8-K: Tamboran Sanctions Pilot Project, Boosts Acreage & Capital

Tamboran Resources Corporation announced its Q1 FY26 results, sanctioning the Shenandoah South Pilot Project, completing a major drilling program, and securing significant capital for future development.

Summary

• Sanctioned the Shenandoah South Pilot Project, targeting first gas sales to the Northern Territory market by mid-2026.
• Successfully completed the first batch drilling program in the Beetaloo Basin, drilling three wells (SS-4H, -5H, -6H) with 10,000-foot horizontal sections, 9 days ahead of schedule and under budget.
• Commenced the 60-stage stimulation program for the SS-6H well in early November 2025, expected to conclude by year-end, with IP30 testing in Q1 2026.
• Construction of the Sturt Plateau Compression Facility (SPCF) is 68% complete and on track and on budget for mid-2026 first gas, with the Sturt Plateau Pipeline (SPP) also progressing on schedule for practical completion by end-2025.
• Announced the expected acquisition of Falcon Oil & Gas Ltd., which will increase Tamboran's Beetaloo Basin acreage to 2.9 million net prospective acres and enhance ownership in the Phase 2 Development Farmout Area.
• Raised US$56.1 million (pre-fees) through a Public Offer at US$21.00 per share, including a US$10 million investment from new strategic partner Baker Hughes.
• Entered into subscription agreements for a Private Investment in Public Equity (PIPE) to raise up to US$32.0 million, subject to shareholder approval.
• Reported a cash balance of US$39.6 million as of September 30, 2025, with pro forma cash and expected near-term inflows totaling approximately US$140 million.
• Secured key commercial agreements including a Gas Sales Agreement with the NT Government for 40 TJ/d, a Gas Processing Agreement with SPCF Trust, and a Gas Transportation Agreement with APA Group.
• Received consent from Native Title Holders and approval from the NT Government under Beneficial Use of Gas (BUG) Legislation to sell appraisal gas, avoiding flaring.

Sentiment

Score: 8

Explanation: The filing demonstrates strong operational progress, including ahead-of-schedule drilling and significant project milestones like FID. Substantial capital raises and strategic partnerships further de-risk the development. While there are minor operational issues and future contingencies, the overall trajectory is highly positive for project execution and growth.

Positives

• Final Investment Decision (FID) reached for the SS Pilot Project, securing key approvals, Native Title Holder consent, and third-party debt funding.
• Successful completion of the first batch drilling program in the Beetaloo Basin (SS-4H, -5H, -6H) with all three wells drilled 9 days ahead of schedule and below budget.
• Strategic partnerships strengthened with Baker Hughes investing US$10 million and entering a preferred services agreement for oilfield services and technology.
• Significant capital raised through a US$56.1 million Public Offer and an additional US$32.0 million PIPE transaction, bolstering the balance sheet to fund activities to first gas sales.
• Pro forma cash balance of approximately US$140 million, including expected near-term inflows, provides strong liquidity.
• Construction of the Sturt Plateau Compression Facility (SPCF) and Sturt Plateau Pipeline (SPP) is on track and on budget for first gas in mid-2026.
• Expected acquisition of Falcon Oil & Gas Ltd. will significantly increase Tamboran's net prospective acreage to 2.9 million acres and enhance its position in the Beetaloo Basin.
• Secured an unconditional Gas Sales Agreement with the NT Government for 40 TJ/d, providing a clear path to market.
• Received Native Title Holder consent and NT Government approval to sell appraisal gas, demonstrating strong stakeholder relations and environmental responsibility by avoiding flaring.

Negatives

• A coiled tubing issue occurred in the SS-4H well during cleanout, requiring stimulation to be moved to the SS-6H well to maintain schedule.
• The PIPE transaction of up to US$32.0 million is subject to shareholder approval in January 2026, introducing a contingency.
• The Share Purchase Plan (SPP) is still open and its final proceeds are not yet fully realized.
• The stimulation of the remaining three drilled and uncompleted wells (SS-3H, -4H, and -5H) is expected to occur after the wet season, which could introduce timing dependencies.

Risks

• Movements in oil and gas prices.
• Risks associated with the development and operation of the acreage.
• Exchange rate fluctuations.
• Inability to obtain funding on acceptable terms or at all.
• Loss of key personnel.
• Inability to obtain appropriate licenses, permits, and/or other approvals.
• Inaccuracies in resource estimates.
• Share market risks and changes in general economic conditions.
• Early stage of development with no material revenue expected until 2026 and limited operating history.
• Substantial additional capital required for the business plan, which may be unable to raise on acceptable terms.
• Strategy to deliver natural gas to the Australian East Coast and select Asian markets being contingent upon constructing additional pipeline capacity, which may not be secured.
• Absence of proved reserves and the risk that drilling may not yield natural gas in commercial quantities or quality.
• Speculative nature of drilling activities, involving significant costs and may not result in discoveries or additions to future production or reserves.
• Challenges associated with importing U.S. practices and technology to the Northern Territory due to limited local experience.
• Critical need for timely access to appropriate equipment and infrastructure, which may impact market access and business plan execution.
• Operational complexities and inherent risks of drilling, completions, workover, and hydraulic fracturing operations that could adversely affect the business.
• Volatility of natural gas prices and its potential adverse effect on financial condition and operations.
• Risks of construction delays, cost overruns, and negative effects on financial and operational performance associated with midstream projects.
• Potential fundamental impact on the business if assessments of the Beetaloo are materially inaccurate.
• Concentration of all assets and operations in the Beetaloo, making the company susceptible to region-specific risks.
• Substantial doubt raised by recurring operational losses, negative cash flows, and cumulative net losses about the ability to continue as a going concern.
• 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.
• 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.
• Increased attention to ESG matters and environmental conservation measures that could adversely impact business operations.
• Risks related to corporate structure, common stock, and CDIs.

Future Outlook

Tamboran is on track to deliver first gas sales from the SS Pilot Project by mid-2026, targeting 40 TJ/d to the Northern Territory market. The company plans to complete the stimulation of the SS-6H well by end-2025, followed by IP30 flow testing in Q1 2026. The acquisition of Falcon Oil & Gas Ltd. is expected to close in Q1 2026, significantly expanding Tamboran's acreage. Further stimulation of the SS-3H, -4H, and -5H wells is planned for 1H 2026. The company is also progressing an application for a research and development rebate, which could provide incremental cash inflows. Santos, as operator of EP 161, plans a three-well program in 2026 with stimulation in the 2027 dry season. Tamboran is exploring partnership opportunities for additional LNG work, including commencement of FEED activities.

Management Comments

• "This quarter marks a significant milestone for Tamboran as we officially sanctioned the Shenandoah South Pilot Project, paving the way for first gas sales to the Northern Territory market in mid-2026."
• "Our commitment to work closely with the Native Title Holders and Northern Territory Government was recognized with the agreement to avoid flaring and consent to sell appraisal gas from the proposed Shenandoah South Pilot Project."
• "We completed the largest drilling program in the history of the Beetaloo Basin, successfully delivering three 10,000-foot horizontal wells, batch drilled with the H&P FlexRig, and have commenced the stimulation of the SS-6H well."
• "The three wells are fundamental to delivering gas to the local Northern Territory market, which is predominantly powered by gas."

Industry Context

The announcement positions Tamboran as a significant player in the Beetaloo Basin, a key unconventional natural gas resource in Australia. The successful FID and progress towards first gas sales in mid-2026 align with broader industry trends focusing on securing domestic energy supply and developing new gas basins. The strategic partnerships with major oilfield service providers like Baker Hughes and Liberty Energy, and infrastructure partners like APA Group, reflect a common industry approach to leverage specialized expertise and technology for efficient resource development. The planned acquisition of Falcon Oil & Gas Ltd. indicates a consolidation trend to achieve scale and optimize acreage positions in emerging basins. The focus on ESG, including avoiding flaring and aiming for Scope 1 net zero production, reflects increasing investor and regulatory pressure on environmental performance in the energy sector.

Comparison to Industry Standards

• The successful batch drilling program in the Beetaloo Basin, completing three 10,000-foot horizontal wells 9 days ahead of schedule and below budget, demonstrates efficiency comparable to leading unconventional drilling operations in North America.
• The application of new Baker Hughes anti-vibration drilling technology, which contributed to SS-6H achieving the fastest horizontal section in the Mid Velkerri B Shale to date (>3,750 feet in a day), indicates adoption of best-in-class drilling practices seen in mature shale plays like the Permian Basin.
• The partnership with H&P for super-spec FlexRigs and Liberty Energy for a modern frac fleet mirrors the strategy of many U.S. shale producers to utilize advanced, efficient equipment to reduce costs and improve well performance.
• The target proppant intensity of 2,250 lb/ft for the SS-6H stimulation is in line with high-intensity completion designs used in successful unconventional plays globally to maximize reservoir contact and production.
• The acquisition of Falcon Oil & Gas Ltd. to consolidate acreage and increase ownership in the Beetaloo Basin is a common strategy in the oil and gas industry to achieve economies of scale and optimize development plans, similar to consolidation seen in the Permian Basin among companies like ExxonMobil and Pioneer Natural Resources.

Management Changes

Corporate Governance

Related Party Transactions

• The PIPE transaction includes a US$6.6 million investment from Tamboran's largest shareholder, Mr. Bryan Sheffield, and Mr. Scott Sheffield, a member of the Company's Board of Directors. This is subject to shareholder approval under ASX Listing Rule 10.11.

Stakeholder Impact

• Shareholders: Potential dilution from Public Offer, PIPE, and SPP, but also increased capital and strategic partnerships to de-risk and accelerate development. Falcon shareholders will receive Tamboran shares.
• Native Title Holders: Consent secured for appraisal gas sales and ongoing engagement for longer-term production via an Indigenous Land Use Agreement, indicating positive relations and benefit sharing.
• Northern Territory Government: Secured Gas Sales Agreement for 40 TJ/d, providing energy security for the region. Government also guaranteed Tamboran's share of SPCF debt facility.
• Employees: Management changes with interim CEO appointment and new non-executive directors.
• Customers (NT market): On track to receive first gas sales from mid-2026, providing a new energy source.
• Suppliers/Partners (Baker Hughes, Liberty Energy, H&P, APA Group, Bechtel): Strengthened strategic alliances and contracts, indicating ongoing business and collaboration.
• Creditors: Secured significant debt financing for SPCF, backed by NT Government guarantee for Tamboran's share, potentially improving credit profile.

Next Steps

• Complete the SS-6H stimulation program by end-2025.
• Conduct IP30 flow test for the SS-6H well in 1Q 2026.
• Shareholder vote in January 2026 for the PIPE transaction.
• Finalize farmout of Phase 2 Development Area in 1Q 2026.
• Complete the acquisition of Falcon Oil & Gas Ltd. in 1Q 2026.
• Stimulate the SS-3H, -4H, and -5H wells in 1H 2026, ahead of commencement of production.
• Target SS Pilot Project first gas sales of 40 TJ/d in mid-2026.
• Progress application for research and development rebate.
• Santos to undertake up to three 10,000-foot horizontal well program in EP 161 in 2026, with stimulation in the 2027 dry season.
• Acquisition of a 2D seismic survey in EP 143 in 2026.
• Tamboran exploring partnership opportunities to proceed with additional LNG work, including commencement of FEED activities.

Key Dates

Recommendation

The filing demonstrates significant progress on multiple fronts: the SS Pilot Project has reached FID and is on track for first gas, a major drilling program was completed ahead of schedule and under budget, and substantial capital has been raised. The planned acquisition of Falcon Oil & Gas will significantly expand Tamboran's strategic acreage position. Strategic partnerships with industry leaders like Baker Hughes and Liberty Energy further de-risk operations and enhance efficiency. While there are inherent risks in exploration and development, the company's execution, financial strengthening, and clear path to production in a high-demand market (Northern Territory) present a compelling investment case for long-term growth. The minor operational issue with coiled tubing and the contingency of shareholder approval for the PIPE are outweighed by the overall positive momentum and strategic advancements.

Keywords

Tamboran Resources, Beetaloo Basin, natural gas, SEC filing, Q1 FY26 results, Shenandoah South Pilot Project, FID, drilling program, SS-6H stimulation, Sturt Plateau Compression Facility, Sturt Plateau Pipeline, Falcon Oil & Gas acquisition, capital raise, Public Offer, PIPE transaction, Baker Hughes, Liberty Energy, H&P FlexRig, Northern Territory, gas sales agreement, Native Title Holders, ESG, oil and gas exploration, energy technology, corporate governance