Tamboran Resources struck a deal last week to acquire all of Origin’s exploration permits in the Beetaloo Basin (EP 98, 117 & 76) through a joint venture with Bryan Sheffield (Founder and CEO of Parsley Energy Inc). The acquisition will see Tamboran become the largest player in the Beetaloo Basin – with permit interests over approximately 1.9 million net acres of the most prospective acreage in the basin. Tamboran will take responsibility for operatorship in the acquired assets and are immediately tasked with the drilling of the two horizontal Amungee wells.
The deal involves Origin selling their 77.5% interest in the Beetaloo assets to a Tamboran-operated JV for an upfront cash consideration of $60 million as well as a 5.5% royalty on future production from the three permits. In addition, Origin and the Tamboran JV have entered into a binding 10-year Gas Sales Agreement (GSA) for up to 36.5 Petajoules per annum.
Figure 1: Tamboran Resources: New and existing assets
The deal was accompanied by a capital raising of A$138 million for Tamboran. The proceeds will be used to fund the $60 million upfront payment to Origin as well as fund the original Origin Farm-in commitments (Stage 3 Planned Work Programme) which include the drilling of the two Amungee horizontal wells at a cost of approximately A$40 million.
From Tamboran’s perspective, there is a lot to like about this deal and in its execution. Origin’s decision to sell, driven by a broader shift in strategy away from greenfields exploration, has enabled Tamboran to build a portfolio of assets encompassing the Beetaloo’s most prospective areas. The portfolio will not only enable greater optionality in the case of full field development but will surely be seen as an attractive strategic asset for any of Australia’s LNG exporters looking to expand.
The deal sees an increased level of involvement in the Beetaloo from Brian Sheffield – founder and CEO of Parsley Energy. Bryan Sheffield is committing $60 million – $30million into the Tamboran placement as well as $30million directly into the Origin deal – making him 50-50 partner in the JV. In addition, Mr Sheffield has paid Tamboran $22 million for a 2.3% Overriding Royalty interest (ORRI) over production from all of Tamboran’s permits. This significant investment by Mr Sheffield to increase his stake in Tamboran and to directly invest in the JV should provide domestic investors with a higher degree of comfort given his outstanding record in the development and production of Parsley’s US acreage.
The involvement of Helmerich and Payne Inc (H&P) – the largest onshore drilling solutions provider in the United States – is also a significant waypoint in the project’s progression. H&P is listed in the United States, and they indicated to the US market just last month their intention to diversify internationally. Their investment of $22million into the placement is not only a huge vote of confidence in Tamboran and the Beetaloo but it will also enable Tamboran to access the powerful drill rigs and technology that is necessary for drilling the longer horizontal wells that drive improved productivity and profitability in unconventional shale gas.
There will be a big shift in Tamboran’s Resource position given Origin’s exploration activity to date and it potentially enables Tamboran to move towards development decisions more swiftly than before. The acquisition will increase Tamboran’s Net 2C Contingent gas resources by 268% to nearly 1.5 trillion cubic feet (TCF) and increase their Net Unrisked Prospective Gas Resources by 370% to 147 TCF.
Figure 2: Contingent Gas Resources
Figure 3: Unrisked Prospective Gas Resources
Overall, the acquisition appears to be a significant positive for Tamboran. With the firming up of gas supply agreements with Origin as well as the strategic drilling hook up with Helmerich & Payne, Tamboran looks now to be on track to be the Beetaloo’s first producer of commercial gas.
