Tamboran Resources Ltd (ASX:TBN) and Bryan Sheffield have agreed to acquire Origin Energy Ltd’s 77.5% interest in three Beetaloo Basin permits in the Northern Territory through a joint venture entity.
The entity will put up an upfront cash consideration of $60 million plus a future gas production royalty.
Largest acreage holder
Tamboran will, therefore, be the largest acreage holder in the Beetaloo Basin with roughly 1.9 million net prospective acres, resulting in an increase in the vicinity of 270% in Tamboran’s estimate of net 2C contingent gas resources to around 1.5 trillion cubic feet.
The JV has entered into a binding 10-year gas sales agreement (GSA) for up to 36.5 PJ per annum – 18.3 PJ per annum net to Tamboran – with Origin, Australia’s leading energy retailer.
The acquisition will be funded through an institutional placement to new and existing shareholders to raise up to $138 million before costs at $0.21 per share, representing a 22.2 and 18.2% discount to the company’s closing price and five-day VWAP, respectively, as at September 14.
The institutional placement includes a $98 million private placement of shares to strategic partners and US cornerstone investors, supported by investments of $30 million by Sheffield and $22 million by Helmerich and Payne (H&P).
Tamboran intends to launch a share purchase plan (SPP) allowing existing shareholders to participate on the same terms as the placement at $0.21 per share, targeting $3 million.
Tamboran’s major shareholders, representing more than 50% of the ordinary shares, intend to vote in favour of the placement, including Tamboran’s board and largest shareholder, Longview Petroleum (19.6% interest).
Immediate near-term catalysts include the drilling of Maverick 1V (M1V) in EP 136, currently underway, with two Amungee wells planned to commence in October 2022.
Initial production rates from the two Amungee wells are expected to be announced in early 2023.
Shale exploration still "net-zero"
The company says this will not change its ESG profile.
“Tamboran remains absolutely committed to operating sustainably,” Tamboran managing director and CEO Joel Riddle said.
“We intend to build on the deep relationships with Traditional Owners, pastoralists, other local stakeholders and the Northern Territory Government that have been fostered by Origin in the Beetaloo over its substantial, multi-year exploration and appraisal program.
“The company is committed to working constructively and transparently in all interactions as we seek to support businesses, jobs and local interests as a member of the community.
“The company’s vision for playing our part in the global transition to a lower carbon economy through the production of low CO2 natural gas resources also remains unchanged.
“Our objective is to become a net-zero carbon emissions gas producer for our equity share of Scope 1 and Scope 2 emissions when the company commences commercial sales of natural gas by integrating renewable energy and carbon offsets into any development.”
Equity alliance with Helmerich and Payne
To fund its activities, Tamboran has entered into a strategic alliance and secured US$15 million ($22 million) equity investment from a subsidiary of Helmerich and Payne, Inc., the largest drilling solutions provider in the US.
The investment forms part of Tamboran’s $138 million equity placement.
Proceeds will be channelled into development of the Beetaloo Basin. The strategic alliance with H&P, which has significant expertise in deep unconventional shale drilling, is also expected to help Tamboran accelerate development drilling in the region at a reduced cost.
Tamboran has also finalised a drilling contract with H&P for a super-spec FlexRig® for a two-year term.
The rig will mobilise into Australia for the company’s 2023 proposed drilling campaign. The drilling activity, if successful, is expected to position Tamboran for the sanctioning of the proposed Amungee Pilot Development by the end of 2023.
Once imported into Australia, H&P’s super-spec FlexRig®, with more than 2,000 horsepower and one-million-pound hookload, will be one of Australia’s most powerful onshore drilling rigs.
Capable of drilling more than 4,000-metre horizontal sections within the Mid-Velkerri 'B Shale', the rig is expected to support a material reduction in cost per unit of recoverable gas and minimise the environmental footprint.
“We are extremely excited to work with H&P to bring one of the largest US onshore drilling and service providers into the Beetaloo Basin,” Riddle said.
“The strategic alliance with H&P, alongside their $22 million equity investment in Tamboran, aims to bring unrivalled US unconventional expertise and knowledge into the development of our significant low-CO2 natural gas resource and materially reduce costs.
“The equity investment reflects H&P’s confidence in the quality and focus of Tamboran’s assets and operational team.