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Still waiting on that permit
Falcon Oil & Gas to raise US$10mln to support upcoming well campaign
Falcon Oil & Gas Ltd (LON:FOG) is raising up to US$10mln of new capital to support its participation in an anticipated four-well horizontal drilling programme in Australia.
New shares are being priced at 14p each and it is expected that the shares will be taken up by institutional investors.
The share placing is being delivered by brokers J&E Davy, RBC Capital Markets and Cenkos Securities. A bookbuild process will open this morning.
READ: Falcon Oil & Gas nears re-start of exploration at Beetaloo
It will cover Falcon’s remaining share of costs in the well, with a substantial portion of the costs already covered via the farm-out deal with Origin Energy (the partner is committed to cover up to A$113mln of upcoming costs, spread over two stages of operations).
The explorer noted that its net cash contribution to the first US$100mln of gross capex for the Beetaloo project’s Stage 2 and Stage 3 programmes amounts to just US$5.5mln, not including contingencies.
Meanwhile, the gross capex for the combined programmes is estimated to be around US$130mln.
Beetaloo programme
Falcon retains 30% of the Beetaloo project which hosts major new shale hydrocarbon discoveries. So far the project comprises around 6.6 trillion cubic feet of discovered contingent gas resources (equating to 1.94 trillion net to Falcon).
A previous well yielded between 0.8 and 1.12mln cubic feet of gas per day over a 57 day extended production test, which produced a total of 63mln cubic feet.
Following a hiatus, caused by a prior moratorium on fracking in Australia’s Northern Territory, the company and its partner Origin Energy are now preparing to get back into the field.
The upcoming work programmes, including four new wells, aims to evaluate the potential of the liquids-rich gas fairways in both the Kyalla and the Velkerri shale plays.
This appraisal work aims to de-risk the project and pave a way towards a field development scenario.
It is anticipated that the work will begin around ‘mid-2019’.
https://www.proactiveinvestors.co.uk/companies/news/220496/falcon-oil--gas-to-raise-us10mln-to-support-upcoming-well-campaign-220496.html
Anyone know much about their JV Origin?
Agreed, what a disappointing reaction to the news of the moratorium being lifted.
Looks like a slow drift backwards until some concrete evidence of the resources actually in the ground comes out.
Unfortunately, same old same old.
Hoping Origin puts something out on timelines. Everyone wants the faster horse so they move on for now.
T
Looks like back to waiting - nobody impressed with this news. Or nobody knows.
True. And, a plan from Origin about their schedule going forward would clarify things.
T
Market isn't impressed. Hopefully today all the "buy on rumor, sell on news" people are gone. I think maybe just no one knows about this stock. Need someone to start covering or pushing it.
After rereading this, hard to not see the meddling by yet more government officials. Probably why market doesn't care. I guess as long as people there don't mind paying an arm and a leg for oil and gas, the government doesn't care.
T
GC, certainly a surprise reaction from market. Guess they will have to continue to prove worthiness. But, eventually, should be a $1-$3 stock. As always with this stock, patience is required.
T
Based on global market reaction, don't expect to get rich overnight. A good read and interview from POQ below puts it all in perspective. We may not pop, but other than impatience, i can't think of a reason why anyone would be selling this. A buyout offer could literally come at any time.
Falcon Oil & Gas marks modest rise on fracking breakthrough but CEO says low prices won’t be around for long
2018-04-17 11:14:00
“Falcon are fully carried for the next five wells ... we’ve got US$9mln cash in the bank, so we’re not looking to raise any money any time in the next two to three years."
Falcon’s shares rose no more than 10% in the morning’s deals
Investors may be forgiven for feeling underwhelmed by Falcon Oil & Gas Ltd’s (LON:FOG) modest share price rise after Tuesday brought an end to fifteen months of anticipation and more than a modicum of uncertainty.
Falcon’s shares rose no more than 10% in the morning’s deals and at around 11:00am were changing hands at 24.9p, up only 5.96%.
Lifting of a moratorium on hydraulic fracturing allows Falcon and operating partner Origin Energy to get back to work in their pursuit of a major shale gas play in the Northern Territory’s Beetaloo basin.
READ: Falcon Oil & Gas clear to advance major Australian shale project
The fracking hiatus cut off what had been a very encouraging programme of wells and flow testing – subsequent analysis saw some 6.6 trillion cubic feet of gas identified within an area that represents just an eighth of the Beetaloo project.
Now, the partners plan to get back to work as soon as practical, meaning new drilling is likely to start in 2019. Significantly, Origin is covering some US$101mln of what will be a five well programme and is expected to run into 2020.
If investors were expecting a bigger boost to the Falcon share price, they were not alone.
“I would’ve imagined it would be much higher … and I think it will in the next few days when people realise what this really means,” Falcon chief executive Philip O’Quigley said in an interview with Proactive Investors.
“It is not just a lifting of moratorium."
O’Quigley added: “We’re going back to go after what is already a huge resource, 6.6 TCF just on one zone in one eighth of the whole area, and there’s much more to go after.
“I think people, in time, will realise that this is a huge play and it is a really attractive asset.
“Falcon are fully carried for the next five wells, so there’s no issues, we’ve got US$9mln cash in the bank, so we’re not looking to raise any money any time in the next two to three years.
“People will realise that this is the only time you’re going to get in at these prices, today, and hopefully we’ll see the market appreciate that over the next few days.”
WHY INVEST IN FALCON OIL & GAS LTD? READ MORE HEREVIEW THE FULL COMPANY PROFILEREGISTER HERE TO BE NOTIFIED OF FUTURE FALCON OIL & GAS LTD COMPANY ARTICLES
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https://www.google.com/amp/www.proactiveinvestors.co.uk/companies/amp/news/195143
Official statement released.
FRACKING MORATORIUM LIFTED – STRICT LAWS TO BE IN PLACE BEFORE EXPLORATION OR PRODUCTION CAN OCCUR
16 April 2018
Chief Minister Michael Gunner today announced the Northern Territory Government had accepted all 135 recommendations of the independent fracking inquiry.
Mr Gunner said implementation of the recommendations of the Final Report of the Inquiry would now begin so that Territorians could benefit from the creation of new jobs while protecting our unique natural environment for generations to come.
“We promised to be a Government that restores trust, listens to the community and creates jobs,” Mr Gunner said.
“We promised an independent, scientific inquiry after which we would either ban fracking or allow it in highly regulated circumstances in tightly prescribed areas.
“We have kept our promise.
“We have accepted the key finding of the report – that if all the recommendations are implemented the risk from fracking can be reduced to an acceptable level.
“We have also accepted the Inquiry’s advice about no go zones and coupled with areas where there is no petroleum potential, 49% of the Territory will be frack free, including in National Parks, Conservation Areas, Indigenous Protected Areas, towns, residential and strategic assets, and areas of high cultural, environmental or tourism value.
“In the remainder of the Territory, strict new laws and regulations will be put in place to ensure that when fracking takes place, we protect the environment, the cultures and lifestyles that rely on it, and the many tourism, pastoral and agricultural jobs that depend on it.
Some of the key elements of these new laws and regulations include:
Ensuring all Environmental Management Plans for fracking must be assessed by the EPA and signed off by the Minister for the Environment;
Strict new requirements that must be met before exploration approval is granted including codes of practice for well integrity and well decommissioning, development of wastewater management frameworks, the requirement for gas companies to obtain a water license;
Strict new requirements that must be met before production can take place including the development of robust and transparent monitoring strategies, discussions with industry and pastoralists regarding land access requirements and compensation, and release of all environmental management plans for public comment;
Broad standing to seek judicial and merits review of statutory decisions;
Broad new powers to sanction non-compliance, civil enforcement proceedings and increased criminal penalties for environmental harm.
An independent officer will be appointed to oversight the implementation of all 135 recommendations.
“We understand that many Territorians are concerned about increased greenhouse gas emissions from fracking and as recommended by the inquiry, I have written to the Prime Minister and the Federal Leader of the Opposition seeking their agreement to partner with us in offsetting all additional emissions,” Mr Gunner said
“In addition, this Government will soon be seeking comment on draft Climate Change and Environmental Offset policies which we want to finalise before the end of the 2018.”
“These reforms will require significant additional resources and we have approved $5.33 million over three years to implement the 135 recommendations. This will ensure that our unique environment is protected while much needed new jobs are created – particularly in remote and regional parts of the Territory.
“In line with the recommendations of the report, the Government will be ensuring industry pays its fair share through an appropriate cost recovery model.
“I understand that many Territorians feel passionately about fracking and were hoping for a different announcement today.
“I want to assure all Territorians that we will faithfully implement all the recommendations of the report and I encourage those who are passionate about protecting our precious natural environment to stay engaged through this process of reform,” Mr Gunner said.
Work on a detailed implementation plan for the 135 recommendations of the Final Report will begin immediately and be completed and released to the public in July this year.
As part of the ongoing implementation a community and industry reference group will be created to ensure Territorians continue to have a formal voice in the process.
Further information on the Government’s response to the Final Report of the Inquiry and fact sheets can be found at hydraulicfracturing.nt.gov.au
Now the fun begins.
T
AND WE HAVE LIFTOFF
Fracking given green light by NT Government
NT News-1 hour ago
Chief Minister Michael Gunner will announce the decision this morning, ending an 18-month stand-off over the controversial practice. Mr Gunner's office refused to comment last night, but it's understood Cabinet signed off on the final details of its response yesterday, following an independent scientific ...
Hard to say how far it will go but hopefully enough to sell my investment and ride alot of free shares until POQ sells the rest for us. Ive had a bid in all day and can't get filled. Nice volume here today.
Someone betting that it gets lifted. Volume an hour in is already 100,000 above average daily volume. What price you looking for if/when it gets lifted?
T
Bid and ask have been creeping up all week. A decision on the moratorium could come early next week, with a favorable outcome for falcon, imo. Keep your eyes on this.
It's been quiet here for a while but things should start getting interesting again real soon. Just need Gunner to light the fuse by lifting the moratorium, and that decision could come any time now
Judge clears way for Falcon’s $100m drill plan
April 2, 2018
Source: The Irish Times
A drilling programme valued at Aus$100m (€62.3m) is set to quickly resume at a huge gas prospect part-owned by Irish exploration company Falcon Oil & Gas after an Australian judge recommended the lifting of a fracking ban.
The Dublin-headquartered company, led by exploration veteran Philip O’Quigley, saw its share price jump briefly last week before giving up its gains following the publication of the long-awaited report by Justice Rachel Pepper.
The report called for the lifting of the fracking ban, subject to conditions, but it now falls to the local Northern Territories government to make the final decision.
The chief minister of the province indicated that his government would decide within weeks whether to accept the report and lift the moratorium on fracking. When the government implemented the temporary ban in September 2016 it cast major uncertainty over the value of Falcon’s potentially massive shale gas find in the Beetaloo Basin. Falcon has previously claimed the find could be up to 100 times the size of Ireland’s Corrib gas field and is comparable to some of the biggest shale gas fields in the world.
Falcon owns a 30pc share of the gas field, 600 miles south of Darwin, having farmed out a stake to Australia’s largest energy player Origin. In exchange, Origin agreed to fully carry a AUS$200m (€124.6m) development programme at the gas field but this was halted half way through by the moratorium.
“Justice Pepper’s report is a great result and amazingly comprehensive. In my view it should make the government’s decision making process easy,” said O’Quigley. “But we now have to wait and see what they come back with.”
If the moratorium is lifted as recommended “that is where it gets very exciting,” he said. “We have a super project, a great partner in Origin, AUS$100m of a AUS$200m drilling programme still to be spent by our partner over the next two to three years. The prize here has just got bigger and bigger even since we announced our discovery in February 2017 with promising new target areas.”
Northern Territories chief minister Michael Gunner, who ordered the moratorium and judicial review to fulfil promises made in his 2016 election manifesto, told Australian radio that his government would provide certainty on the matter as soon as possible and that he had “cleared his diary” to consider whether or not to lift the ban.
O’Quigley said this continuing uncertainty was one reason why Falcon’s share price had not jumped as much as brokers have previously predicted if the exploration project gets clearance.
“People do not invest in political risk no matter where it is in the world because you cannot quantify it,” said O’Quigley. “You can never determine what politicians are going to do but the report is quite an emphatic piece of work that makes it easy for them to deliver a result that is good for everyone.
“One of the big fears that we had was that there would be a pause for several years to undertake monitoring and baseline assessments, but the report actually addresses that and says that most of those things can be run in parallel.”
O’Quigley said Falcon’s strategy is to see through the current drilling programme, which is being paid for by its partner, and that it will then consider selling its share to a bigger company.
“We have never made any secret about the fact that we want to build this asset up to a value and then look to exit. If we stayed in we would have to go to the market in two or three years time to look for money for major capex, or at that stage we could sell the company. I don’t know of any shareholder who would be against selling so long as we get the kind of value that we believe we can generate in the next two to three years.”
Source :
Independent
weekly.com/business/oil-gas-mining/judge-clears-way-for-falcons-100m-drill-plan/
Most likely due to this. Now we need the moratorium lifted so we can really move.
https://www.investegate.co.uk/falcon-oil---38--gas-ltd---fog-/gnw/falcon-oil---gas-ltd---kyalla-formation-evaluat---/20180221070018H0403/
Kyalla Formation Evaluation, Beetaloo Basin, Australia
21 February 2018 - Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG, ESM: FAC) is pleased to announce that Origin Energy Limited ("Origin") presented a technical paper on the potential of the Kyalla Formation in the Beetaloo Sub-basin at the Australia Exploration Geoscience Conference (AEGC) in Sydney earlier today. The key conclusions by Origin are summarised below:
Kyalla Formation Evaluation
Reservoir and geomechanical analysis acquired at the Beetaloo W-1 well indicate the presence of two potential Source Rock Reservoir ("SRR") intervals; the middle Kyalla SRR and the lower Kyalla SRR.
Geomechanical properties of the lower Kyalla SRR suggest it has the greater potential and could be conducive to successful hydraulic fracture stimulation.
Development of the lower Kyalla SRR, if viable, could have significant cost advantages over that of the middle Velkerri SRR due to expected lower drilling costs.
Mudgas and core analysis indicate the reservoir is likely to be wet gas which could also improve the economics considerably.
There is also the possibility that a successful lower Kyalla SRR test could lead to a 'stacked' play development with the middle Velkerri SRR. Infrastructure sharing synergies, with a greater portion of centralised infrastructure, could result in significant cost savings and an optimised surface footprint.
Further appraisal work is required to determine the deliverability of the identified Kyalla SRRs.
Philip O'Quigley, CEO of Falcon, commented:
"Today's announcement is encouraging and follows the February 2017 Discovery Evaluation Report publication on the existence of a material gas resource in the middle Velkerri formation. We look forward to the Final Report from the scientific inquiry into hydraulic fracturing due to be published in March and the Northern Territory Government's response to the Final Report before determining the forward exploration / appraisal program."
On low volume there's a good rise in share price today
Put a smile on your face!
The report that was supposed to come in early Nov has been delayed. Now a preliminary in Dec with full report around March, I believe. Gave me a chance to get some at .255 just before it went to .20, but seems to have found its range now in .25-.26 area. Not sure what is happening in South Africa, but that was supposed to be Dec time also.
T
Anybody know why so much volume yesterday with a down trend? Obviously somebodies wanted out.?
Article on pressure to lift ban coming from prime minister:
http://www.abc.net.au/news/2017-09-14/malcolm-turnbull-again-puts-pressure-nt-lify-gas-moratorium/8944028
T
Thanks, GC!
T
Sure, here you go.
Origin Energy sizes up Beetaloo gas prizefacebook email twitter
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by Angela Macdonald-Smith
July 20 2017 - 12:00AM
Origin Energy could be sitting on a multi-billion dollar gas resource in the Northern Territory, several times the size of the North West Shelf and with the potential to keep the energy-short eastern states market well supplied for years.
All it needs now is the green light to get gas flowing.
Origin chief geologist David Close is excited about the prospects for Beetaloo. Photo: Peter Eve
Speaking at the site of Origin's successful Amungee well, drilled last year, chief geologist David Close likened the resource to an "elephant" and said it was hard to argue that the unconventional well is not the country's most successful.
"It's undoubtedly met and exceeded expectations, and there has been a lot of disappointing results from shale," Dr Close told reporters.
Chief executive Frank Calabria said that in the early stages of work, the resource "looks very exciting", particularly given the east coast is crying out for more gas.
"I'll leave it to others to speculate as to the overall scale of that potential: Suffice to say it's caught people's attention across the industry and investors about what it could be," Mr Calabria said. "It is potentially material and potentially valuable."
While activity at the Beetaloo Basin project about 600 kilometres south-east of Darwin has been scaled back due to the NT's fracking moratorium, Origin is keenly eyeing a potential resumption of work. But that depends on the outcome of the government's ongoing scientific inquiry, which was driven by intense community concerns about risks to land and water resources.
Premier shale play
The Beetaloo Basin has rapidly emerged as the country's premier shale play, despite the early stage of work, with results matching some of the best in the US. The NT scientific panel estimated the Northern Territory holds more than a third of Australia's total shale gas resource, with about 70 per cent of the NT's gas in the Beetaloo region. The panel said it could start commercial production in five to 10 years.
Origin's preliminary estimate of 6.6 trillion cubic feet of gas as a "contingent resource" was based on a 57-day production test at the fracked Amungee horizontal well, squeezed in just before the moratorium. That volume – enough to supply Australia's domestic gas needs for more than five years – assumes just one layer of a single shale, called Velkerri, over an area of just 2000 square kilometres.
But Origin's three permits cover more than 17,000km², while another shallower layer, called Kyalla, could also be productive and hold valuable condensate as well as gas. Citigroup has estimated the permits may yield over 100 Tcf of recoverable gas.
"There is certainly a large volume of gas in the Velkerri formation. It's really material; you cannot put a number on it," Dr Close said at the well site, on pastoral land about 50km east of Daly Waters.
"It's like trying to identify an elephant by its toenail."
The results from the well have gone some way to putting to bed doubts that the 1.4 billion-year-old rocks in the Velkerri formation, lying about 2.4km underground, would be too old to yield productive flows of gas, and have attracted attention worldwide. But Dr Close cautioned it was still too early to declare the gas commercial.
Citigroup has calculated that the economics of Beetaloo gas would be "challenged" by high pipeline costs, while Wood Mackenzie's Saul Kavonic said that even if the moratorium were lifted tomorrow, large commercial volumes of NT gas are "probably at best a second half of next decade story".
Third parties show interest
Still, Origin, which will own 70 per cent of the permits once it completes a deal to buy out South Africa's Sasol, is thought to have fielded interest from third parties in the project.
"We're open to considering the right joint venture structure," Dr Close said.
Origin and its remaining partner, Ireland's Falcon Oil & Gas, still have another five wells to drill under their original five-year, nine-well commitment, with the remaining work costing up to $120 million. If the moratorium is relaxed in 2018, drilling could resume in 2019, Dr Close said.
He described many of the preliminary recommendations in the inquiry's interim report, released last Friday, as "pretty reasonable", confirming industry views that the inquiry has not raised insurmountable obstacles.
Despite its reputation as remote, the Beetaloo Basin lies close to the Stuart Highway and just north of Tennant Creek, where an $800 million pipeline is being built to take NT gas to the east coast. Beetaloo gas could also be piped up to Darwin for LNG.
"The market will take care of that, where the demand is, whether that's east or north," Dr Close said.
Just picked up a small position this morning. Any guesstimations on how long until the moratorium is lifted?
GC, came up as subscriber only. Any way to copy and paste?
T
T, the interim report came out Friday and basically said to hold on and wait some more, which scared some flippers off but it has rebounded nicely today. After sifting through the interim report, i still see the moratorium being lifted, but possibly for the Beetaloo only, which is still great for us.
Still slow going until some real news drops but until then here's a decent read.
https://www.google.com/amp/s/amp.afr.com/business/energy/gas/origin-energy-sizes-up-beetaloo-gas-prize-20170718-gxdulh
Interesting action. I have been thinking news was imminent but thought the powers that be would want some cheap stock. Well, they walked it down to .205 so far. Gave me a chance to buy. I predict news in two weeks.
T
I just realized that Lamesa bought the stock about a nickel, Canadian, higher than going price. Interesting.
T
Winter cant come fast?
No problem T. Been slow over the summer but hoping things start to heat up here with the interim report and the final report end of year, which should lift the moratorium.
Thanks for info, GC.
T
It's actually closer to 17%.
Keep up to date on all things related to the inquiry here. This article says an interim report should be out next week.
https://frackinginquiry.nt.gov.au/news/community-update-13
16% outstanding shares sound really good.. IMO
Must be talking about this. The interim report is due soon too, I'll check the date.
Marketwired.com/press-release/lamesa-acquires-shares-of-falcon-oil-gas
PANAMA, REPUBLIC OF PANAMA--(Marketwired - July 11, 2017) - Lamesa Holding S.A. ("Lamesa Holding") announced today that it has acquired beneficial ownership of 157,083,634 common shares (the "Shares") in the capital of Falcon Oil & Gas Ltd. ("Falcon") from Renova Assets Ltd. ("Renova"), a company acting in concert with Lamesa Holding. Lamesa Holding and Renova effected the transaction pursuant to a share sale and purchase agreement dated July 11, 2017, pursuant to which Renova is transferring the Shares to Lamesa for aggregate consideration of CAD$65,078,745.3 or CAD$0,41 per Share. Immediately after giving effect to the Share transfer, Lamesa Holding holds beneficial ownership and control of an aggregate of 157,083,634 Shares, representing approximately 16.92% of the issued and outstanding common shares of Falcon as publicly disclosed by the Issuer as of July 11, 2017. Shares of Falcon are listed on the TSX Venture Exchange. Lamesa Holding intends to hold the Shares referred to above for investment purposes, and Lamesa Holding, and/or one or more of its subsidiaries or affiliates may, depending on market and other conditions, increase or decrease its beneficial ownership of Shares or other securities of the Issuer whether in the open market, by privately negotiated agreement or otherwise. Lamesa Holding having its resident agent's office at PH ARIFA, 9 and 10 Floor, West Boulevard, Santa Maria Business District, Panama, Republic of Panama. For a copy of the early warning report filed on SEDAR, please contact Ms. Oksana Vasilieva at +357 24 692 900 or by O.Vasilieva@ream.com.cy. The issuance of this news release is not an admission that an entity named herein owns or controls any securities described herein or is a joint actor with another named entity.
GC, you heard anything about a prelim report on Beetaloo coming out shortly? A poster on Stockhouse seems to think one may be coming out that could double price if good. Another one mentioned something filed at sedar but I think that might be about the general and special shareholders meeting.
T
Anyone hear about some wind disaster in Southern Australia.
There is something on utube about it being an economic disaster. May lead to lifting the moratorium.
T
News from SA:
http://af.reuters.com/article/investingNews/idAFKCN18B0U8-OZABS?pageNumber=1&virtualBrandChannel=0
Sorry, couldn't get it to cut so went with copy.
T
Yeah, my uncle had sent me the announcement from the Falcon site. Not sure what to make of it. Certainly shouldn't be bad. But, would like to know the price so we could derive a value for Falcon's piece of the pie. Market seems to like it.
T
Origin doubles down in the Beetalo, buys out Sasol. Wonder what they know and paid?
https://www.originenergy.com.au/about/investors-media/media-centre/origin-increases-interest-in-beetaloo-joint-venture.html
This could be the reason for the recent uptick as well.
http://www.abc.net.au/news/rural/2017-05-03/northern-gas-pipeline-granted-licence-from-territory-government/8492572
Good catch. Might explain renewed interest. Could be for drilling or buying of some more acreage. Very interesting. Would make sense they would know more about timing of moratorium stoppage than the public. I like to see volume come back. Usually precedes a pop.
T
I hear ya T, the wait too can be frustrating.
Slightly OT and pure speculation but Origin is freeing up some cash and divesting some "non-core assets", could it be to pay for some new wells in the Beetalo? What do you think?
https://www.google.com/amp/www.skynews.com.au/business/business/company/2017/05/01/origin-sells-solar-farm-to-apa-for--220m.amp.html
Thanks, GC. Eventually Australia will move forward and we will get another pop. We also have the SA news down the line regarding the licensing and potential JV. Just takes patience which I am not gifted with.
T
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Falcon Oil & Gas Ltd. is a global energy company that is focused on acquiring, exploring and developing large acreage positions of unconventional and conventional oil and gas resources. We focus on areas in politically and economically stable countries that are characterized by a high regional demand for energy with existing infrastructure allowing rapid delivery of oil and gas to market. Falcon has interests in approximately 12.3 million gross acres in three major exploration projects in Australia, South Africa and Hungary. | ||
Our offices are in Dublin, Ireland and Budapest, Hungary. Shares of our company trade in Toronto on the TSX Venture Exchange (TSXV) under the ticker symbol 'FO', in London on the London Stock Exchange (AIM) under the ticker symbol 'FOG' and in Dublin on the Irish Stock Exchange (ESM) under the ticker symbol 'FAC' . |
Falcon Oil & Gas Ltd (LON:FOG) this week revealed it is sitting on a potentially massive discovery in Australia’s Northern Territory.
On Wednesday, citing figures produced by Origin Energy, its partner in and operator of 16,000-square kilometres of licences, the gross best estimate of gas in place is put at a world-class 496 trillion cubic feet (TCF).
Converting that to oil equivalent, it stacks up to 82bn barrels of the black stuff.
This breakthrough has seen the Falcon share price rise some 95%.
Here, we feature questions and answers that provide valuable insights to the project, and what investors can expect in the coming months.
Q: Wednesday’s press release was in two parts, can you tell us more about that?
A: The first part of our press release talks about the Discovery Report that was submitted to the Northern Territory Government, which was a requirement following the declaration of a discovery in October 2016.
The second part talks about the contingent resource numbers that Origin announced.
Q: Who prepared the Discovery Report?
A: The Discovery Report was prepared by the operator, Origin Energy Resources Limited on behalf of the Beetaloo Joint Venture.
Q: Why was the Discovery Report prepared and to whom was it submitted?
A: The Report was prepared in accordance with the requirements of Section 64 of the Northern Territory Petroleum Act (2016) and submitted to the NT Department of Primary Industry and Resources (DPIR).
It follows the Declaration of a Discovery submitted to the DPIR on the 7th October 2016.
Q: What are the key findings in the Discovery Report?
A: The most significant part of the Report is the estimated Original Gas in Place (OGIP).
Origin calculated a gross best estimate for OGIP of 496 TCF over an area of over 16,000 km2.
Q What work has Origin based the OGIP estimate on?
A: The JV drilled three vertical wells and one horizontal well over the past couple of years.
In addition, we carried out a hydraulic fracture stimulation on the horizontal well and then completed a 57day extended production test.
All the data from this drilling and production and testing program together with the previously acquired 1,000’s of km’s of seismic was used in determining the OGIP number.
Q: So this basically covers everything Falcon owns in the Beetaloo
A: Not at all. This OGIP number is based solely on the B shale within the middle Velkerri formation.
That is the shale formation that we carried out the extended production test on last year.
However, within the Middle Velkerri we have also identified an “A” and “C” shale.
And then there is the real potential of the Kyalla shale which has yet to be tested.
Q: Just how big is the project? 16,000 square kilometres sounds like a very large area.
A: It is equivalent to almost 4 million acres. Wales measures around 5m acres. Leinster is about 4.9m acres – so it’s a pretty big area alright.
Q: And just how big a project would 496 trillion cubic feet really be?
A: While the OGIP is a big number and has a BOE equivalent of 82 billion barrels of oil, we should look at what we think is technically recoverable.
Origin has taken a conservative view and has taken into account subsurface and surface utilisation factors to come up with a best estimate recovery factor of 16%.
Q: So that is still a pretty big number, in terms of a technically recoverable resource?
A: Yes, it certainly is. It works out to be around 85 TCF.
Q: It seems that Origin has gone further than the OGIP in the Discovery Report and has indicated a contingent gas resource
A: Yes, Origin’s own press release indicates 6.6 trillion cubic feet of gross contingent gas resources, around an area of just 1,968 square kilometres.
This is a very exciting development to be able to advance some of our resource categorisation to a contingent resource.
Q: The 6.6 TCF is just around 1,968 square kilometres - how was this area calculated?
A: This is just the area surrounding and adjacent to the Amungee NW-1H well – the well that we flow tested late last year for 57 days.
Q: Is it possible to extrapolate that number over the entire permit area of 16,000 square kilometre area?
A: It’s a bit too early to do that and we need a lot more wells drilled and extended production tests.
But based on the very encouraging results we got from the Beetaloo W-1 well 85km south of the Amungee well it is exciting.
Q: How does the Beetaloo compare to other shale plays, particularly in the US?
A: In Origin’s opinion and as set out in their own press release as one of the basis for determining a discovery the Marcellus and Barnett Shales in the USA are analogous, commercially productive fields that are similar to the Middle Velkerri B Shale reservoir.
Q: Remind us of the ownership structure, how much of the project does Falcon own?
A: Falcon farmed out 70% of this project to Origin and Sasol back in 2014 in exchange for them carrying Falcon through approximately $200m of capex.
Falcon still own 30% through our 98.1% Australian subsidiary.
Q: There’s currently a moratorium on hydraulic fracturing in the Northern Territory - what is the latest news on this?
A: The moratorium on hydraulic fracturing was introduced by the NT Government on 14 September 2016. Since then an independent Panel has been established to conduct an independent inquiry and report back to the Government.
They plan on publishing an “Issues Paper” before the end of February and then publish an interim report by the mid 2017 with a final report by the end of the year.
Q: Do you think that this discovery will influence the outcome of the moratorium?
A: The Independent panel has to look at all the issues such as the potential impact on the environment but also the potential economic impact.
This Discovery Report together with Origin’s contingent resource estimate will hopefully provide insight into the potential positive impact this unconventional resource may have on the economy of the NT and on Australia.
Q: What are the future plans for the joint venture? Will there be more drilling in 2017?
A: Pending the outcome of the moratorium currently in place, Origin has requested a suspension of all drilling operations with the DPIR and await their formal response to the request.
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