Member Info for WetWater

Thanks Newtofo.

There have been a couple of days recently I have bought 6 figures of stock. The supply just doesn't seem to dry up the closer one gets to .245 - .25. Someone has a boatload of stock for sale - the 62 million coming up for sale in next month's br proceeding sure seems to fit. I know there are a couple of bigger buyers of Falcon that agree with me that the stock is being manipulated. Makes no real difference - just trying to make sense out of this market.

It's NOT me that is coming up with the 90% number - its what an 'experienced' E&P company believes! I agree with you and Nano that the 90% number sounds high - after all the Kyalla has never been fracked. 90% sounds overly optimistic but I just can't divulge the source of that figure - I am repeating what I have been told - my opinion is nowhere in that number. Once again 90% still means there is a 10% chance of failure so like everyone else I will still be holding my breath on the Kyalla. By the way, the Kyalla is not a test well - per POQ's Proactive interview it is an appraisal well just as the Amungee well so Origin knows more than has been put out in the public airways.

Cheers - Have a great weekend

Thanks for your point of view - it makes for an interesting discussion while we wait for the June date. I agree with you on not knowing results of the Kyalla till later. POQ said we should be getting the flow test results in September on the Kyalla and about November on the Velkerri - hopefully those dates hold.

Origin/Falcon give the Kyalla a 90% chance of success. The Vlekerri Wet Gas a 40% chance of success.

As Angela McDonald's article mentioned, a Kyalla liquids rich discovery will go a long way to building out infrastructure. That is why I have been saying that a Kyalla discovery will go a long way towards a claim of commerciality. IMO the Velkerri B will be commercial but such a claim will not be made until the 3000 meter lateral scheduled in the 2020 drilling program are drilled.

I have recently noticed in a couple of different articles that there are '2' wells to be drilled in the 2019 program. I suspect the Velkerri wet gas vertical test and horizontal test are being counted as one well along with the Kyalla well. I have never gotten a definite answer if the same vertical hole will be used on both Velkerri test wells.

POQ has also said if the Velkerri wet gas well does not prove itself then Origin would move back up north for an offset to the Amungee NW-1H well. I am wondering now if the shortened drilling season has nixed that potential offset well - we will see.

The good news is that we will soon be back to drilling.

IMO the price is still being held down on the shares. BO might be able to pick up a few at .20 but he better be quick. It makes no sense that the price seems to weaken the closer we get to drilling - I still contend that has to do with the Sweetpea bankruptcy and is a manipulated price.

I should slap my hand for responding to BO but I thought a little history on the Beetaloo might benefit some other folks on this board. BO comments about "smart people knowing about the Beetaloo FIELD forever" - then of course he goes on to say the Beetaloo FIELD is not a field - Go figure!

Beetaloo's Exploration History:

In the 1980’s a subsidiary of Rio Tinto drilled 12 wells across the Beetaloo Basin accumulating over 27,000 feet of core data, and these cores, which were subsequently stored in Northern Territory warehouses, represented the basis of independent information for Ryder Scott’s filed Report with Toronto Stock Exchange (www.sedar.com) in May 2010, which estimated a potential resource of the Beetaloo Basin of 17 billion barrels of recoverable oil and 64 TCF of natural gas.

The technology to develop these types of unconventional oil and gas deposits throughout the world were not developed until the late 1990’s in the United States, principally in the formations of the Barnett Shale in Texas, and the Pinedale Anticline in Wyoming.

Santos and Tamboran drilled Tanumbirini 1 vertical well in EP161 and McManus-1, Altree-2 and Walton-2 also provide convincing evidence of significant volume of moveable hydrocarbons.

Pangaea in joint venture with American Energy Partners drilled Birdum Creek #1, Wyworrie #1, Tarlee #1 and Tarlee #2 in EP167 and EP168 and had planned additional horizontal well coverage.

Falcon Oil & Gas Australia Limited, a subsidiary of Falcon Oil & Gas Ltd, owns 4 exploration permits EP 98, EP 117, EP 76 and EP 99 in the Beetaloo Basin and drilled a well called Shenandoah-1 on EP 98 in 2011 and with Joint Venture Partner Origin Energy since 2014 drilled Kalala S-1, Beetaloo W-1, Amungee NW-1 and Amungee NW-1H in 2017. Significant gas shows were encountered in the Middle Velkerri Shale and lower Kyalla Shale.

Origin submitted the Results of Evaluation of the Discovery and Preliminary Estimate of Petroleum in Place for the Amungee NW-1H Velkerri B Shale Gas Pool to the Northern Territory Government.

So the original wells were drilled in the 80's. Not finding oil, the core samples were stored in dusty warehouse bins until reviewed by Ryder Scott in 2010. Until the late 1990's the technology did not exist to give shale a second look. After years of development work the process and economics were proven in the United States - now in 2016 Origin moves forward with the process in Australia. To say that the Beetaloo has been known about for years is technically correct but a little disingenuous - if you cored samples but didn't know what to do about it what was the current worth of that discovery!

I also would be curious for BO to let us uninformed know why he thinks there will be no drilling on the Beetaloo in 2019. Seems like the stars are also aligning against him on that one.

Hmmm - Pepper's regulations passed but allowed for an open standing clause. I don't like the clause of granting 'open standing' - it sounds Paul Kirby may have given a back door to anti-frackers. With the wet and dry seasonality I can see where these open standing challanges could potentially bog down developers. I don't know that it would effect Origin's planned 2019 season but then again I guess someone like LTG would be willing to try anything.

Maybe OrsonModesto can enlighten us.

Fracking laws pass NT parliament
HAYLEY SORENSEN, NT News
March 19, 2019 7:28pm

EXPLORATION for hydraulic fracking could begin this year after the NT Government last night passed legislation to regulate the practice.

The passage of the laws followed the 15 month inquiry into the practice by Justice Rachel Pepper.

Debate on the regulations went into the evening. One of the sticking points was the controversial “open standing” clause which will allow any person to challenge decisions under the act.

Fracking proponents fear that could mean development is hamstrung by vexatious challenges from anti-frackers.

But Resources Minister Paul Kirby said similar regulations in other jurisdictions “hadn’t resulted in floodgates opening”.

The “cost and effort” involved in mounting challenges were an impediment to spurious claims being brought, he said.

Deputy Opposition Leader Lia Finocchiaro said litigants needed to have a connection to the decision to be able to challenge it in court.

She criticised the Government for accepting the recommendation to introduce open standing without doing its homework on how it could play out.

“The fact the Government hasn’t had an independent thought about this law, simply because it was a recommendation of the independent Pepper report, should ring huge alarm bells for Territorians and industries,” she said.

Ms Pepper’s inquiry returned 135 recommendations to the Government.

Phil: I've given up trying to respond to BO. The current standard for laterals here in the Permian Basin is 2 miles - yes they drill under two 1 mile sections. The companies will even lease a pad site off their property to start a well several hundred yards off their two mile section line so as to be down in the pay zone when their section line is crossed (I believe in Texas there is a 300(?) feet non-production zone on adjoining mineral acreage so as not to deplete your neighbors acreage.

I have talked to Falcon and also recall the 3000 meter laterals being published in regard to the 2020 drilling program - he can look that up - I'm not doing BO's research for him.

There is no set formula for using a multiples for extrapolating a 600 meters frack into 3000 meters. The only way to come up with that figure is actual drilling and completing - its a learning experience. In Texas there are areas that have diminishing returns the farther the lateral - to try to go our 3 miles might not be doable with today's technology. To use a multiple of 5 might not be correct - I think some or our producers in the basin have learned that the hard way. That multiple might be 4, or 4 1/2 but could be 5. Then you get into the Parent/Child discussion - The parent (first) well usually comes in the best. Next comes another learning experience - just how far away do you drill the child (second) well. Too close and the return is not as great - Too far and you leave valuable resources in the ground.

These horizontal operators understand all of this even more than BO does. It's amazing to see companies lining up to participate in such an uneconomical venture. Are their unknowns - sure. Is it 100% - of course not but that's what the industry is all about. Does the first test well cost more than development wells - once again of course.

BO got burned in a New Mexico gas field play that was too expensive to produce and I believe that has certainly influenced his perspective on this shale play. As I said, Origin got a better well than they anticipated - that says a lot towards commerciality IMO. There is also pipeline accessibility available - Jemena has already committed to expanding the existing pipeline as production ramps up. We have a ton of demand coming out of Asia for LNG and the commodity pricing looks stable to increasing longer term.

I am pleased with this prospect and excited to be on board - I believe BO once again is being left at the station refusing to pay up for a ticket - may he enjoy his never changing view.

Sorry to carry on but I wanted to expand on why I am not haunted by negatives in the middle of the night. IMO Falcon is already worth much much more than its current market price. While I am extremely hopeful that the Kyalla proves itself, I take great comfort in the Velkerri B discovery. Falcon has currently 6.6 Tcf of contingent resources and I'm very confident we can double/triple/quadruple those resources with step-out wells to the Amungee.

I know that the Amungee well came in much stronger than what Origin even originally expected - they were extremely pleased with the flow test - especially considering only 600 meters of the well was successfully fracked.. If Origin, prior to drilling, was expecting a lessor production rate to be commercial then logically the Amungee, at its current depth and flow rate, can be assumed to be a commercial play. Origin just has to make that commercial declaration official by drilling a 3000 meter lateral - think the 2020 drilling season.

The 6.6 Tcf contingent resources assigned to the Amungee well can in themselves yield a $1.00/share value on Falcon when converted to reserves. If you believe as I do that one, two or three additional Amungee Velkerri B wells would prove up a world class field then today's lackluster .24/share price is a roaring buy. No hauntingly sleepless nights on this end.

Schlemiel: I have always taken the approach that I am in the stock until Falcon's Beetaloo interest sells. Therefore I always tell myself this day to day lackluster price doesn't matter but then again I am just like many others on this board - It would make me feel better about my Falcon position if the stock was - pick a number - .35' .45, .50/share. I wouldn't be selling if the stock was $1.00/share today so in my world I guess today's price doesn't really matter.

If I wasn't so close to Falcon I would be haunted at night thinking there is something negative we don't know. That is not the case and yesterday as last week and the month before and the month before that I keep adding to my position. I am going to be terribly right or terribly wrong!

Poods: I don't have firsthand knowledge of the bankruptcy proceedings but from what I understand someone is interested in acquiring the stock as part of the workout agreement. The br was originally filed under a Chapter 7 type arrangement but that has been changed to a Chapter 11(?) or similar in Switzerland. It is my contention that whomever wants the 62 million remaining shares would try to get them as cheap as possible and therefore is capping the stock price for whatever evaluation period is required. I have also been told that whoever wants Sweetpea not only wants the stock but also Sweetpea's acreage in the NT - didn't know they had any acreage rights so take that for what it's worth. Once the br is settled Falcon will be required to list the new owner of it's 62 million shares so we will soon know that piece of the puzzle.

Poods: A year from now today's stock prices will look like a dip - you haven't missed anything. As you say, the market is quietly but steadily accumulating stock. I still contend the price of the stock is being depressed. I suspect the reason for this is the evaluation period of the 60+ million Sweetpea shares in the upcoming bankruptcy hearing. If what I have been told is correct, the hearing will begin mid-April and should wrap up sometime in May - after the court's stock price is set Falcon should increase in value.

Look for the drilling program to begin sometime in June - not July. The closer we get to the start of the 2019 drilling season the stronger the stock will become. Now is the time to add to positions if one is inclined to do so.

The lack of news is so POQ. The more I watch this guy the more I see that conservative accountant suit coming out. No hype here - just the facts. At the last AGM he indicated he was going to keep Falcon low key so as not to stir up any undue attention. That is what we are seeing today - Welcome to the World of Falcon - 'The Most Underhyped Stock in the World!'

Thanks OrsonM. I will go back and review those seismic charts. I just assumed that the aerial extent of the Kyalla shale was predicted based on the existing wells around the Shenandoah integrated with the seismic interpretation.

I'll be on the lookout for the proposed sites- maybe in some of the submittals for the scientific inquiry panel?

Thanks dprussky - That's a neat tool to be able to post a jpg for all of us to see.

A couple of observations from the overlay on this slow day:

1) Note the placement of the Velkerri 98 E1. I take that to be the location of the next step-out to the existing Amungee well - also considered the fallback location if the southern Velkerri wet gas play fails. A well in this location will go a long way to proving up additional Tcf. A couple of years ago POQ felt a well in this area could prove up about 30% of the Beetaloo Velkerri B.

2) Why are there 3 Velkerri liquid rich proposed sites if this year's 2nd scheduled well is considered a low probability well? I assume there are water bore holes around one of these sites but I haven't stumbled across which one. Possibly one of the remaining two will be the potential site for the 2020 drilling program - just a WAG.

3) Why is the Kyalla 98 W-1 located on the very edge of the predicted aerial extent of the Kyalla liquids rich gas play? Will this be the location of the potential Kyalla 2020 well?

Origin789: I've been mulling over the start date of the next Kyalla well. After seeing the Santos' schedule along with any lack of any news on a start date delay from Origin; I suspect we are still on schedule for a June spud date.

IMO, the Origin EMP is completed - Origin knows what regulations will be adopted so I am sure they have already built that information into the document. It will just be a matter of submitting it to the public for 28 days and then on for the approval of the government which already has access to the document and will just give it a cursory review.

If Santos is showing drilling of the Dukas-1 to take 9 weeks in the February - May period then have they already submitted their EMP for public hearing? They would need to be drilling in the next couple of weeks to meet their schedule. With the dryer area of the Dukas-1 their projected drilling schedule would proceed Origin's.

Chief Minister Gunner has pledged to not delay the drilling plans for this years dry season. He has kept his word on his other pledges and I suspect with companies lining up drilling schedules based on his commitments he is not going to be put in a position of delaying everyone's schedules.

I predict we will be seeing an announcement of planned drilling prior to June. POQ said he would keep the news releases flowing on the 2019 drilling season - I take him at his word and marking my calendar accordingly.

On 22,000 acres of the Eagle Ford, Hilcorp Energy came in as a partner and using equity partner KKR & Co drilled the first dozen wells - then turned around and sold that package to Marathon for $3.5 billion - not a bad return on their investment. Hilcorp didn't sell all their interest as the Eagle Ford is still one of their primary holdings - I don't know how much they had initially or how much they retained after the sale to Marathon. I just find it interesting that they may be looking at a similar type of investment opportunity in the Beetaloo. Possibly using an equity partner they might buy out Falcon, drill a dozen or so wells and then Origin/Hilcorp sell off part of their' acreage for a hefty payday.

"The company later brought in Hilcorp Energy Co. as a partner to drill the first dozen wells. Hilcorp brought in mega-private equity player KKR & Co. as an investor in 2010. After the smoke cleared, the Hilcorp/KKR package sold for $3.5 billion in June 2011 to Marathon Oil Corp. in a blockbuster deal that firmly established credibility for the Eagle Ford shale, which has since evolved into the world’s most active in situ oil shale play."

OMG! This preliminary EMP is 301 pages of eye glazing details about anything you might ever want to know about the Beetaloo. I can't imagine how many man hours it took to research and put together this document - government regulation at its finest!

If you find yourself tempted to peruse through report I found page number 78 interesting - it shows the next six proposed well pad location. I'm sure these are subject to change but it give us some insight into what Origin is thinking. One of the proposed pads is the Kyalla 117 N2 which is the next proposed drilling and stimulation site (page 9). I always envisioned this next well to be adjacent to the Beetaloo W-1 but it is actually further north located about 25 km south of the Shenandoah well - right splat in the middle of the Kyalla north-south fairway.

Thanks Orson for posting the link and for your comments.

VegasGal: I've read that update a couple of times and still don't understand how and where it comes into play. I'm thinking Origin would have already filed a EMP and our wells prior to permitting but not 100% sure.

Maybe OrsonModesto can comment on what if any effect this has on Origin. EMP's are based on the prior 135 regulations so meeting them should not be an issue. My main concern would be if Origin had to go back and resubmit one that had to undergo a comment period from the NT communities prior to submittal and approval by the Minister - Don't want to get things backed up any further.

We will have to see what the comments are to this publication - may be a non-event.

Schlemiel: Newtofo's response is spot on.

As previously mentioned, the Kyalla shale appears to be well understood. The rock characteristics look promising though it has never been fracked so that is a bit of an unknown. Sources I have quoted give this well a 90% chance of success so it's fair to say it has a good shot at making a well. For those reasons, this next Kyalla well is considered by Origin/Falcon to be an appraisal well with an anticipated extend flow test just as was the case with Amungee horizontal test.

The Velkerri wet gas play is a lessor certainty with a 40% chance of success. There is a lot of potential in the Velkerri wet gas formation so Origin/Falcon don't want to leave that stone unturned. If the vertical test well doesn't look promising then it's back up north to a step out of the Amungee well to prove up another 6 -7 Tcf of contingent resources.

I will be disappointed if the Kyalla doesn't prove itself, neutral if the vertical Velkerri wet gas doesn't pan-out ( ecstatic if it does! ) but then very happy when we double the contingent resources up north. All in all the Beetaloo's contingent resource figure should grow considerably by year-end. Exciting times just around the bend.

Nerves: Phillip doesn't want to have to entertain any material offers prior to the end of the 2020 program - with that said a material offer may very well be out of his control. With the limited number of large shareholders which in total control the likely outcome of a vote, hopefully POQ can keep them on the reservation. I would like to think the large shareholders wouldn't jump the gun but that is of concern to Phillip. I wouldn't see anyone wanting to accept an offer prior to the results of the 2019 program. At that point one could make a reasonable projection of the two 2020 well locations - it you get that far along why not wait for a declaration of commerciality and realize the most return on your shares (or so my thinking goes). If we go into another year of appraisal wells I don't know what the 'indians' would do.

POQ talked about selling off part of Falcon's 30% if Falcon elects to participate in the additional appraisal wells. He only mentioned that as a potential option to another stock offer. Falcon has no interest in E&D as that would require billion(s) in capital.

I wish they would look at retaining a 2-3 percent ORI on their 30% and put that into a royalty holding company. We would get less upfront but as the Beetaloo develops over the decades it would throw off tonnes of dividends. It's probably much more complicated than that and the hit up front might not be acceptable to a lot of investors.

I'm not holding my breath on the Karoo - SA seems a hopeless situation. The culture seems to be based on greed, bribes and apartism IMO.

Hilcorp might very well get involved as might additional companies. Hilcorp is a $4 billion dollar company so I don't know if they could take out all of Falcon's 30%. I still contend that Origin will be selling part of their interest in the Beetaloo - I have wondered how that will look since Falcon/Origin both hold undivided interest. Origin will at some point need to divide/piece out the Beetaloo which gets even more complicated if they have a couple of new JV partners with undivided interest.

Falcon will likely be gone before the messy details have to be dealt with unless Origin packages some of their interest with Falcon's exit. If that happens parcels will need to be appraised and sold accordingly.

Fun things to ponder but maybe I should instead be pondering the success of the next Kyalla well!

Cont..

After all gas is a “clean green fuel” isn’t it – but only if you compare it to coal, and if you ignore all the “fugitive” greenhouse gases released into our air.

And we have a gas shortage crisis in Australia don’t we – even though we are the largest gas exporter with 81% of our gas slated to leave the country.



And people down south need gas in winter to keep warm don’t they – only if you don’t know that it’s far cheaper these days to heat your home with a modern reverse-cycle air conditioner.



Cooking with gas? With gas, one thing you can definitely cook up is a case for fracking it.



Whereas it’s harder to argue that NT oil would satisfy some greater good. With so many oil spill disasters around the world and electric vehicles on the way, no company suggests oil is a clean-green fuel. Nor would they even hint that NT oil is going to reduce the price you pay for petrol by even one cent.

So the miners went silent on the real prize, oil, and also silent about its risks. Oil was explicitly left out of the Terms of Reference for the NT Fracking Inquiry. There has been no review into the threats oil poses to our air, water, land, and health – even though cancer-causing oil components have been widely found to cause harm in the fracked lands of the USA.

It’s time the oil and gas companies were honest with Territorians about their real plans, and about the problems fracking for both oil and gas will bring to the NT.

Tim Forcey worked for forty years as an engineer and manager in the petrochemical, oil, and gas industries in the US and Australia. More recently he has published energy research with the University of Melbourne.

[The Alice Springs News Online is inviting comment from Mr Gunner and seeking an answer to the question: Why was oil not included in the terms of reference for the Pepper enquiry?]

I don’t buy the argument that the possibility of producing oil in the Beetaloo changes the science or safety of fracking. Whether oil, gas or both, the science and technology of fracking doesn’t change. Judge Pepper’s Scientific Inquiry panel was charged with if/how to best proceed with fracking in a safe and highly regulated manner – the end product of applying that technique was not the question or focus. The Beetaloo is primarily a gas field exploration. If it happens to contain oil, which it does, then all the better for Falcon/Origin. This is just another environmentalist that can’t except the fact that fracking was approved in the Northern Territory.

Gas fracking: Who forgot the oil?
2615 gas 1 OK



2615 Tim Forcey

By TIM FORCEY (pictured)



For years gas fracking has been the topic of official inquiries and much discussion in the Northern Territory. But somewhere along the line, they forgot to tell us about the oil.



The fact is that the Gunner Government’s permission to frack for gas amounts equally to permission to frack for oil – enhancing the production of oil and giving access to Northern Territory oil not available without fracking.



The frackers didn’t forget to alert their investors. Origin Energy announces the first order of business in the Beetaloo basin is to target the “liquids-rich” Kyalla and Velkerri shales. Falcon Oil and Gas adds that the Hayfield sandstone is “anticipated to have the highest liquid yields”. Federal Minister Canavan hopes the Beetaloo will produce more oil than the Bass Strait.



Normally an oil and gas company loves to shout from the rooftops about the prospects for oil. As a liquid, oil is easier to deal with and worth ten times as much as gas, molecule for molecule.



Gas, on the other hand, is a problem. It needs to find a market, sometimes as far away as Queensland or even China.



Getting it there takes pipelines thousands of kilometres long, or multi-billion dollar liquefaction plants, LNG ships, and then LNG import terminals, regasification facilities, and more pipelines. For what, billions of dollars of asset write-downs and the opportunity not to pay any tax?



BHP lost billions of dollars in the USA shales hoping to find oil but found only gas. Today some US fracked gas is so worthless they are flaring it off, venting it, or paying people to take it.



By comparison oil is easy. Get it out of the ground, put it in a tank, “weather off” the benzene-containing light ends, put it in a truck and now someone will pay you fifty US dollars per barrel for it, or more.



So why all the talk in the NT about gas, and so much silence about oil? Because although gas isn’t so easy to sell to a distant customer, it can be easier to try and sell it to the Australian public.



(cont)