8-K: Tamboran Resources Announces 3Q FY25 Results, Highlights Progress in Beetaloo Basin

Tamboran Resources reports successful stimulation of SS-2H ST1 well, secures funding for pilot project, and advances Phase 2 development in the Beetaloo Basin.

Summary

• Tamboran Resources Corporation announced its 3Q FY25 results, highlighting progress in the Beetaloo Basin.
• The company successfully completed a 35-stage stimulation campaign on the Shenandoah South 2H sidetrack (SS-2H ST1) well.
• The SS-2H ST1 well was soaked for 62 days before reopening in mid-May 2025.
• Tamboran raised US$55.4 million (pre-fees) through a Private Investment in Public Equity (PIPE) at US$17.74 per share.
• A binding agreement was signed to finalize the checkerboard of the joint acreage position with Daly Waters Energy, LP (DWE).
• DWE will acquire a non-operating interest in 100,000 acres for US$15 million, subject to approvals.
• Tamboran has reserved 406,693 gross acres as the Phase 2 Development Area.
• RBC Capital Markets has been engaged to commence a formal farmout process of the Phase 2 acreage.
• The company expects to be fully funded to drill and complete the remaining three wells for the Shenandoah South (SS) Pilot Project, targeting ~40 MMcf/d (~19 MMcf/d net Tamboran).
• Drilling of three wells is planned to commence in mid-2025, with stimulation of four wells planned for late 2025/1H 2026.
• As of March 31, 2025, Tamboran had a cash balance of US$25.6 million, with pro forma cash of US$96.0 million after the PIPE and acreage sale.
• First gas production from the SS Pilot Project is planned for mid-2026.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The company has made progress on key projects, secured funding, and is moving towards first gas production. However, there are risks associated with the development and potential delays.

Positives

• Successful completion of stimulation activities on the SS-2H ST1 well.
• Secured funding to progress drilling activity in the Beetaloo Basin.
• Checkerboard process completed with DWE, allowing prioritization of ~400,000 acres for Phase 2 development.
• Engagement of RBC Capital Markets to undertake a formal farmout of the Phase 2 Development Area.
• Non-binding LOI signed with Arafura for potential gas supply to the Nolans Rare Earth Project.
• Non-binding LOI signed with Linde Inc. for helium supply from proposed NTLNG project.
• Pipeline infrastructure delivered to Australia ahead of construction.
• Compressors delivered to Brisbane, Australia.

Negatives

• The remaining US$11.0 million of the PIPE is subject to shareholder approval.
• Falcon will not participate in the three well campaign, which will result in Tamboran increasing acreage in the proposed Northern Pilot Area following completion of the wells.

Risks

• The timing of upcoming catalysts is indicative and subject to change due to unforeseen events, weather delays, and key stakeholder and Joint Venture approvals.
• The company's strategy to deliver natural gas to the Australian East Coast and select Asian markets is contingent upon constructing additional pipeline capacity, which may not be secured.
• The absence of proved reserves and the risk that drilling may not yield natural gas in commercial quantities or quality.
• The speculative nature of drilling activities, which involve significant costs and may not result in discoveries or additions to future production or reserves.
• The challenges associated with importing U.S. practices and technology to the Northern Territory, which could affect operations and growth due to limited local experience.
• The critical need for timely access to appropriate equipment and infrastructure, which may impact market access and business plan execution.
• The operational complexities and inherent risks of drilling, completions, workover, and hydraulic fracturing operations that could adversely affect the business.
• The volatility of natural gas prices and its potential adverse effect on financial condition and operations.
• The risks of construction delays, cost overruns, and negative effects on financial and operational performance associated with midstream projects.
• The potential fundamental impact on the business if assessments of the Beetaloo are materially inaccurate.
• The concentration of all assets and operations in the Beetaloo, making the company susceptible to region-specific risks.
• Complex laws and regulations that could affect operational costs and feasibility or lead to significant liabilities.
• Community opposition that could result in costly delays and impede the ability to obtain necessary government approvals.
• Exploration and development activities in the Beetaloo that may lead to legal disputes, operational disruptions, and reputational damage due to native title and heritage issues.
• The requirement to produce natural gas on a Scope 1 net zero basis upon commencement of commercial production, with internal goals for operational net zero, which may increase production costs.
• The increased attention to ESG matters and environmental conservation measures that could adversely impact business operations.
• The company's early stage of development with no material revenue expected until 2026 and its limited operating history.
• The substantial additional capital required for the business plan, which the company may be unable to raise on acceptable terms.

Future Outlook

Tamboran is focused on progressing towards production from the proposed ~40 MMcf/d (gross, ~19 MMcf/d net) Pilot Project in mid-2026 and developing the Phase 2 Development Area to supply gas to the East Coast domestic gas market in 2029-30.

Management Comments

• Having successfully raised funding to progress drilling activity in the Beetaloo Basin, we are focused on delivering the largest single drilling campaign in the region to date.
• The program includes three wells drilled from the SS2 pad, commencing in mid-2025, and stimulation of up to 240 stages across four 10,000-foot horizontal wells.
• These wells are going to be critical for meeting the binding Gas Sales Agreement with the Northern Territory Government that will supply much needed gas to Darwin to keep the lights on.
• Importantly, we also completed the checkerboard of the Beetaloo Basin with DWE, allowing us to prioritize a position of ~400,000 acres (the Phase 2 Development Area) for development of gas to Australias East Coast gas market, which is forecast to be short gas by the end of the decade.

Industry Context

This announcement highlights Tamboran's efforts to develop its Beetaloo Basin assets to address the anticipated gas shortfall in the Australian East Coast market. The farmout process for the Phase 2 Development Area and the potential expansion of the Phase 1 pilot project reflect the growing interest in developing new gas sources to meet domestic demand.

Comparison to Industry Standards

• The company is targeting <25 days spud to TD timing for SS-4H, 5H and 6H wells, which is competitive with industry standards for shale gas drilling.
• The company is using Liberty Energy equipment for zipper fracturing, which is a common practice in the US shale industry to improve efficiency.
• The company is targeting optimized proppant placement at >100 barrels per minute, which is a high rate compared to some other shale plays.

Related Party Transactions

• DWE will acquire a non-operating interest in 100,000 acres for US$15 million, subject to approvals.

Stakeholder Impact

• Shareholders will benefit from the increased funding and progress towards first gas production.
• The Northern Territory Government will benefit from the increased gas supply to Darwin.
• Arafura Rare Earths will benefit from the potential gas supply to the Nolans Rare Earth Project.
• The East Coast domestic gas market will benefit from the potential gas supply from the Phase 2 Development Area.

Next Steps

• Commence 90-day flow testing of SS-2H ST1 in May 2025.
• Announce IP30 flow test results from SS-2H ST1 in June 2025.
• Commence three well drilling program of remaining proposed SS Pilot Project wells in mid-2025.
• Proposed Final Investment Decision of the SS Pilot in mid-2025.
• Commence construction of SPCF and SPP in 2H 2025.
• Stimulation of four wells and 30-day flow test of a single well in 4Q 2025 1H 2026.
• Target for first gas from proposed SS Pilot Project in mid-2026.

Key Dates

Keywords

Beetaloo Basin, Tamboran Resources, Natural Gas, Drilling, Stimulation, Pilot Project, Farmout, Acreage, Production, Energy