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Scale of Falcon Oil & Gas's resource far bigger than expected, says WH Ireland

WH Ireland said: "In our opinion, the scale of the resource is much greater than we had anticipated..."
Scale of Falcon Oil & Gas's resource far bigger than expected, says WH Ireland
Falcon is developing world class oil & gas resources the in Beetaloo Basin in Australia

Scribes at broker WH Ireland are upbeat on Falcon Oil & Gas's (LON:FOG, CVE:FO) announcement today, which encouragingly points to what lies beneath its acreage in the Northern Territory’s Beetaloo Basin.

Citing figures produced by Origin Energy, its partner in and operator of 16,000-square kilometres of licences,  Falcon revealed a gross best estimate of gas in place at a world-class 496 trillion cubic feet (TCF).

That was for the Velkerri B shale horizon within three key licences - EP76, EP98 and EP117 - just one shale horizon, within acreage that is home to multiple plays.

WATCH - Falcon Oil & Gas boss 'more than pleased' with Beetaloo Basin gas in place report

"In our opinion, the scale of the resource is much greater than we had anticipated even if we knew the licence position was massive," said analyst Brendan Long, who also highlighted that the resource assessment was focused on just one single shale horizon.

Long believes that sort of scale attracts capital and the resource is "clearly strategically significant for energy importing countries.

"It would move the dial even for big LNG importers," he says.

He adds that the domestic gas shortage crisis is Australia also creates an interesting backdrop.

Most importantly, he reckons, is that the resource is concentrated with high recovery rates with contingent resources (2C) of 11%, implying a recovery of 3.35 bcf (billion cubice feet) per square kilometre.

The technically recoverable estimates imply a recovery factor of 16% and a recoverable resource of 0.877 mmboe (million barrels of oil equivalent) per square kilometre.

"We believe that having 2C estimates would have been an excellent result at the end of the two-phase drilling program, to be there around the half-way mark suggests the asset quality is increasingly obvious."

Falcon has a 29.43% working interest in the Beetaloo project. Origin is a 35% joint venture partner.

Shares in Falcon in London added almost 24% to 6.5p each in early deals.

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