8-K: Tamboran Resources Advances Beetaloo Basin Project, Targets First Gas in 2026

Tamboran Resources reports progress in its Beetaloo Basin project, including drilling advancements, pipeline agreements, and a strategic MOU with Santos, aiming for first gas production in the first half of 2026.

Summary

• Tamboran Resources Corporation announced its financial and operating results for the quarter ended December 31, 2024.
• The company successfully drilled and cemented the SS-2H ST1 and SS-3H wells in EP 98, with the SS-3H well featuring a 10,000-foot horizontal section.
• Stimulation activities commenced in January 2025 using Liberty Energy's equipment, with 35 stages completed on the SS-2H ST1 well.
• Precautionary steps were taken to pause SS-3H completion operations due to stress in the casing connection, with reinforcement planned for Q1 2025 and recommencement of stimulation in Q2 2025.
• Tamboran entered binding agreements with APA Group for the construction of the Sturt Plateau Pipeline (SPP) to support the Shenandoah South (SS) Pilot Project.
• A US$23 million line of credit from Macquarie Bank was secured, partly to cover guarantees for the SPP construction.
• A non-binding MOU was signed with Santos to explore a potential Darwin LNG Train 2 expansion and collaborate on EP 161 acreage.
• The company's cash balance as of December 31, 2024, was US$59.4 million, following a US$6.2 million R&D tax credit receipt.
• The SS-3H well was drilled in 25 days, which is 43% faster than the SS-2H well.
• The SS-2H ST1 well achieved a Beetaloo Basin record average proppant intensity of 2,706 lb/ft, approximately 26% higher than the SS-1H well.
• Tamboran and Daly Waters Energy (DWE) have contracted all foundation capacity on the SPP from the commencement of operations until at least 2041.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with significant progress in drilling and infrastructure development. However, the pause in SS-3H completion and the need for additional funding introduce some uncertainty.

Positives

• Successful drilling of SS-2H ST1 and SS-3H wells demonstrates operational progress.
• Record proppant intensity achieved in SS-2H ST1 well indicates improved stimulation techniques.
• Binding agreements with APA Group secure pipeline infrastructure for gas delivery.
• Committed line of credit from Macquarie Bank provides financial flexibility.
• MOU with Santos opens potential for LNG expansion and collaboration.
• Strong cash position of US$59.4 million ensures funding for near-term objectives.
• Drilling efficiency improvements in SS-3H well reduce costs and timelines.
• The company completed a 10-month Methane Satellite Monitoring Campaign across the Company's assets in the Northern Territory and across 78 satellite observations no methane emissions were recorded from Tamboran assets.

Negatives

• Pause in SS-3H completion operations due to stress in the casing connection indicates potential operational challenges.
• The company anticipates a ~US$0.5 million (net to Tamboran) cost impact associated with SS-3H evaluation and remediation.

Risks

• Potential delays in recommencing SS-3H stimulation activities could impact timelines.
• Reliance on APA Group for pipeline construction introduces counterparty risk.
• The MOU with Santos is non-binding, meaning there is no guarantee of further collaboration or expansion.
• The company is evaluating a range of options to fund remaining SS Pilot development drilling and associated infrastructure.
• The company is exploring potential farm-out opportunity to accelerate Phase 2/3 resource maturation and partnerships.

Future Outlook

Tamboran is progressing towards production from the proposed ~40 MMcf/d (gross, ~19 MMcf/d net) Pilot Project in 1H 2026, with final approvals expected in 2Q 2025 and a Final Investment Decision in mid-2025. The company is also evaluating options to fund remaining SS Pilot development drilling and associated infrastructure and exploring potential farm-out opportunities to accelerate Phase 2/3 resource maturation and partnerships.

Management Comments

• Joel Riddle, Chief Executive Officer, stated that the company maintained momentum towards first gas production in the Beetaloo Basin.
• Joel Riddle noted that lessons from the original SS-2H well were incorporated into drilling of these two wells, resulting in a material step change in drilling efficiency.
• Joel Riddle stated that Australia must embrace responsible domestic gas production, particularly from regions like the Beetaloo Basin.

Industry Context

Tamboran's activities align with the broader industry trend of developing domestic gas resources to enhance energy security and reduce reliance on international imports. The MOU with Santos reflects a collaborative approach to LNG expansion, which is a key area of growth in the energy sector. The potential development of data centers powered by natural gas highlights the evolving energy needs of the digital economy.

Comparison to Industry Standards

• Tamboran's acreage position of approximately 1.9 million net acres in the Beetaloo Basin is comparable to leading U.S. independent gas producers in shale regions like Marcellus and Utica, such as EQT.
• The company's drilling speed improvements, with the SS-3H well drilled 43% faster than the SS-2H well, demonstrate progress towards U.S. operational efficiencies.
• The average proppant intensity of 2,706 lb/ft achieved in the SS-2H ST1 well is a Beetaloo Basin record and reflects a focus on optimizing stimulation techniques, similar to practices in established shale plays in the U.S.

Stakeholder Impact

• The project will generate revenue through royalties for Native Title Holders and the Northern Territory Government.
• The project will create employment opportunities for Traditional Owners.
• The Northern Territory will benefit significantly from this new source of supply, with the majority of its electricity generated from natural gas.

Next Steps

• Commence flow testing of the SS-2H ST1 well in March 2025.
• Announce IP30 flow test results from SS-2H ST1 well in April 2025.
• Stimulate and flow test the SS-3H well in April/May 2025.
• Announce IP30 flow test results from SS-3H well in mid-2025.
• Reach SS Pilot Final Investment Decision in mid-2025.
• Commence drilling and construction of facility and pipeline infrastructure in 2H 2025.
• Target first gas from proposed SS Pilot Project in 1H 2026.

Key Dates