oil pricing following what is happening with LNG prices in Europe and Japan. “That’s equivalent to $200 oil,” Sheffield said. “And so right now oil is cheap.” Sheffield said during the interview that “most people estimate a 4 million barrel a day increase in demand and that by the end of 2022, “we’ll be back … to 100 to 101 million barrels a day.” He also quoted Amin Nasser, chief executive officer of Saudi Aramco, about OPEC and OPEC+ being out of supply and extra capacity in 2022.

Darnit: Don't be so sure that a potential raise in not in Falcon's future. Once we get a declaration of commerciality the share price of Falcon will better approach 'fair value'. At that point it makes sense do a raise for the EP76 well if that well makes sense to help prove up our value.

Newtofo: I am confident there remains sufficient carry for the two 'proposed' Amungee wells. As previously mentioned, it it highly likely based on economics of proving commerciality that these two wells will be consecutively drilled/fracked on the same pad as the existing Amungee well. Falcon would not enter into the drilling of these two wells without having sufficient carry to complete both the drilling and fracking - I think we would have already seen preliminary indications of a capital raise if that was being contemplated. I have heard that due to timing/rig availability, the EP76 horizontal test well would not be drilled until 2023 and that a raise would likely be needed for that well. The EP76 well is contingent based on potential buyers interest - it will be drilled if that is what it takes to get a maximized price for our acreage.

I am still hopeful that after commerciality is proven that a new company might be formed by Origin and Falcon's Beetaloo interest with their interest purchased by stock in this new company - that is simply my pipe dream at this point in time but IMO it makes too much sense to just ignore that scenario. At that point farm outs and capital raises could be completed to move the Beetaloo development forward. All just IMO.

Newtofo: Heard that two 2000 meter wells were being planned but then again with the two Santos/Tamboran wells is Origin required to drill two additional wells to prove commerciality when one might suffice? I believe one also has to look at rig availability and the economy of drilling two wells side by side. - much easier/cheaper to skid the rig over and immediately drill the second well - also economics are to be gained by fracking two wells back to back on one pad. Time shall tell!

I would like to see a EP76 horizontal if it rig availability/timing permit but would a test well 1000 meter horizontal prove up commerciality at this point? - I don't fully understand the boxes that need to be checked before claiming a commercial discovery.

Newtofo: If the T2H and T3H wells come in at the anticipated rate (comingled production in the neighborhood of 8 -10MMscf/D or better) then I would bet that Origin will drill their next two wells on the Amungee NW - 1H pad. Origin's PRIMARY goal of the 2022 drilling program is to drill two 2000 meter wells to prove commerciality - Origin is not trying to prove us additional acreage or looking to undertake the additional time/expense/risk by stepping out into a new area. Origin has the permits and pad built for these next two Amungee wells so they can hit the ground running next year.

Regardless of Oleo's take, Origin/Falcon are pretty confident that the normalized 5.2 - 5.8MMscf/d flow rate out of stages 8-11 (200 meters length) Amungee NW 1H well looks to be a reliable estimate. All the seismic/vertical test wells/logs and now hopefully the T2H and T3H wells assign a pretty good production potential of the 'table top' Middle Velkerri formation that runs throughout 95% of our 4.6 million acre concession.

With the natural flow rate of the vertical T2 and T3 wells, I suspect that Santos/Tamboran's excitement is more than just stock hype - these look to be legitimate solid wells. As I also have mentioned, with Bryon Sheffield's enthusiastic purchase of 7% of Tamboran I suspect he's seeing something to be pretty excited over. This next month could in fact be a big game changer for the Beetaloo Basin and our bird.

The Sheffields are a long time Midland Texas Family. Pioneer is a well know and respected operator in the Permian Basin shale plays. IMO, With the reputation these guys have this is fantastic news for our adjoining acreage. Bryon and Scott see something they really like with Tamborans's Beetaloo acreage which sure makes me feel very positive about Falcon's acreage position. Just another reason to hold.

GLA