8-K: Tamboran Resources Completes NYSE IPO and Achieves Record Flow Rates in Beetaloo Basin

Tamboran Resources successfully listed on the NYSE, raised US$82 million, and achieved the highest normalized flow rate in the Beetaloo Basin to date.

Summary

• Tamboran Resources completed its initial public offering (IPO) on the New York Stock Exchange (NYSE), raising US$82 million before fees.
• The company issued approximately 3.4 million shares at US$24.00 per share, including the underwriters' partial exercise of the over-allotment option.
• The funds raised are intended to finance Tamboran's two-well drilling program in 2024, which will supply the proposed Shenandoah South Pilot Project.
• Tamboran announced an average IP90 flow test for the Shenandoah South 1H (SS-1H) well of 2.9 million cubic feet per day (MMcf/d) over a 1,644-foot horizontal section, which normalizes to 5.8 MMcf/d over a 3,280-foot section.
• This flow rate is the highest normalized rate produced in the Beetaloo Basin to date.
• A binding, long-term Gas Sales Agreement (GSA) was signed with the Northern Territory Government (NTG) to supply 40 TJ per day (~19 TJ per day net to Tamboran) for nine years.
• Tamboran was granted Major Project Status (MPS) by the NTG for its Beetaloo Basin assets.
• An Interim Agreement was granted by the NTG for a 420-acre site at Middle Arm, providing exclusivity until the end of 2027.
• As of June 30, 2024, Tamboran had a cash balance of A$111.6 million (US$73.9 million), excluding the US$7.4 million from the over-allotment.
• The company plans to commence drilling of the first well in Q3 2024, with stimulation activity planned for Q4 2024 and gas rate announcements expected in Q1 2025.

Sentiment

Score: 8

Explanation: The document is highly positive due to the successful IPO, record flow rates, and government support. However, the risks associated with the company's early stage of development and financial challenges temper the overall sentiment slightly.

Positives

• The successful NYSE IPO provides significant funding for the company's drilling program.
• The record flow rate from the SS-1H well demonstrates the potential of the Beetaloo Basin.
• The long-term GSA with the NTG provides a stable revenue stream.
• Major Project Status from the NTG indicates strong government support.
• The Interim Agreement for the Middle Arm site secures a key location for future development.
• The company has a strong cash position with A$111.6 million on hand.

Negatives

• The company is still in the early stages of development with no material revenue expected until 2026.
• The company requires substantial additional capital to execute its business plan.
• The company's strategy is contingent on constructing additional pipeline capacity.
• There are risks associated with drilling activities, including the possibility of not finding commercial quantities of gas.
• The company faces operational complexities and risks associated with drilling and hydraulic fracturing.
• The company is susceptible to region-specific risks due to the concentration of all assets in the Beetaloo Basin.
• The company has recurring operational losses and negative cash flows, raising doubts about its ability to continue as a going concern.

Risks

• The company's early stage of development and lack of material revenue until 2026 pose a significant risk.
• The need for substantial additional capital and the uncertainty of securing it on acceptable terms is a major concern.
• The reliance on constructing additional pipeline capacity introduces a risk of delays and cost overruns.
• The speculative nature of drilling activities and the risk of not finding commercial quantities of gas are inherent challenges.
• Operational complexities and risks associated with drilling and hydraulic fracturing could adversely affect the business.
• The concentration of all assets in the Beetaloo Basin makes the company vulnerable to region-specific risks.
• Recurring operational losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern.
• Community opposition and legal disputes related to native title and heritage issues could cause delays and operational disruptions.
• The requirement to produce natural gas on a Scope 1 net zero basis may increase production costs.

Future Outlook

Tamboran is focused on drilling the SS-2H and -3H wells in EP 98 during the September 2024 quarter, commencing pre-FEED activities for the proposed NTLNG project, and targeting FID for the 40 MMcf/d SPCF. The company expects to announce IP flow results in Q1 2025 and is targeting first production from the Shenandoah South Pilot Project by H1 2026.

Management Comments

• Tamboran successfully delivered on several key milestones during the quarter, including the highly anticipated NYSE listing.
• Tamboran raised approximately US$82 million (before fees), which is expected to fund our upcoming two well 2024 program, which includes the longest lateral section drilled in the Beetaloo Basin to date.
• We hope to demonstrate the impressive flow rates from the 500-metre section in the Shenandoah South 1H (SS-1H) well are replicable over the extended 3,000-metre horizontal section.
• The NTG continues to demonstrate strong support for our Beetaloo Basin and Middle Arm developments.
• We are progressing activities to deliver further drilling success during the second half of the year with the Shenandoah South 2 pad 1H (SS-2H) and 2H (SS-3H) wells in EP 98.

Industry Context

This announcement highlights Tamboran's progress in developing its Beetaloo Basin assets, a region gaining increasing attention for its potential natural gas resources. The successful IPO and government support position Tamboran as a key player in the Australian energy market, particularly in the context of growing demand for gas and the need for energy security. The company's focus on longer horizontal sections and advanced stimulation techniques reflects industry trends towards maximizing production from shale resources.

Comparison to Industry Standards

• The normalized flow rate of 5.8 MMcf/d from the SS-1H well is a significant achievement, exceeding previous results in the Beetaloo Basin and demonstrating the potential of the Mid Velkerri B Shale.
• Companies like Santos and Origin Energy are also active in the Beetaloo Basin, but Tamboran's recent flow rates and government support position it as a strong competitor.
• The planned 10,000-foot horizontal sections and 60 stimulation stages are comparable to advanced shale development practices in the US, indicating Tamboran's commitment to adopting best-in-class techniques.
• The long-term GSA with the NTG is similar to other supply agreements in the region, but the take-or-pay structure provides a level of revenue certainty.
• The Major Project Status granted by the NTG is a significant advantage, streamlining regulatory approvals and demonstrating government support, which is not always available to other companies in the region.

Related Party Transactions

• Payments of A$0.5 million (US$0.3 million) were made to related parties and their associates during the quarter, relating to directors fees and Managing Director remuneration.

Stakeholder Impact

• Shareholders benefit from the successful IPO and the potential for future growth.
• Employees may see increased job opportunities as the company expands its operations.
• The NTG benefits from a secure gas supply and economic development.
• Customers will have access to a new source of natural gas.
• Suppliers will have opportunities to provide goods and services to the company.

Next Steps

• Drill the SS-2H and -3H wells in EP 98 during the September 2024 quarter.
• Commence pre-FEED activities for the proposed NTLNG project with an EPC contractor.
• Target FID and place Long Lead Item (LLI) orders for the 40 MMcf/d SPCF at the Shenandoah South location, subject to funding and approvals.

Key Dates

Keywords

Beetaloo Basin, Natural Gas, IPO, NYSE, Drilling, Gas Sales Agreement, Northern Territory Government, Exploration, Production, Shenandoah South, Middle Arm, Flow Rates