10-Q: Tamboran Resources Reports Increased Losses Amidst Beetaloo Basin Development

Tamboran Resources Corporation reports a net loss of $15.5 million for the quarter ended December 31, 2024, as it continues to invest in exploration and development activities in the Beetaloo Basin.

Summary

• Tamboran Resources Corporation reported a net loss of $15.5 million for the three months ended December 31, 2024, and a net loss of $22.3 million for the six months ended December 31, 2024.
• These losses are primarily attributed to ongoing exploration and development expenses, including LNG feasibility study expenses of $3.2 million and a checkerboard fee expense of $6.0 million.
• The company's cash and cash equivalents decreased to $59.4 million as of December 31, 2024, from $74.7 million on June 30, 2024.
• The company is focused on developing its natural gas assets in the Beetaloo Basin, with significant capital commitments for exploration and development activities.
• Tamboran has secured a performance bond facility agreement with Macquarie Bank Limited for A$25 million, with potential for additional facilities subject to raising further capital.
• The company is subject to legal proceedings, including a merits review and an injunction application related to its Shenandoah South Pilot Project.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative due to the increased losses and dependence on future capital raises, offset by progress in development activities and securing financing.

Positives

• Tamboran secured a performance bond facility agreement with Macquarie Bank Limited for A$25 million, providing financial flexibility.
• The company received $6.2 million in R&D tax credits.
• The company successfully sold rig 403 for $8.5 million.
• A renewal application for EP 136 was approved in July 2024, granting a five-year extension.

Negatives

• Tamboran Resources reported a net loss of $15.5 million for the quarter ended December 31, 2024.
• The company's cash and cash equivalents decreased to $59.4 million as of December 31, 2024.
• The company incurred $3.2 million in LNG feasibility study expenses and $6.0 million in checkerboard fee expenses.
• The company is facing legal challenges related to its Shenandoah South Pilot Project.
• The company recognized a foreign currency translation loss of $29.2 million for the three months ended December 31, 2024.

Risks

• The company's ability to continue as a going concern is dependent on obtaining additional capital.
• The company is subject to legal proceedings that could impact its operations.
• The company faces risks associated with exploration and development activities, including drilling failures and environmental risks.
• The company's strategy relies on constructing additional pipeline capacity, which may not be secured.
• The company's assets and operations are concentrated in the Beetaloo Basin, making it susceptible to region-specific risks.
• The company has identified a material weakness in its internal control over financial reporting.

Future Outlook

The company estimates needing to invest approximately $50.0 million for the remainder of the fiscal year ended June 30, 2025, to progress its development plans and expects existing cash on hand to be sufficient to fund planned fracture stimulation and flow testing of SS-2H ST1 and SS-3H.

Industry Context

Tamboran Resources is focused on developing unconventional gas resources in the Northern Territory of Australia, aiming to support the net-zero CO2 energy transition in Australia and Asia-Pacific. The company's activities are part of a broader effort to develop Australia's natural gas resources for both domestic consumption and export.

Comparison to Industry Standards

• It is difficult to compare Tamboran's results directly to industry standards due to its early stage of development and lack of revenue generation.
• Comparable companies in the exploration and appraisal phase often exhibit similar financial characteristics, including net losses and significant capital expenditures.
• Companies like Santos Limited, which operates EP 161, could be considered a benchmark for operational efficiency and project management in the region.
• However, a true comparison would require a detailed analysis of Tamboran's operational metrics, such as drilling costs, completion rates, and flow rates, against industry averages for unconventional gas development.

Legal Proceedings

• The Environment Centre Northern Territory (ECNT) lodged an Originating Application in the Northern Territory Civil and Administrative Appeals Tribunal (NTCAT) for a merits review of the Minister for Environment, Climate Change and Water Securitys (Ministers) approval of TB1 Operators Shenandoah South Exploration & Appraisal Program EP98 and EP117 Environment Management Plan (Shenandoah EMP) (NTCAT Merits Review).
• On December 6, 2024, Lock the Gate Alliance Ltd (Lock the Gate) lodged an Originating Application in the Federal Court of Australia seeking an injunction under s475(2) of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act), to restrain TB1 Operator from conducting the Shenandoah South Pilot Project and a declaration under s 21 of the Federal Court of Australia Act 1976 (Cth) that the Shenandoah South Pilot Project is an action which involves unconventional gas development and is likely to have a significant impact on a water resource within the meaning of ss 24D and 24E of the EPBC Act.

Related Party Transactions

• The Group transacts with two shareholders identified as related parties, H&P and Mr. Bryan Sheffield (Mr. Sheffield).
• During the three months ended and the six months ended December 31, 2024 , the Group transacted with DWE, which is wholly owned by Formentera Australia Fund, LP, which is managed by Formentera Partners, LP, a private equity firm of which Mr. Sheffield serves as managing partner.

Stakeholder Impact

• Shareholders: The increased losses and dependence on future capital raises could negatively impact shareholder value.
• Employees: The company's ability to continue operations and execute its development plans is crucial for job security.
• Customers: The company's success in developing its natural gas resources could contribute to a stable and reliable energy supply.
• Suppliers: The company's capital commitments represent potential revenue opportunities for suppliers of goods and services.
• Creditors: The company's ability to repay its debts is dependent on its success in developing its natural gas resources and generating revenue.

Next Steps

• The company plans to continue its exploration and appraisal drilling program.
• The company plans to develop and commercialize its assets, including the SPCF, pipelines, and the proposed NT LNG facility.
• The company plans to opportunistically invest in additional natural gas assets adjacent to its current positions.

Key Dates