For every 250 shares held in Falcon Oil & Gas (LON:FOG) investors will shortly receive just 1 new share in the re-named Beetaloo Resources Corp. This share consolidation move could prove to mark a turning point in the fortunes of this British Columbia, Canada-incorporated business, which is headquartered in Dublin, Ireland, while its technical team is based in Budapest, Hungary. That international structure is stretched even further when it is realised that Beetaloo is situated in a Sub-basin in the Northern Territory of Australia.
Not only is the current FOG listed on AIM, but it has a Toronto Venture Exchange quote as well. And in the early part of next year, the revitalised group will also be seeking a US stock exchange listing. The tidying up of its share structure through the 250-for-1 consolidation is, obviously, a forerunner of the US quote process. That new listing is expected to excite US investors into providing additional sources of capital in due course.
Falcon describes itself as an international oil and gas company, engaged in the exploration and development of unconventional oil and gas assets, with its current portfolio focused in Australia, South Africa and Hungary. Its principal interests are located in two major under-explored basins in Australia and South Africa and further interests in Hungary, covering approximately 12.3m gross acres in total. Those interests are in countries with a high regional demand for energy and, for Australia and Hungary, are close to existing infrastructure allowing for rapid delivery of oil and gas to market.
Its corporate strategy is to: explore unconventional oil and gas basins; then following successful exploration, to continue with appraisal programmes determining commercialisation options; leading on to monetising its assets prior to production.
The Beetaloo Sub-basin
At the end of August, the group announced the commencement of the 2024 drilling programme with the spudding of the Shenandoah South 2H horizontal well in exploration permit 98 in the Beetaloo Sub-basin, Northern Territory, with Falcon Oil & Gas Australia Limited’s joint venture partner, Tamboran (B2) Pty Limited. The SS1H flow test indicated that future development wells with lateral lengths of 10,000 feet may be capable of delivering average rates of 17.8MMcf/d over the first 90 days of production. The SS1H well has demonstrated steady gas flows and decline profiles in line with some of the most prolific regions of the Marcellus Shale in the US. According to Falcon, the two-well programme will be the largest single campaign in the Beetaloo Sub-basin to date.
Following the drilling of the SS2H well, Tamboran B2 will immediately move to the Shenandoah South 3H well off the same well pad location ahead of the stimulation program. Both wells will be drilled by H&P super rigs and will include a horizontal section of some 3,000m and will target the Amungee Member B-shale at an estimated target depth of 3,020m. Each well is expected to be drilled in 30 days. Initial flow test results from each well are expected in Q1/25. The wells will be stimulated with up to 60 stages utilising the Liberty Energy modern frac fleet currently being mobilised from the US to Australia. The increased efficiency and performance of the Liberty fleet is expected to result in a material increase in the completed stages per day and optimised gas flows.
An additional four-well programme is planned for 2025, which will complete the drilling for the proposed Shenandoah South Pilot Project that will supply 40m cubic feet per day to the Northern Territory Government.
CEO Philip O’Quigley stated that: “The spudding of the SS2H horizontal well, which is the first of the planned two horizontal wells to be drilled in 2024, is an exciting next step in the development of the Beetaloo Sub-basin. Following on from the success of the Shenandoah South 1H well announced earlier this year, and using the same drilling company, H&P, together with the arrival of the Liberty frac fleet, capable of materially increasing the stimulation intensity, we are really excited about being able to demonstrate the deliverability of the Amungee Member B-shale over 3,000-metre horizonal sections.”
Analyst View
James McCormack at Cavendish Capital Markets currently has a 32p Price Objective on the group’s shares. He notes that: “Falcon and its JV partners have commenced operations at the Shenandoah South (SS) Pilot Project with the spudding of the SS-2H well, the first of two 3,000m horizontal wells to be drilled, fracked and flow tested as part of the current drilling campaign. The drilling programme will benefit from significant US shale expertise through the utilisation of the H&P super-spec FlexRig Flex 3 rig and the Liberty Energy modern frac fleet. Initial flow test results are expected in Q1/25. Four further 3,000m wells will be drilled and fracked before the end of 2025, as Falcon embarks on a work programme which will see a continuous stream of activity over the next 18 months.”
A New Beginning for Falcon Oil & Gas
This £59m-capitalised company is debt-free and boasted some $11.5m of cash in the bank at the end of June this year. Its change of emphasis is sure to gradually dawn upon UK private investors, enough to help to reinvigorate the share price. It was up to 13.44p in February this year and is now dragging at around the 5.20p level. I believe there will be a flow of corporate news from the group over the next few months that will certainly engender investor interest – in my view the shares are heading a lot higher.
