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Falcon Oil & Gas to raise US$10mln to support upcoming well campaign

An important and hotly anticipated new well programme is due to kick off in the coming months.

oil and gas operations
The drill programme is expected to start in 'mid-2019'

Falcon Oil & Gas Ltd (LON:FOG) is raising up to US$10mln of new capital to support its participation in an anticipated four-well horizontal drilling programme in Australia.

New shares are being priced at 14p each and it is expected that the shares will be taken up by institutional investors.

The share placing is being delivered by brokers J&E Davy, RBC Capital Markets and Cenkos Securities. A bookbuild process will open this morning.

READ: Falcon Oil & Gas nears re-start of exploration at Beetaloo

It will cover Falcon’s remaining share of costs in the well, with a substantial portion of the costs already covered via the farm-out deal with Origin Energy (the partner is committed to cover up to A$113mln of upcoming costs, spread over two stages of operations).

The explorer noted that its net cash contribution to the first US$100mln of gross capex for the Beetaloo project’s Stage 2 and Stage 3 programmes amounts to just US$5.5mln, not including contingencies.

Meanwhile, the gross capex for the combined programmes is estimated to be around US$130mln.

Beetaloo programme

Falcon retains 30% of the Beetaloo project which hosts major new shale hydrocarbon discoveries. So far the project comprises around 6.6 trillion cubic feet of discovered contingent gas resources (equating to 1.94 trillion net to Falcon).

A previous well yielded between 0.8 and 1.12mln cubic feet of gas per day over a 57 day extended production test, which produced a total of 63mln cubic feet.

Following a hiatus, caused by a prior moratorium on fracking in Australia’s Northern Territory, the company and its partner Origin Energy are now preparing to get back into the field.

The upcoming work programmes, including four new wells, aims to evaluate the potential of the liquids-rich gas fairways in both the Kyalla and the Velkerri shale plays.

This appraisal work aims to de-risk the project and pave a way towards a field development scenario.

It is anticipated that the work will begin around ‘mid-2019’.

Quick facts: Falcon Oil & Gas Ltd

Price: 8.05 GBX

AIM:FOG
Market: AIM
Market Cap: £79.04 m
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