Falcon Oil & Gas Ltd.: Transformational Farm-Out of Beetaloo
Unconventional Acreage, Northern Teritory, Australia
DUBLIN, IRELAND--(Marketwired - May 2, 2014) - Falcon Oil &
Gas Ltd. (TSX-VENTURE:FO)(AIM:FOG)(ESM:FAC) ("Falcon" or the
"Company") is delighted to announce that its 98% subsidiary, Falcon
Oil & Gas Australia Ltd ("Falcon Australia"), has executed
Definitive Agreements including a Farm-Out Agreement and Joint
Operating Agreements (collectively "the Agreements") with Origin
Energy Resources Limited, a subsidiary of Origin Energy Limited
("Origin") and Sasol Petroleum Australia Limited, a subsidiary of
Sasol Limited ("Sasol"), collectively referred to herein as "the
Farminees", to each farm into 35% of Falcon's Exploration Permits
in the Beetaloo Basin, Australia ("the Permits"). The Agreements
are subject to conditions inter alia Government, statutory
authority consents and relevant Stock Exchange approvals.
Transaction details
- Farminees to carry Falcon in a nine well exploration and
appraisal program over five years, detailed as follows:
- 3 vertical exploration/stratigraphic wells and core
studies
- 1 hydraulic fracture stimulated vertical exploration well and
core study
- 1 hydraulic fracture stimulated horizontal exploration well,
commercial study and 3C resource assessment
- 4 hydraulic fracture stimulated horizontal
exploration/appraisal wells, micro-seismic and 90 day production
tests
- Drilling to commence as soon as possible following completion
of the Agreements - targeting 2014 subject to the normal regulatory
requirements and rig availability.
- Drilling/testing specifically planned to take the project
towards commerciality.
- Farminees to pay Falcon A$20 million cash on completion of the
Agreements.
- Origin and Sasol to each earn 35% interest in the Permits.
- Falcon to retain a 30% interest in the Permits.
- Origin to be the Operator.
- Farminees will pay for the full cost of completing the first
five wells estimated at A$64 million, and will fund any cost
overruns. This work is expected to be completed within the first
three years.
- Farminees to pay the full cost of the following two
horizontally fracture stimulated wells, 90 day production tests and
micro seismic with a capped expenditure of A$53 million, any cost
overrun funded by each Party in proportion to their working
interest. This work programme is expected to be undertaken in year
4.
- Farminees to pay the full cost of the final two horizontally
fracture stimulated wells and 90 day production tests capped at
A$48 million, any cost overrun funded by each Party in proportion
to their working interest. This work programme is expected to be
undertaken in year 5.
- As part of the agreements to reduce the overriding royalties
from what was originally 12% to 1%, Farminees will pay their
pro-rata share (US$14 million) of the two five year call options
entered into by Falcon as part of agreements announced on 1
November 2013 with CR Innovations AG and 17 December 2013 with the
TOG Group, should Farminees and Falcon decide to exercise the call
options.
- Farminees may reduce or surrender their interests back to
Falcon only after:
- the drilling of the first five wells or
- the drilling and testing of the next two horizontally fracture
stimulated wells.
Renewal and Relinquishment:
Three (EP-76, EP-98 and EP-117) of Falcon Australia's four
Beetaloo Permits were due for renewal at 31 December 2013. As part
of the renewal process, Falcon agreed to relinquish approximately
26% of the three Permits which was not considered to be core to the
unconventional play in the Beetaloo Basin by Falcon, Origin and
Sasol. The renewal of the three Permits was completed on 30 April
2014. Falcon Australia's fourth permit, EP-99, which was due for
renewal at 31 December 2014 was surrendered as it too was not
considered to be core to the unconventional play.
Philip O'Quigley, CEO of Falcon commented:
"We are delighted that we have brought two great fit for purpose
partners, Origin and Sasol to work alongside us in the evaluation
of our highly prospective acreage in the Beetaloo Basin as we move
the project towards commercial reality.
The Farm-Out announced today marks a significant milestone in
the history of Falcon as it provides for a five year, nine well,
technically comprehensive exploration work program in the Beetaloo.
Together with A$20 million cash up front, the deal is worth up to
approximately A$200 million to Falcon.
This Farm-Out marks the end of a very busy period for Falcon. In
July 2013 we consolidated our interest in Falcon Australia and
increased our shareholding from 73% to 98%. In November and
December 2013 we completed two agreements that will result in the
reduction of the 12% privately held Overriding Royalty Interests on
the Permits to just 1%.
Origin brings with it an enormous wealth of expertise as an
Unconventional Operator in Australia. Sasol, through its interest
in the Montney unconventional shale play in North America brings
with it enormous expertise of operating unconventional shale plays
and is a world leader in gas to liquids. In addition, Origin and
Sasol offer many potential options for the monetisation of any
natural gas discovered on the Permits".
John Craven, Chairman of Falcon said:
"This is a monumental deal for Falcon. Apart from the value of
the carried, no cost drilling programme to Falcon, the real value
is that with Origin/Sasol we now have the financial and technical
fire-power to unlock the real hydrocarbon potential of the Beetaloo
Basin. I am particularly pleased that the initial focus of
evaluation will be on the Middle Velkerri formation which according
to RPS* has prospective potentially recoverable oil and gas
resources of over 12.7 billion BBLS of oil and 74.5 TCF of natural
gas in the Beetaloo.
I see this is as a win win for all stakeholders, particularly
the people of Northern Territory where any success will have a
major impact.
I would like to thank shareholders for their patience. It is
because of our belief in the potential of the Beetaloo Basin that
management has in recent months focussed on maximising
shareholders' upside to the Beetaloo play by increasing Falcon's
stake in our Australian affiliate and significantly reducing legacy
royalties, both of which were necessary to allow a successful farm
out process to occur.
Finally I would like to thank and congratulate all those who
have worked on this project for their hard work and diligence in
making this happen".
About Falcon Oil & Gas Ltd.
Falcon is an international oil & gas company engaged in the
acquisition, exploration and development of conventional and
unconventional oil and gas assets, with the current portfolio
spread between Australia, South Africa and Hungary. Falcon is
incorporated in British Columbia, Canada and headquartered in
Dublin, Ireland with a technical team based in Budapest, Hungary.
Falcon Australia is a 98% subsidiary of Falcon and is the
registered holder of three Exploration Permits covering
approximately 4.6 million acres in the Beetaloo Basin, Northern
Territory, Australia.
For further information on Falcon Oil & Gas Ltd. please
visit www.falconoilandgas.com.
About Origin
Origin Energy (ASX: ORG) is the leading Australian integrated
energy company focused on gas and oil exploration and production,
power generation and energy retailing. A member of the S&P/ASX
20 Index, the company has more than 6,000 employees and is a
leading producer of gas in eastern Australia. Origin is Australia's
largest energy retailer servicing 4.3 million electricity, natural
gas and LPG customer accounts and has the country's largest and one
of the most flexible generation portfolios with approximately 6,010
MW of capacity, through either owned generation or contracted
rights. Through Australia Pacific LNG, its incorporated joint
venture with ConocoPhillips and Sinopec, Origin is developing one
of Australia's largest CSG to LNG projects based on Australia's
largest 2P CSG reserves base.
In New Zealand, Origin is the major shareholder in Contact
Energy, a leading integrated energy company, operating geothermal,
thermal and hydro generation facilities and servicing electricity,
gas and LPG customers across both the North and South islands.
Origin is also a major operator and participant in petroleum
exploration acreage in New Zealand.
For more information go to www.originenergy.com.au
About Sasol
Sasol Limited, through its subsidiary Sasol Canada, owns a 50
per cent working interest in two natural gas fields in British
Columbia and is pursuing the opportunity to build Canada's first
gas-to-liquids (GTL) facility to convert natural gas into
high-quality transportation fuels. Sasol entered Canada in early
2011 through a $2 billion acquisition for a 50 per cent working
interest in Talisman Energy's natural gas assets in one of the most
prolific shale plays in North America: the Montney shale basin
located in northeast British Columbia. The Sasol/Talisman
partnership holds 108,000 total net acres of land in the Montney
basin with approximately 20 TCF of contingent resource. 134
production wells have been drilled to date.
Sasol Limited is an integrated energy and chemical company and
is the world's largest producer of synthetic fuels. It is the World
leader in gas-to-liquids (GTL) and coal-to-liquids (CTL) technology
with over 60 years' experience. Sasol is present in 38 Countries
and employs 34,000 people Worldwide. Sasol is listed on the JSE and
NYSE with a market capitalisation of A$36 billion.
Glossary of terms |
TCF |
Trillion cubic feet |
BBLS |
Barrels of oil |
BCF |
Billion cubic feet |
A$ |
Australian dollars |
MW |
Megawatt |
* Source: RPS Energy in its Competent Person Report ("CPR")
titled "Evaluation of the Hydrocarbon Resource Potential Pertaining
to Certain Acreage Interests in the Beetaloo Basin, Onshore
Australia and Makó Trough, Onshore Hungary" (the "RPS 2013 Report")
dated 1 January 2013 (filed on www.sedar.com and on Falcon Oil
& Gas Ltd's website at www.falconoilandgas.com). Prospective
Resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects.
Prospective resources have both an associated chance of discovery
and a chance of development. There is no certainty that any portion
of the undiscovered resources will be discovered and that, if
discovered, it may not be economically viable or technically
feasible to produce any of the resources.
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.
Certain information in this press release may constitute
forward-looking information, including comments made with respect
to the type and number of wells and expected costs of the work
program under the Farm-out and the project being brought
towards commerciality. This information is based on current
expectations that are subject to significant risks and
uncertainties that 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
www.sedar.com.
Falcon Oil & Gas Ltd.Philip O'QuigleyCEO+353 87 814 7042 or
+353 1 417 1900Falcon Oil & Gas Ltd.John CravenNon-Executive
Chairman+353 1 417 1900FTI ConsultingEdward Westropp+44 207 269
7230Davy (NOMAD & Joint Broker)John Frain / Anthony Farrell+353
1 679 6363GMP Securities Europe LLP (Joint Broker)Rob Collins / Liz
Williamson+44 20 7647 2800Cantor Fitzgerald Europe (Joint
Broker)David Porter / Richard Redmayne+44 207 894 7000
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