The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Longknife: Disappointing to you, my answer would be yes - it would tell us what not to do or how to avoid a repeat - not to throw up our hands and give up on the Velkerri B. If you recall the first Amungee well hole was nearly lost and was damaged due to faulting - it told them to pay better attention to seismic this go around. These guys learn things on every well they drill. Same will be true with fracking - I have heard the Velkerri B formation is excessively dry making water alone not ideal carrier of proppant - I'm sure there will be adjustments to frack chemistry to adjust.
I am in a wildcat well in the states that was drilled off-setting a non-productive well drilled in 1980s 4 miles to the south. The data and information on that well was considered invaluable to the current operator. The geologist/engineers better understood trends, knew what to anticipate and what to avoid. Due to that data a larger BOP was installed which kicked in 6 times - saving the well at least twice. Based on to this dry hole data, the well encountered expected formations and over-pressured zones were anticipated allowing mud weights to be adjusted accordingly. The well will be completed this spring - the engineers are anticipating up to a 60mmcf/d well. This well would have been lost with to up to 13,000# down-hole pressure kicks had they not had an idea of what to expect and adjust mud psg prior to entering formations - that plugged well 4 miles to the south gave the engineers some very valuable information.
So yes, you can learn a lot from wells such as the Kyalla. The Kyalla #117 well is still being studied to better understand what happened and make the likelihood of a future off-setting well more successful - so YES, even with the failure, lessons will be learned and the next Kyalla well will benefit.
The stock market does not assign value to the same things geologist and engineers assign value! While Tamboran/Falcon/BS are Intune to future potential of the Beetaloo while you are intently focused on the Falcon stock price - I understand.
Longknife: In your view the Kyalla well was a failure. In the industry's view that well provided much information regarding that area to the south. Origin apparently fracked into a water source which they have yet to figure out. I suspect Falcon won't be around when that area is tested again but when it is the data from that well is considered important. With the exciting promise of the Kyalla formation, that area will be revisited. In the eyes of geologist, all wells are valuable - some just tell you where not to drill or what formations contain issues!
Success will come with failures - that's the nature of the industry.
Longknife: Arggg! We have been at the mercy of Origin for years and yet have completed the Kyalla, Velkerri Flank well recently, have undergone the major ownership conversion from Origin to Tamboran, have apparently drilled/completed what looks like a very successful Amungee hole and are now waiting for frack trucks to show up. If I can't tell you to sell then please at least keep your complaining and whining to yourself - you amuse no one. I for one, am very pleased with where Falcon stands today - it's been a long road but looking like success is just around the corner. I would think you of all people could see the big picture but maybe not? This next year is shaping up to be more exciting for you.
Thank You for pointing out what you and I have realized for some time. People want information and POQ tries to give these people some color but at the end of the day he doesn't control the timeline. Another thing that some don't realize is that this operation/location is more than a hop/skip and jump from 'equipment bases - it's a journey for these trucks/equipment/material and personnel to get on site - if something goes wrong and needs repairing things are slow to be hot -shotted to the location. This will slowly improve as more wells are planned/drilled but you can expect significant delays at this stage. Even Tamboran/Sheffield have to learn to be patient.
Longknife: Don't get me wrong - I would certainly lighten the load if the stock were to appreciate to .40 - .50 cents and certainly $.75 $1 - I've had dead money in this stock for years. I thought you were thinking about trying to sell at these points with the intention of buying back lower - IMO we wont' see the big declines after upcoming news events we have seen in the past - but then what do I know :^)
Longknife: We have seen this happen a couple of times in the past where the stocks runs up on good news but then tends to settle back down. The big difference this time is if these next two wells are what I think they will be this stock might not settle back as much when Tamboran plans the third well in the 4th qtr 2023 and the fourth well shortly thereafter. Then we are looking at the pilot program so who knows how this stock reacts. The wild card is someone makes a legitimate offer and the stock jumps overnight.
People can play it differently but I have always looked at Falcon in the long term and will probably hold most of my stock. Nothing wrong with holding or trade some stock. If your holdings are in the range of mine then trading that size of blocks might be an issue getting in and out easily.
Looking forward to some nice news going forward - I am hopeful this stock rises to the next level in the next two years.
Assuming you have followed Falcon for some time, trying to predict stock prices based on events like this is a fools game. No official prediction but personally I am hoping for a nice jump to $.30US - $.35US.
IMO, 6.5-7mmcf/day would be outside of the current flow rate predictions by Falcon and Tamboran. That type of flow rate would (should) demand a greater stock price. Like I say I can't predict anything based on facts - hoping yes! I am not an engineer but just common sense say if a 12 stage frac using 4 1/2 inch casing flows 5.2 mmcf/d then a 24 stage frac using 5 1/2 inch casing off the same pad should yield a better result - if Tamboran wasn't looking for a better result the Pioneer based technical team would not have suggested/approved all the additional expense.
Longknife: Only makes sense to say 5 mmcf/d and that is their conservative number. The normalized rate of the Amungee well was 5.2 mmcf/d and this wells is drilled off the same pad. These shale wells shouldn't vary that much all things being equal. But in this case all things are not equal. The well was cased with 5 1/2 casing and there is a planned 24 stage frack planned. I can assure you that these two changes are much more expensive than the 4 1/2 casing and the basic 10 stage frack of the Amungee well. If they are spending more, Tamboran is expecting a return on that additional expense. Right or wrong I have gone on record as predicting this well will come in at 6.5 - 7 mmcf/d/1000 meters.
3 mmcf/d is the basic amount needed for commerciality - 5mmcf/day is the conservative expectation of Tamboran - 6.5 - 7 is likely where it will come in (IMO). At 6.5 - 7 mmcf/d not only MacQuarie but the whole market will sit up and take notice - you will see a nice jump in FOG/Tamboran.
Anyone else have any predictions of what we might be looking at?
Wow - lots of grammer and other errors in my last post - I had someone waiting for me in a car and I obviously just threw it together - Still wishing for an edit button on the board!!
At the end of the post I meant for it to say 5 - 10% interest. I feel Falcon will participate in some regard unless it is just not feasible for some reason.
Longknife: That is a concern of mine. I don't know how they will develop this acreage. Once would think they would do it block at a time at that would be more economical. If there is 10 wells /block that could be a couple of years drilling once they get going. I would hate for Falcon to sit on the side lines for that long even though surrounding acreage would be proving up. I suspect Falcon will try to participate to come extent in each block - even if it is 50-10%
BtoB: Nice analysis of the current situation and what we have to look forward to moving forward. As to next we know that their is another well to be drilled shortly - if this current Amungee well is as positive as I expect I would hope they would drill another well off of the same pad - saves a lot of time and money. Do they drill there or try to step out a bit and prove up another area - $64K question. I would think at this point they take the more conservative approach and drill the 3H off the same pad.
The next big question is where will the 3rd & 4th wells be drilled and when - I would hope the later part of 2023. IMO, 2023 is going to be an eventful and exciting year.
Newtofo: You are probably right that the Empire well will likely come in under our current well being drilled. I had forgot that their well is a shallower horizon.
Depth makes a difference. I am in a well that is about 16,500 feet TD. - drilled but not yet completed. It hit a gas kick that about blew the well out but thanks to the BOP the well was saved - downhole pressures spiked to 13,000 pounds and they had to quit drilling any deeper into that horizon and call it a day as the pressures were at the limits of the casing. The well is estimated to come in at 60 mmcf/d - its a beast! Its the same similar story to our Beetaloo area - because of wildlife restrictions they had to move the well off the pad by Dec 1st and won't return to complete till May 1st. - Grrr!
newtofo/Beetaloo - You guys might be right, but I'm looking for the Tamboran well with its 5 1/2" casing and American style frack with 24 stages/1000 meters to come in about 7 mmcf/d.
With regard to Empire's well - the well is a 2000 meter lateral - that is why I was hoping for about 10-15 mmcf/d on their flow test.
If you guys are thinking the Tamboran well is only going to flow 3-4 mmcf/d I think you are going to be pleasantly
surprised. I am hearing that Tamboran is very pleased with what they are seeing in the drilling stage and excited about fracking this well with the advanced technology. I don't believe it comes in under the Origin Amungee well normalized rate.
Time will tell - they look to lbegin fracking in the next couple of weeks so we should have an initial flow rate soon.
Empire - Curious to see what type of initial flow rates they get on 1989 meters with a 40 stage frack. Will be somewhat telling though its a good bit from out current wells. Still will be great for the Beetaloo is this comes in with a solid flow rate of 10 - 15 mm/cfd.
Origin789 - Yep, those indigenous people are part of the 600 jobs to be created by the Beetaloo - or so some idiots claimed!! Those trying to talk down and kill the development of this world class national asset had no idea how wrong they were. The Beetaloo will have 600 X 10 and likely more as time goes on. The Beetaloo is going to be a real blessing for the local populations - not only in infrastructure and health but in education and economic opportunity. The blessings of this genie is out of the bottle for the NT.
Mewtofo: "I honestly don't think that B.S. will want to be talking to any of his big player connections in Texas without having some formula to get rid of this pesky opt in or opt out clause -- by taking Falcon out completely??"
For those that don't realize it, B.S. also has that pesky opt in or out clause.
Falcon would likely be the first target as their interest holds most royalty and they are a non-operator. Let Pioneer, Chevron or another major make Falcon a healthy offer and and see what develops. If these next 4 wells come in strong then there is no reason to wait for Falcon to prove up more acreage/reserves - it would just cost a suitor that much more to acquire FO position.
Its interesting how Pioneer (B.S.) has put together their team to help drill these wells. Either Scott Sheffield is watching over his boy or wanting to get a good look at what they might be buying? Pioneer is the biggest producer in the Permian so IMO the Beetaloo would just be a hop/skip and jump if they have any interest in growing internationally. All just a guess on my part.
Newtofo - you are likely correct regarding your thoughts on the big oil companies getting into involved. I see that as the scenario of how Falcon exits the Beetaloo. BS ultimately needs a couple of big players to take out Falcon and Tamboran’s interest. It’s going to take some big players to put even a dent in the Beetaloo’s potential. The big question IMO is just how long before they show up on the scene. Probably before the next 4 wells but if not, we raise funds and keep proving reserves. All is good.
Newtofo: I appreciate your dedication to this board. I'm relieved that our Beetaloo investment of old is finally getting off high center and scheduled to start moving forward at a quicker pace. We are in good hands with Tamboran and the Pioneer team they have put together to oversee these unconventional Beetaloo wells.
Falcon is in the advantageous position utilizing the sole risk clause to participate in wells at a pace/rate that correlates with their financial constraints. Falcon will build reserves over the next couple of years and then as it's stock price allows, raise funds for future development and continued participation in the Beetaloo. I feel more encouraged with this investment than I have felt in quite a while.
Thanks to all of the contributors of this board. Looking forward to 2023 and beyond.
BtoB: "And he’s rightly concluded that if drilling results are quite good there’s far more upside for Falcon shares than TBN." I'm with Tom L.ayman on this one. I'm feeling pretty comfortable with my Falcon shares. That might change in time but the next couple of years look to be good for Falcon.
Beetaloo: Others may correct me on this but I believe Tamboran has completed their financing. With good results on the 2H and 3H wells I would think Falcon should be worth $0.35 - $0.40 per share but as we all know, what Falcon is actually worth does not necessarily equate to its actual stock price. I don't anticipate Falcon needing to raise any further funding until the 4H and 5H wells are completed - with Tamboran's additional $30m carry on those last two wells ($6.75 million on each well) Falcon should have enough funding to meet it's WI obligations. The question after those wells are completed is what's the stock value at that point in time and how much dilution is Falcon willing to undergo to move forward and of course what % participation will they be looking/locked into. The picture looks murky at this point - will future wells (6H, 7H etc.)be in the same participation unit as the 4H & 5H? If that is the case then Falcon needs to base its WI participation in the 4H and 5H wells based on the drilling exposure of the whole participation block if that makes sense.
I for one want Falcon to participate to the greatest extent practical but at the least dilution necessary - its a balance our small company is going to have to figure out over the next few years.
Of course the more success Falcon can have prior to fund raising the better for we stockholders.