Falcon Oil & Gas Share Discussion Threads

[thecynical1] 01/9/2015 10:32

scargs - I think you may find that a lot of the holders of this are not BB posters....... : ) Encouraging RNS today in my opinion but we'll have to wait and see what the other drills bring...........

[theabbey] 27/8/2015 18:59

PERTH (miningweekly.com) – The development of shale and tight gas resources in the Northern Territory could add a combined A$22.4-billion to the state's economy over 20 years and create an additional 6 300 jobs by 2040, a new report has revealed.It is our preference that if you wish to share this article with others you should please use the following link:http://www.miningweekly.com/article/shale-tight-gas-could-boost-nt-economy-by-a22bn-2015-08-26?utm_content=bufferccf1e&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

[scargs] 08/8/2015 10:00

This is a very quiet board.

Good to see a 5% + tick up yesterday.

Not too long to wait until results of the first of the three wells.

[jimbobjames2002] 15/7/2015 18:08

Any thoughts on today's news anyone?

[shutittrev] 01/7/2015 16:04

Better. Thanks.

[loganair] 28/6/2015 11:36

Russia's richest oligarch backs Irish fracking firm Falcon Oil in gamble:

Viktor Vekselberg's Renova is one of the biggest shareholders in ESM-listed Falcon, which will soon start drilling in Australia.

Russia's richest man has emerged as a major backer of Dublin-based fracking company Falcon Oil & Gas. Viktor Vekselberg, who has a $14.7bn fortune, owns 12.24pc of the company through Soliter Holdings, part of his conglomerate the Renova group.

"He's one of those entrepreneurs who has fantastic managerial skills and works well with his team. He drives his team extremely hard.

"Like any other rational investor, he is just looking for a return on his investment. The investment managers he would appoint to an investment like this would be very highly incentivised in relation to getting a return."

So what has him involved with Falcon? Renova's Moscow spokesman didn't comment on the specific reasons when contacted by the Sunday Independent, but Falcon's high-potential portfolio probably holds the key.

The company's flagship asset is a 30pc interest in the 4.6m-acre Beetaloo basin in northern Australia. Shortly it will break ground on the first of three exploration wells due to be drilled as part of a $200m farm-out deal with Sasol and Origin, which included a $20m cash payment up front. The Beetaloo is seen in the industry as a major litmus test which will reveal much about the viability of fracking outside the USA.

Falcon won't have to a pay a penny towards the cost of the first three wells, which are designed to see if the basin is commercially viable. Next year the plan is to start fracking - drilling into the ground and shooting rocks with a high-pressure mixture of water, sand and chemicals to release the resources inside.

The Dublin-based fracker - probably the most interesting Irish-listed company of which you've never heard - is run by Philip O'Quigley, the former chief financial officer of Tony O'Reilly's Providence Resources. Chairman is John Craven, the former chief executive of Cove Energy which was sold for £1.2bn. Craven was the founder of Petroceltic and the man who floated it.

Maxim Mayorets, Vekselberg's head of mergers and acquisitions - or top dealmaker in plain English - is on Falcon's board. So is Gyorgy Szabo, a Hungarian who oversaw the extinguishing of some of the Kuwait oil fires in the early 1990s.

O'Quigley looks to have left Providence at the right time. Dublin, London and Toronto-listed Falcon is valued at €138m, nearly four times as much as Providence, with O'Reilly's company dropping precipitously in value over the last year.

Carlow native O'Quigley (52) trained as an accountant with Ernst & Young and later became financial director at Craven's Petroceltic. Then he was CFO of Providence from 2008 until he became Falcon boss in 2012. He remains on Providence's board as a non-executive director. He joined Falcon after an approach from Craven.

"Falcon was not in a good place at that time with debt on the balance sheet and the prospect of running out of cash being just two of its many challenges. But given the quality and scale of Falcon's assets, this was an opportunity too good to miss. The dynamics of running a junior oil and gas company are vast - but my four years at Providence proved to have been a great training ground for my role as CEO of Falcon as I learnt so much from working with Tony O'Reilly.

"It's an industry full of great characters and an industry that quickly grows on you like no other. The risks of failure are huge but so too are the rewards of success and it is the constant uncertainty of not knowing which is around the corner that is the thrill... the scale, the technical challenges and advances and the fact energy remains the cornerstone of economic prosperity makes it a very rewarding industry."

It's also an industry that's very different from the norm. Falcon has a market capitalisation of €138m, even though it's not producing anything. The value is based entirely on the potential of its portfolio, which may never be realised.

As O'Quigley puts it: "Falcon cannot be a small success. It will either not work at all, or be a success on a huge scale."

The Falcon boss drives a hard bargain. In 2013 he refused to give US oil giant Hess an extension on a drilling commitment in the Australian asset - effectively kicking them out the door.

"They had an activist investor on the register which was putting great pressure on them to retrench their overseas investment so they tried to buy another time extension with the wrong man," O'Quigley said. "It was a very tough decision, but the terms of the deal we did with Origin and Sasol are far better."

Fracking is controversial - opponents say there are risks of groundwater contamination. Daniel Schrag, a Harvard academic and advisor to US President Barack Obama, said there are environmental risks but that they aren't "that much worse than conventional gas."

The UK Royal Society and Royal Academy of Engineering said "the health, safety and environmental risks associated with hydraulic fracturing as a means to extract shale gas can be managed effectively in the UK as long as operational best practices are implemented and enforced through regulation."

O'Quigley says only that "debate is good and it is right to have a debate on this issue. But the debate needs to focus more on the facts and less on the myths."

Falcon's second most valuable asset is in the Karoo basin in South Africa. Its partner there is US giant Chevron. That country is suffering from a massive energy shortage and successful gas development there would be huge for Falcon. The Energy Information Administration ranks the Karoo in the top five unconventional basins in the world.

Despite the fall in oil Falcon's share price is about the same as a year ago. Davy analyst Job Langbroek has an 'outperform' rating on the stock.

"Shale gas and light tight oil and all that has been a game-changer in the industry and has really survived initial scepticism by everybody really," Langbroek told the Sunday Independent.

"Its genesis was in the US and in many ways the US is the perfect test tube. It's got the right rocks, it had the infrastructure, or most of it. It had a legislature that was friendly towards oil and gas, the local landowners get recompensed. The big question is, is it repeatable elsewhere?

"I think the answer is probably out that it's very hard to repeat it in Europe. Let's leave the UK aside for a moment as the jury's out on that. Other places where you might get it, think China, think Argentina, think Australia and South Africa. Those places have the right rocks. They probably have the right attitude to them, in the sense that either they can get it done or there's not an awful lot of people around. There are questions about markets. Where does the gas go? Are there enough companies? Is there enough service infrastructure? But a lot of those boxes are ticked by Australia - the gas can go north to Asia, they've got plenty of water, and they seem to have a friendly enough legislature.

"The model that he follows is you use shareholder funds to set up the asset play at the start, and then you do it in such a way that you've used your local knowledge and skill to set yourself up so you develop an asset that the industry wants to get involved in. And he's done that in Australia.

"It's a good deal in the sense that he's no capital upfront, it's a big uplift on the carried valuation prior to that, and when the wells get drilled and if they've discovered gas and if it becomes a viable project, then you get another value uplift.

"There's no easy comparable Irish-listed company doing unconventionals. It really puts them in another category."

[akw_aim] 18/6/2015 12:31

a real problem

[aviemore32] 18/6/2015 12:28

Spudding in just a few weeks and no interest here?

[aviemore32] 11/6/2015 18:47

New presentation

hxxp://www.falconoilandgas.com/uploads/pdf/060515.1_Falcon_Corporate_Presentation_1_June_2015.pdf

[loganair] 09/6/2015 12:41

By Malcolm Wood, Partner of HydroCarbon Capital:

Falcon Oil & Gas (LON:FOG) - All of a sudden there is a lot going on at Falcon, after I interviewed CEO Philip O’Quigley on TipTV the week before last there is activity in both its key areas. Last week it was Australia where drilling operations got under way and this week it is good news from South Africa. I understand that the Government there has Gazetted new fraccing regulations for the oil and gas industry. Publication of these means that exploration licences for shale gas can be issued to those companies that applied in the past. I take this to be good news for Falcon who have had an application in for a 7.5m acre permit in the Karoo Basin, a farm-out would probably follow, maybe to technical partner Chevron but i’m sure there will be plenty of interest in this asset.

[aviemore32] 08/6/2015 21:06

Very quiet board for a share which has as much potential as PANR!

[loganair] 03/6/2015 16:59

Moment Of Truth For Falcon Oil & Gas:


Summary:

•Drilling has started in the Beetaloo Basin by Origin Energy. Origin is local and has experience in a similar project in Queensland. Also, Origin should have an advantage with suppliers.

•The Beetaloo Basin has distinct advantages over other unconventional projects in Australia. Therefore, the recent departures of Chevron, ConocoPhillips and Shell should not be over analyzed.

•If the Beetaloo Basin becomes commercially viable, Falcon's land price per acre will rise substantially. Offers will be plentiful from producers if LNG is viable in big quantities.


I have been following Falcon Oil & Gas for a good few years now, and the next 3 to 6 months will probably make or break the company. I wrote in a previous article here how Hess Corp. pulled out of Falcon's Australia asset (Beetaloo Basin) at the last minute in 2013, but this move may have been a blessing in disguise for Falcon. The reason being that, in 2011 and 2012, Hess invested approximately $80 million in the biggest 2D seismic program in Australia's history. Hess wanted to bring in another partner after the seismic program which would have given Hess a 65% stake in Falcon's acreage. Hess delayed on this decision and eventually asked Falcon for an extension so it could source a third party. Falcon denied the extension request which was seen as a bold move by a junior company with a market cap of just over $100 million compared to Hess' $19 billion+ market cap. Therefore, Falcon ended up with $80 million of seismic data for free. Saying no to Hess in hindsight seems to have been the correct decision considering the interest from other producers and a subsequent farm out deal.

In May of last year, Falcon farmed out a deal worth $200 million with Origin Energy and Sasol. The deal carries Falcon into a nine well drilling program. Furthermore, Falcon retained a 30% ownership in the play (1.38 million acres) and also received a $20 million cash payment up front a few months ago. You can assume that Origin and Sasol would have been able to hit the ground running due to the extensive seismic program that had been already carried out. This asset had been researched thoroughly and was estimated to have 21+ billion barrels of oil and 162 trillion feet of natural gas in total. High expectations from investors have rallied Falcon's shares up to $0.15 a share from $0.09 a share recently. The risk-reward ratio definitely stacks up here in my opinion. Let's discuss some reasons why.

First of all, it has to be an advantage that Origin is involved. This company is Australian and has vast knowledge about how the oil and gas industry works in this jurisdiction. Origin's involvement will lead to more productivity and better deals with suppliers. Origin has a wealth of experience already built up in Australia. Currently, it is a major partner in the Australia Pacific LNG Project which is a $20+ billion project. Falcon's project in the Beetaloo Basin needs Origin for a couple of reasons.

1.The infrastructure is poor in the Beetaloo Basin, even though there is a gas pipeline (probably not big enough to transport big volumes of gas) running through it. Remember that this asset is 600 km south of Darwin so efficiency and productivity on the job will be essential. Origin has experience in this part of the world with regards to rigs. It will need this experience as repairs will be slow and costly.

2.Origin knows the resources are there. The question is, can the company extract oil and gas profitably? This again is where its local geology experts may have an upper hand.

Secondly, although Australia is poised to become the biggest LNG exporter in the world, the industry as a whole in Australia has received bad press due to big oil majors pulling out of projects recently. The most notable one is Chevron. Eight weeks ago, it pulled out of the Nappamerri trough natural gas project. Chevron is really tightening its finances (due to cash flow problems) at the moment to make sure capex and dividend payments continue to be met. Do I think other oil and gas producers will bail if energy prices remain low? It's a possibility, but there are a few advantages that the Beetaloo Basin has that should keep Origin and Sasol interested for a sustained period of time.

However, they undoubtedly will have the right to walk if Phase 1 doesn't go according to plan. But I don't think they will bail because...

1.The shale is on the thick side (over 100 meters in thickness);

2.There is a high degree of total organic carbon (well above the base minimum 2% level); and

3.There is evidence of low clay content shales.

Unconventional plays are not straight forward which is why you need to have as many advantages as possible before drilling starts. I wouldn't read too much into the recent Chevron withdrawal as well as the ConocoPhillips and Royal Dutch Shell withdrawals in Australia, as they were mainly a result of the current oil and natural gas price environment. Furthermore, oil and gas prices have risen substantially recently which should give producers more time when performing their drilling procedures.

As I have mentioned above, Falcon has a 30% stake in this project which amounts to 1.38 million acres. Now, if we compare the Beetaloo Basin with the largest horizontal plays in the world (the Bakken and Eagle Ford), here are how the numbers play out

Ironically, Hess is one of the 48 producers in the Bakken and is reported to be the most efficient producer thus far. The Bakken in North Dakota is 40% bigger than the Beetaloo Basin and non-producing acreage in this area can fetch $10,000+ per acre. If the Beetaloo Basin becomes commercially viable, then the price of Falcon's non-producing acreage (1.38 million acres) will become very expensive, independent of the volumes of energy found. Since Falcon is not a producer, I believe it will offload this land to the highest bidder and enrich shareholders in the process.

The advantage here over investing in the producers is that Falcon gives shareholders the possibility for substantial upside in a short period of time. I foresee results from these initial wells being released in 4 to 6 months. If they come back positive, Falcon may not be around for Phase 2 next year.

Sometimes in investing, fortune favours the bold. Although I fundamentally agree with dividend growth investing as a proven wealth building strategy, one needs a substantial amount of time and capital to make this strategy a success. I also fundamentally agree with the strategy of investing "$1 to potentially make $5". Falcon definitely offers this possibility. Therefore, I would advise investors (with strict money management) to invest in this stock now. It's a penny stock which brings its own risks such as reduced liquidity and limited historical information on the company. However, Falcon's assets (and interest among oil producers) are what make this company stand out in my opinion. With strict money management, the potential reward outweighs the risk here.

[thecynical1] 29/5/2015 07:45

finally........

[bageo] 15/5/2015 19:49

also in the Karoo:

ASX-listed Challenger Energy, whose subsidiary Bundu Gas and Oil Exploration is aiming to explore for shale gas in South Africa’s Karoo......

[loganair] 14/5/2015 17:58

Falcon Oil investors should be “very encouraged” by growing positive sentiment towards Australia’s Northern Territory, according to broker GMP Securities.

The AIM quoted Falcon is partnered in around 4.6mln acres in the region, and it is set for a drill programme later this year.

GMP’s oil and gas team, in a note, today highlights reports of a potential transaction that’s likely to raise eyebrows in the sector.

Aubrey McClendon, founder and former CEO of Chesapeake , is said to be seeking capital for a new venture targeting around 5,000 square kilometres of prospective shale acreage, via a farm-in with Pangaea Resources. GMP said this was “clearly a significant positive”.

“That this play has caught the interest of a major shale player and pioneer should be taken as very encouraging for sentiment towards Falcon Oil, whose shares have already enjoyed a 90% run in the past month,” the Canadian broker said in a note.

Falcon is named a ‘top pick’ at the Toronto headquartered brokerage.

“Falcon is a top exploration pick for us as we believe 2015 will be a defining year for the company as the Beetaloo is drilled and with a robust balance sheet, full carry and extremely material resources to get after, the announcement of securing a rig (expected imminently) should start to see a re-rating from a market starved of material exploration exposure,” it added.

According to GMP the Australian opportunity – one of three key asset groups for Falcon – is very material, and it estimates it could be worth about 68p per share.

[ulvers] 11/5/2015 16:59

Good article in oil voice today.... May account for some movement on price today.



GLA

[loganair] 11/5/2015 10:03

South Africa’s nascent shale industry may soon receive a long awaited shot in the arm, as reports suggest the government is set to approve new regulations in a matter of weeks.

Should it finally come to pass it would be great news for AIM quote Falcon Oil & Gas, an early mover with exposure to 7.5mln acres of the Karoo shale basin.

Karoo, a semi-desert region in central and southern South Africa, has been estimated to contain just shy of 400 trillion cubic feet of shale gas.

Ngoako Ramatlhodi, South Africa’s mineral resources minister, has said that the country’s new shale gas regulations has now been finalised.

“The regulations will go before Cabinet at its next meeting in two weeks,” he told reporters.

[thecynical1] 11/5/2015 07:44

imteresting tradiing in Canada..........ready to blow?

[loganair] 30/4/2015 12:53

By Malcolm Graham-Wood - Falcon Oil & Gas also updated the market and things are looking up there as well with the three wells to be drilled in the Beetaloo Basin in Australia at ‘an advanced stage’. In South Africa their license application is being processed and I hope to hear news from the company before long. I have a meeting in the diary for late May with energetic CEO Philip O’Quigley to be followed by a CEO interview on TipTV so much more about Falcon then.

[thecynical1] 30/4/2015 12:23

does anyone know when we are likely to see a definitive drilling schedule?

[nw99] 30/4/2015 09:44

Good volume pick up lately

[mr hangman] 29/4/2015 19:50

I like this one a lot, best management team in the business glad I doubled up last Friday

[loganair] 29/4/2015 11:19

For me, the most important part of the results:

Strong financial position, debt free with cash and cash deposits up 75% to US$14.8 million (FY 2013: US$8.4 million) and "Looking ahead, with our fully funded 2015 Australian drilling campaign on track to commence this summer.

Falcon Oil & Gas (LON:FOG)‘s stock had its “buy” rating restated by investment analysts at Cantor Fitzgerald Europe in a note issued to investors on Wednesday. They currently have a 21p price target on the stock.

[themadstork] 24/4/2015 07:51

Agreed. An announcement re the Beetaloo drills should be imminent. Think 10p is easily doable from here as the long news drought comes to a close.