One of the great truths of investing is that just when you think you know what’s going to happen the complete reverse happens. I was fully expecting Hess Australia to elect to commit to drilling the 5 wells required to earn their interest in the Beetaloo permits by the agreed deadline of 28th June last month. So I was as surprised as every one else that the deal never went through. Falcon had previously granted Hess an extension from August 2012 to June 2013.
In effect Falcon had bent over backwards for Hess who had invested a considerable amount of time, effort & cash ($80 million) and one could say that Hess had bent over backwards for Falcon. So what’s gone on behind the scenes?
As ever your intrepid blogger Dan the Libel man will deliver his ‘findings’ which I might add are based on what I believe. The facts reported to me by confidential sources & good old fashioned research. If FOG or Hess wish to dispute the facts then they can send in their legal teams etc. Or just push off and realize that the truth always comes out in the end.
Beetaloo Basin has the potential to be a world class oil & gas asset so why in the name of God have Hess elected not to carry on?
As I understand it both parties have been talking to other interested parties. It was widely suspected that Hess had actually been involved with farming out a slice of their deal with FOG. Of course Falcon would have us believe that they never had an idea that this was going on behind the scenes. But did they? I’m pretty sure that just before David struck down Goliath that he was fully conversant with what he was about to do.
We are talking, in relative terms, of a small AIM/TSX listed company pulling the rug from under a multi national multi billion dollar oil corporation. Hess are a big outfit. You don’t cast them aside with out knowing the potential repercussions. The Falcon Board were hastily convened and unanimously vetoed the Hess request for a 30 day extension.
So how does this effect share-holders with regard to the Beetaloo Basin as a potential world class conventional and unconventional play with significant oil and gas potential? It doesn’t effect them at all. In fact it’s very good news. Hess requested a one month extension to allow them sufficient time to conclude a farm- out deal with a third party, which they described as one of the largest oil and gas companies in the world.
Falcon’s rejection of their request was based on a simple premise; was this in the best interests of FOG share-holders? Clearly not. Hess had indicated that their farming out a slice of the Beetaloo pie would not bring any benefits to FOG other than what had previously been agreed. Hess would keep all the jam. Hess expected FOG to agree to the 30 day extension. Unknown to Hess, Falcon must have also been talking to the same Major oiler as Hess.
The opportunity for Falcon shareholders to increase their interest in what promises to be a very prolific basin enhanced and de-risked by the new seismic data is still there to be had.
And here’s why. Falcon tell us “The interpretation of 3,490 kms of new seismic data, acquired and processed at no cost to Falcon, is extremely encouraging. — Identification of a shale oil play in the northern part of the permits in addition to the shale gas and conventional plays throughout the acreage.”
Here’s a few questions to ask Falcon. 1/ How, or more to the point, where did you interpret 3,490 kms of seismic data? 2/ Is there a Data Room fully equipped and manned? 3/ Did Falcon know about HESS’s attempts to farm-out their portion of Beetaloo ?4/ Were Falcon talking to the same Major Multi-National oil company? Now there’s a thought or four.
It is an open secret that Falcon’s board are one of the best on AIM. Proven to have brought value to UK Share-holders in previous business’s by always being one step ahead of the game. They now have a debt free company with funds to match. Plus $80 million dollars of Hess investment while regaining control of the 100% working interest in the four Beetaloo exploration permits which puts Falcon back in the driving seat.
So who is going to farm-in now?
Why one of the 3/4 Majors who are currently whispered to be talking to Falcon that’s why they have a Data Room which has been open for the last few months!
Mr O’Quigley FOG CEO Commented;
“I would like to thank Hess for their significant contribution to the Beetaloo project both in terms of their technical input but also in terms of their financial investment which we estimate to be approximately US$80m to date.” I bet you would Mr O’Quigley! You’ve just played a blinder! David v Goliath!
I am now a Falcon Share-Holder and as such Mr O’Quigley, et al, I invoke the age old share-holder’s right to become a nuisance. Expect many a telephone call with emails!
For those unfamiliar with Falcon Oil & Gas you can acquaint yourself with the company by reading what’s below and clicking the link. Remember. We rarely tell you to buy or sell as I believe that investors should research and make their own decisions when investing their own money. Always research your investments! At the very least watchlist this company. 30p seems achievable. News will break soon enough on another Farmee!
About Falcon Oil & Gas Ltd.
Falcon is an international oil & gas company engaged in the acquisition, exploration and development of conventional and unconventional oil and gas assets, with the current portfolio spread between Australia, South Africa and Hungary. Falcon is incorporated in British Columbia, Canada and headquartered in Dublin, Ireland with a technical team based in Budapest, Hungary.
For further information on Falcon Oil & Gas Ltd. please visit www.falconoilandgas.com.
About the Beetaloo Basin
Falcon Australia, Falcon’s 72.7 per cent. owned subsidiary, is the registered holder of four exploration permits covering approximately 7 million acres (approximately 28,000 km2) in the Beetaloo Basin, a sparsely populated area of the Northern Territory. The Beetaloo Basin is a Proterozoic and Cambrian age tight oil and gas basin that the Board believes is well suited for unconventional oil and gas projects. RPS Energy, in its independent Competent Person’s Report (“CPR”) dated 1 January 2013, estimates gross un-risked recoverable prospective resource (play level) potential of 162 Tcf of gas and 21,345 Mmbo of oil (P50) for Falcon Australia’s Beetaloo Exploration Permits