Falcon Oil & Gas Ltd. Falcon Oil & Gas Ltd. - Beetaloo Farm-Out
April 07 2020 - 2:00AM
UK Regulatory
TIDMFOG
Falcon Oil & Gas Ltd.
("Falcon")
Beetaloo Farm-Out
7 April 2020 - Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG) ("Falcon") is
pleased to announce that its c. 98% subsidiary, Falcon Oil & Gas
Australia Limited ("Falcon Australia"), has executed an agreement which
includes a restated Farm-Out Agreement and Joint Operating Agreement
(collectively "the Agreements") with Origin Energy B2 Pty Ltd., a
subsidiary of Origin Energy Limited ("Origin") to farm down 7.5% of
Falcon Australia's 30% participating interest ("PI") in the Exploration
Permits in the Beetaloo Sub-basin, Northern Territory, Australia ("the
Permits"). Falcon and Origin are obligated to seek the Northern
Territory government and TSXV stock exchange approvals, in respect of
the Agreements.
Transaction details
-- With the necessary approvals, the PI of the respective JV partners will
be:
-- Falcon Australia 22.5%
-- Origin 77.5%
-- In consideration of Falcon Australia transferring 7.5% of its PI, Origin
will increase the gross cost cap of the work program by A$150.5 million.
-- The previous farm-in arrangement included a Stage 2 gross cost cap of
A$65.3 million and a Stage 3 gross cost cap of A$48 million, or A$113.3
million in total. Under the Agreements, the Stage 2 and Stage 3 gross
cost caps will be combined and increased by A$150.5 million to A$263.8
million (the "Overall Cost Cap"),
-- This Overall Cost Cap will be applied to the completion of the Stage 2
and Stage 3 work programmes.
-- Amounts of the Overall Cost Cap not utilised during Stage 2 and Stage 3
will be applied to future work programmes.
-- Expenditure above the Overall Cost Cap will be borne by the JV partners
in proportion to their PI.
-- Origin will assume 25% of the cost of Falcon Australia's remaining call
option to reduce the overriding royalties with the TOG Group. The cost to
Falcon Australia, should it wish to exercise the call option, will reduce
from US$7.5 million to US$5.625 million, in line with its reduced PI.
Operational Update
Drilling operations on the Kyalla 117 N2-1H ST2 well ("Kyalla Well")
were successfully completed in February 2020, reaching a total measured
depth of 3,809 metres, including a 1,579-metre lateral section (from 90
degrees) in the Lower Kyalla Formation. Water impact monitoring bore
drilling was completed in March and final preparatory work continues
ahead of the next stage of operations. On 26 March, in response to the
COVID-19 pandemic, Origin confirmed forward operations in the Beetaloo
had been temporarily paused. As a result, Origin expects a delay to the
Kyalla Well stimulation and extended production test of at least 3
months to now occur in H2 2020, and the drilling of the Velkerri Flank
well in H1 2021.
Philip O'Quigley, CEO of Falcon commented:
"Falcon Australia's farm down of 7.5% of its PI in the Permits for a
further gross cost cap of A$150.5 million, provides Falcon with
additional funding that can be applied to the completion of the Stage 2
and Stage 3 work programmes. It also demonstrates Origin's continued
commitment to the Beetaloo Sub-basin. This farm down together with
Falcon's unaudited cash reserves of US$11.5 million at 31 March 2020
leaves us well positioned to participate in the future upside potential
of the Beetaloo. We look forward to updating the market as soon as
operations recommence in the Beetaloo."
Ends.
CONTACT DETAILS:
Falcon Oil & Gas Ltd. +353 1 676 8702
Philip O'Quigley, CEO +353 87 814 7042
Anne Flynn, CFO +353 1 676 9162
Cenkos Securities plc (NOMAD &
Broker)
Neil McDonald / Derrick Lee +44 131 220 9771
This announcement has been reviewed by Dr. Gábor Bada, Falcon Oil &
Gas Ltd's Head of Technical Operations. Dr. Bada obtained his geology
degree at the Eötvös L. University in Budapest, Hungary and
his PhD at the Vrije Universiteit Amsterdam, the Netherlands. He is a
member of AAPG.
About Falcon Oil & Gas Ltd.
Falcon Oil & Gas Ltd is an international oil & gas company engaged in
the exploration and development of unconventional oil and gas assets,
with the current portfolio focused in Australia, South Africa and
Hungary. Falcon Oil & Gas Ltd is incorporated in British Columbia,
Canada and headquartered in Dublin, Ireland with a technical team based
in Budapest, Hungary.
Falcon Oil & Gas Australia Limited is a c. 98% subsidiary of Falcon Oil
& Gas Ltd.
For further information on Falcon Oil & Gas Ltd. please visit
https://www.globenewswire.com/Tracker?data=8c0Yog3k0tBp96dvcYu6NV_20iMkuIJYOLmcU7F8gNRO2wWSJS7lQ_81m1VIMffctDlboO4o8x5-ZmpSksOfrsNJgzBbt_pqTgEuTuwGAD4=
www.falconoilandgas.com
This announcement contains inside information.
About Origin Energy
Origin Energy (ASX: ORG) is a leading Australian integrated energy
company. Origin is a leading energy retailer with approximately 4.1
million customer accounts, has approximately 6,000 MW of power
generation capacity and is also a large natural gas supplier. Origin is
the upstream operator of Australia Pacific LNG, which supplies natural
gas to domestic markets and exports LNG under long term contracts.
www.originenergy.com.au
Glossary of terms
A$ Australian dollar
Cost Cap The costs up to which Origin has agreed to fund
100%. Any costs incurred above the Cost Cap will
be paid 77.5% by Origin and 22.5% by Falcon Australia
H1 First six months of the calendar year
H2 Second six months of the calendar year
JV Partners Joint venture between Origin Energy and Falcon
Oil & Gas Australia Ltd.
LNG Liquefied natural gas
MW Megawatt
TOG Group Malcolm John Gerrard, Territory Oil & Gas LLC
& Tom Dugan Family Partnership LLC
Stage 2 Drilling operations include the drilling and hydraulic
fracture stimulation of two horizontal wells to
evaluate the potential of liquids rich gas fairways
in the Kyalla and Velkerri shale plays
Stage 3 Drilling operations include the drilling and hydraulic
fracture stimulation of two horizontal wells to
prove flow rates of gas/liquids that provide a
range of commercialisation options
TSXV The TSX Venture Exchange is a stock exchange in
Canada
Advisory regarding forward looking statements
Certain information in this press release may constitute forward-looking
information. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking information. Forward-looking information typically
contains statements with words such as "may", "will", "should", "expect",
"intend", "plan", "anticipate", "believe", "estimate", "projects",
"dependent", "potential", "scheduled", "forecast", "outlook", "budget",
"hope", "support" or the negative of those terms or similar words
suggesting future outcomes. This information is based on current
expectations that are subject to significant risks and uncertainties
that are difficult to predict. Such information may include, but is not
limited to, comments made with respect to the type, number, schedule,
stimulating, testing and objectives of the wells to be drilled in the
Beetaloo Sub-basin Australia, the prospectivity of the Middle Velkerri
and Kyalla plays and the prospect of the exploration programme being
brought to commerciality, risks associated with fluctuations in market
prices for shale gas; risks related to the exploration, development and
production of shale gas reserves; general economic, market and business
conditions; substantial capital requirements; uncertainties inherent in
estimating quantities of reserves and resources; extent of, and cost of
compliance with, government laws and regulations and the effect of
changes in such laws and regulations; the need to obtain regulatory
approvals before development commences; environmental risks and hazards
and the cost of compliance with environmental regulations; aboriginal
claims; inherent risks and hazards with operations such as mechanical or
pipe failure, cratering and other dangerous conditions; potential cost
overruns, drilling wells is speculative, often involving significant
costs that may be more than estimated and may not result in any
discoveries; variations in foreign exchange rates; competition for
capital, equipment, new leases, pipeline capacity and skilled personnel;
the failure of the holder of licenses, leases and permits to meet
requirements of such; changes in royalty regimes; failure to accurately
estimate abandonment and reclamation costs; inaccurate estimates and
assumptions by management and their joint venture partners;
effectiveness of internal controls; the potential lack of available
drilling equipment; failure to obtain or keep key personnel; title
deficiencies; geo-political risks; and risk of litigation.
Readers are cautioned that the foregoing list of important factors is
not exhaustive and that these factors and risks are difficult to
predict. Actual results might differ materially from results suggested
in any forward-looking statements. Falcon assumes no obligation to
update the forward-looking statements, or to update the reasons why
actual results could differ from those reflected in the forward
looking-statements unless and until required by securities laws
applicable to Falcon. Additional information identifying risks and
uncertainties is contained in Falcon's filings with the Canadian
securities regulators, which filings are available at
https://www.globenewswire.com/Tracker?data=8c0Yog3k0tBp96dvcYu6NdQAnJSfxPbWOR0n6M7R8T1PGId47N--md5Cvx6IZah6qm2Isslxr7wMd0GlDXHdhw==
www.sedar.com, including under "Risk Factors" in the Annual Information
Form.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
(END) Dow Jones Newswires
April 07, 2020 02:00 ET (06:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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