Falcon Oil & Gas (LSE:FOG) — Investor Q&A

0:01 Good afternoon, ladies and gentlemen, and welcome to the FALCON OIL and GAS LTD investor presentation. Throughout this recorded presentation, attendees will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. Now before we begin, I would just like

0:32 to submit the following poll. And as usual, if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to CEO, Filippo Quigley. Filipp, good afternoon, sir. Good afternoon, Jake, and thank you, and welcome everybody from wherever you are. We had our AGM this morning in in Dublin, a well attended AGM. We had some people flew in from Midland, Texas, and London, which was great to see. And then we went into a presentation and a q and a, which is what I'm gonna focus on for the next thirty, thirty five minutes. So I hope you can see in front of you the presentation material, which I'll flick through. Got a bit of ground to cover this this afternoon. I'm gonna talk about our well results that we announced earlier this year. We're looking into bit of detail about the exciting pilot program that's gonna kick off the next couple of months.

1:21 Talk a little bit about this three d seismic program, which is part of our pilot program that will be out acquiring three d. And then I wanna talk about this whole US technology and experience already in the but more of it even coming again as we move through into the pilot. And then two other areas I wanna touch on today. One, dealing with the drill spacing units, what it means, how it affects FALCON, what has affected FALCON so far on the future of how the b two loop gets developed on these drill spacing units, And then an introduction to this concept, which may be new to a lot of you, outside of The US certainly is is the checkerboard, which I'll touch on. So quite a lot to get through. Q and a is certainly the end. We do have some presubmitted quest questions. I'm hoping this presentation will generate some more. Perhaps if you wait until the end of the presentation before submitting so I don't cover answering off those questions, you know, as you've already submitted them. So it'll be easier if I can just if you hold off questions until the end.

2:16 So as I said, let's start first with the results, that we announced earlier this year. Before we get into our own specific results on this map here, we look on the on the left hand side, we talk about the Amunji wells that we drilled, in in particularly the Amunji one that we went back in '21 and we tested that and had this, really, really good, flow rate of 5.2 to 5,800,000 scouts of gas a day. So that got us all pretty excited back in September 2021. You'd all remember, of course, with the unfortunate, well results from two h, which is not reservoir related. So we're pretty happy with the reservoir around this area. And we have also drilled another well at three h, which we actually haven't tested that. We've just suspended that well for the moment. If you look over to the east of the slide, in particular, the Tanumbirini wells, which are in the deeper part of the basin, these these wells are operated by Santos at 75%, and Tamborin, our 25% non operated partner.

3:13 These wells are pretty good results too, coming in at three point three and five point two million Scusso gas on the IP 30 as normalized over a thousand. So, again, very, very encouraging results as to the results from Empire as well as drilled in the shallow area of the Carpentaria area. So all results to date were all pretty good. Working with Tamron, you know, as our operator, and they take that information that they gain from from their own operator, Santos at the Tanumbirini, we moved our focus of drilling away from Amunji down to this deeper part of the basin. Similar kind of depth terrain, as the successful Tanumbirini wells, and that's when we landed our Shenandoah well. And true enough, we got fantastic results to be announced earlier this year. We were looking for, you know, kind of a north of 3,000,000, scuffs of gas a day normalized over a thousand meters, and we got 6,400,000.

4:06 So truly a a fantastic result. And that result was giving all of us, the JV partners, a confidence then to move forward with the pilot program, which, of course, I will I'll touch on. Before doing that, let me just talk a bit more detail about the results. As I said, this the thirty day IP rate came in at 6.4 normalized. We then ran it for a further sixty sorry, thirty days, and we had this IP 60 at 6,000,000 scuffs. And then another thirty days, we finished the testing at ninety days in total, and it came in at 5.8 over normalized over the ninety days. 5.8. So what that tells you is you have a nice, decline curve, which is exactly what you wanna see. When you extrapolate what that might look like in future wells, that, of course, will be 3,000 meters horizontal, you'd be looking at something in the order of 19,000,000 scus of gas a day on an IP 30. And that's kind of puts us in around some of the best wells that are being drilled in the Marcellus shale in The US.

5:00 And not only if the flow rates compare very well to the Marcellus, so too do the geological properties. You know, geological properties such as reservoir pressure, porosity, gas in place, all very positive in terms of when you look at at the very, very successful Marcellus Shale. In terms of how that slow decline looks like, this next line gives you exactly what it looks like. The blue line being the daily flow rate, and that orange line above is the cumulative flow rate over the ninety days. So nice, slow, steady decline over ninety days. And that would kind of hopefully lead that kind of a decline rate will hopefully lead to a pretty encouraging and a significant EUR estimated ultimate recovery in the kind of the high teens, seventeen, eighteen, nineteen BCF per well, yet to be determined. But that certain will be our expectations.

5:49 This next slide is just another way of looking at the, comparable flow rates we've had across the. The first two wells, the Empire wells, the Carpenturi wells, three and two, then the Tanner Merini wells, and then, of course, the last one being our Shenandoah well. And every time we drill, these wells get better. We get better at drilling them. Moving to the deeper area in our Beetaloo, the Shenandoah has Shenandoah area has certainly proven to be a very, very good and very smart move by our operator, Tampa. So all encouraging date so far. And then lastly, on the results, again, I come back to this, the geological properties of the compared to the Marcellus. And when you look at things like gas in place, porosity, saturation, TOCs, every which way you look at the beta loop, it actually beats the Marcellus.

6:39 So when we look at it, you know, it's a it exceeds or at least in line with, you know, tier one Marcellus shale properties. So, again, hugely encouraging. And it's hugely encouraging too because it's it's it's this these kind of results that's getting a lot of attraction in The US Of A, which, again, I'll talk a bit more about when I talk about the, you know, The US expertise and technology coming to the. So having dealt with that, let me now talk a little bit about the pilot program. As I said, the results we had to date earlier this year has given us all confidence to move to the pilot program. And the area of the pilot program will be just four kilometers, two and a half miles north of the Shenandoah well. We're simply just stepping across this license boundary up from E P 117 across into 98. It's the exact same geological address as the Shenandoah well. We'd expect the results to be identical or very similar to what we experienced earlier this year.

7:33 Program itself is a pretty exciting program. Six wells in total, all 3,000 meters horizontal. We'll be drilling the first two of those wells starting in the next, you know, month to two months, hopefully, before the end of July. And we'll then hopefully bring it not hopefully, but we'll be bringing in Liberty Energy, who I'll talk a bit more about coming in to frac both of those wells before the end of twenty twenty four. And then one of those wells, we most likely will put on a extended production test, which we will do that into and beyond, the the end of this year and into the new year. But initial results we expect from these two wells, we would have initial results certainly by the end of the year. And then following those two wells, we'll be back drilling in April, May next year, drilling four three thousand meter horizontal wells out then fracking all of those wells as soon as we as soon as they're ready to be fracked.

8:21 And running parallel with that drilling fracking program will be gas gathering and compression facilities to be installed. So that when we have the wells all drilled, ready to to hook up at production, we'll have the gas gathering compression facilities in place ready to go. And then the last piece of the infrastructure will be a roughly a 30 kilometer, 18 mile pipeline connecting the pilot area itself to what's known as the AGP, the Amadeus Gas Pipeline. And that's work that will will be undertaken by APA, a very, very large Australian utility company. And then the gas from the pilot, very importantly, we have signed a binding gas sales agreement with the Northern Territory government to sell gas at a rate of 40,000,000 scouts of gas a day. That's a kind of a nine year contract with an option by the Northern Territory government to extend it for a further six and a half years.

9:12 And as we probably we've identified before in in in earlier press releases, we elected to, reduce our participation in the pilot from 22 and a half percent to five. I'll explain a bit more why we did that and what it means for the future and FALCON's participation in the pilot going forward and in areas around the pilot. So just I've touched on things like the the the pipeline, the Amadeus pipeline, which runs kind of adjacent to our property that we've gotta build this 30 kilometer. APA will build this 30 kilometer pipeline to hook up, our pilot gas into that pipeline, take that gas into the Northern Territory, into the our our customer, the Northern Territory government, I said, at a rate of 40,000,000 scuffs of gas a day. Nine years plus an option to increase it to six and a half.

9:58 So that's the existing infrastructure. There's a dotted line here on this graph. That's just a, you know, a potential future pipeline past the pilot. It's not a pipeline that's been built yet or commissioned or anyone, but that would be a a a potential route. One of the routes actually to to export gas out of the will be down to this junction here called Baleara. And then the other obvious route at time will be to go north up into Darwin into the various LNG facilities there should there be capacity available to do so. Now I mentioned too as part of the program of work we're doing this year on in terms of drilling the six wells this year and next, we'll also be out shooting three d seismic in and around the area. So we're gonna acquire about 230 kilometers square kilometers of of three d covering about 80,000 acres, and that would be very useful going forward in better event identifying structures falls in the area and better look you know, having a better, idea where best to locate the next wells, what direction to drill the next wells in post the pilot. So that's a a valuable piece of data we'll be acquiring before the end of this year.

11:00 So I talked about US technology and experience, and there's a lot of it coming. It's been in the now for over two years. It started basically with Brian Sheffield coming into the back at the end of twenty twenty one when he made his initial investment in Tambo Resources. He followed that up with an investment in FALCON by the following March 2022. He's made subsequent investments in Empire, the other operator in the. He's acquired a 38.75 percent interest in our JV, and he's acquired overriding royalty interest from Tamber and from FALCON and from Empire. In total, Brian has invested of his own personal money, roughly a 125,000,000 US dollars. So that's a that's a significant endorsement for what he believes to be the potential to be.

11:47 And on top of that, Brian runs a funds called the FOG and Tera Funds in The US going after onshore US shale plays, been hugely successful. I think it was I think he's got 1,500,000,000 under management in for Monterra. And he's now set up a dedicated for Monterra Australia fund, and he raised a 120,000,000 last December to basically follow his direct 38.75% interest in the beta loop. So this is in addition to his 125,000,000 already invested. And the last point on this is, you know, Daily Waters, aka Brian Sheffield, has the option for future operatorships, which I'll talk to when I address the introduction to the checkerboard later on.

12:33 In addition to Brian coming in, from, as I said, The US expertise, US money, US know how, US experience, US success. H and P joined the Bitaloo, and were brought into the Bitaloo by Tamburun. And they came in last year. They drilled two wells. In fact, they drilled the Shenandoah well. They also drilled the the the third well of the Mungi, the Mungi 3 H well. And these are big players. These are as you can see on this slide, they got a 152 active rigs last quarter. Market cap, 3,500,000,000. And the H and P Flex rate, which Tambern acquired under contract from them is good until August 25. But Tambran then also has a ten year option to contract for additional five more rigs from H and P as we move forward post the pilot development. And H and P, in in addition to mobilizing the rig to the to to the Beadaloo, they've also invested 35,000,000 Australian dollars in Tambran over over the last year or so and appointed it their senior VP for H and P International onto the board of Tamber. So another great US endorsement of the Beetaloo.

13:35 Last, but by no means least, is Liberty Energy. These are the newest US entrants to be able to move. To me, I think they're significantly important. They bring with them they're the the fourth largest oil field service provider in North America, a large company of 3,800,000,000, turnover last year of 4,700,000,000. And they're mobilizing a fracking fleet to the as we speak, working with the likes of H and P who already done it a year ago, how to get there, mobilizing everything to Darwin. And they'll be in country in time to frac these first two wells we'll be drilling before the end of the summer. So they'll be out there fracking those wells. They have all the expertise. It's not just their fleet, their fracking fleet they're gonna mobilize. It's also their personnel. US personnel coming to the with US technology, US experience.

14:25 So it's a huge step up from where we've been. We've got Brian Sheffield, H and P, Liberty Energy. As I said, the is becoming more and more Americanized in a very, very positive way. In addition, as you see on that slide, Liberty also invested $15,000,000 cash in one of Tamil Tamra's most recent equity raises.

14:49 So that's the, as I said, The US experience and technology. I wanna talk a little bit about drill spacing units and participating interest, particularly as it relates to FALCON. As I go through this, there's a lot of numbers on these next two slides. Hopefully, they'll generate a couple of questions. Please feel free to pop those questions up when you when I've got through the presentation. But I think it's important to understand how the drill spacing units work and when and why they're introduced back in September 2022. So as Origin was exiting the and and entering was Daily Waters, a k Bryan Sheffield together with Tambern to pick up Origin's interest, We introduced this whole DSU concept into the joint operating agreement, the j o a.

15:38 And what it means is instead of us having a 22 and a half percent interest in 4,600,000 acres, We now have a 22 and a half percent interest in each and every DSU, a drill spacing unit. And by and large, most DSUs will be 6,400 acres in size, so 10 square miles roughly. There are certain circumstances where a DSU will be as big as 25,600 acres, and that happens where you have a license commitment well, a commitment to the government to drill a certain well. And if you're drilling a new in a new area and that well is nominated as a commitment well to the government, well, then it automatically creates a DSU of 25,600 acres. So to date, we've we've since the the introduction of the DSUs, the Shenandoah well will be drilled, at the end of last year.

16:29 That created a large DSU. Yes. It was a commitment well. It's not 25,600 acres. It's slightly less because the well wasn't up to a 3,000 meter horizontal, but triggers the full extent of the largest DSU. So it's a slightly smaller DSU of 20,480 acres. And FALCON owns 22 and a half percent of that because that's the level of participation. The next two wells to be drilled as in the first two wells this year, which will be hopefully July, August for the first and August, September for the second, these are commitment wells. They will be create creating two new DSUs, and each will measure 25,600 acres. So we've got 22 and a half percent interest in the first DSU. We will be having we will only have 5% in these two new DSUs, and I'll explain on the next slide why we've done that.

17:16 There is a potential that these three DSUs may be combined into one at some time in the near future. And if we do that, the simple maths across twenty twenty twenty two and a half percent or 20,000 and five percent up to fifty one thousand six hundred gives you a kind of a weighted average interest for FALCON of 10%. So we could see our interest in the enlarged if it gets enlarged to this larger area and it all gets combined into one larger DSU, our interest goes from 5% across up to two up to 10%, which is a nice kind of when we look forward, post the pilot, we can be at 10% and not to be stuck down at this 5%. But right now, we're participating at the 5% in the pilot. But post the pilot, there may be an opportunity for us if these get amalgamated into one larger DSU that will be at 10%.

18:06 There's also what we talk about the first strategic development area. I'm throwing a lot of numbers out here and new concepts out here, but I'll touch on this first strategic development area when I go and talk about the checkerboard in a couple of slides later. So just in terms of future DSUs and commitment wells, there are, I believe, beyond these two wells in '24, there's another one or two commitment wells to be drilled before the end of twenty twenty seven, which is the end of our current license term. And these wells will create two new DSUs, because they'll be drilled away from the current area, and they will also then measure 25,600 acres. But I think it's important to note that most DSUs going forward in the Beetaloo will be 6,400 acres. And even though that to some people in the oil and gas world, particularly in The US Of A, 6,400 acres might seem like an awful lot, of acres, in terms of 10 square miles, but it is a large area we have.

19:02 And when you look at 6,400 acres being one DSU, do bear in mind we've got 718 of them if they're all 6,400 acres. So we can navigate our way around whether we choose to go into a DSU or not. For example, if there's a future DSU to be drilled in '27 or '28, and for some reason, we don't like the area, we don't like the risk associated with the new area and the geology of it, we can drop down to zero. And we drop out of one seven hundred and eighteenth of our total. If we drop to zero, obviously, we have to stay at zero. Then all the areas around it, we can go in back in. When new DSUs get created, we can go back up to 22 and a half percent. So it gives huge flexibility, to FALCON today and going forward.

19:47 So, again, just to finish off on the DSU, a lot of questions came in as to why do we reduce down to 5% of this pilot program. When you look at, the gross acreage, 4,600,000 acres, which is a net 1,000,000 to FALCON. When you look at what we've given up by reducing from 22 and a half down to five, we've given up 17 and a half percent of 51,000 acres, which is roughly 9,000 acres. So we've effectively relinquished our entitlement or our rights to participate in 9,000 acres, which represents point eight seven of 1% of our total acres. So not a lot to give up, yet we still are participating. The beta that will get proven up with this pilot. Part of the reason of going to the five is to do effectively the cost of the pilot. When you look at own estimates contained in a recently published and filed s one, they're looking at a total cost to them, not for the whole pilot, but Tamron of a 165,000,000 US dollars.

20:48 Simple grossing up of that, you get close to $350,000,000. So we were to do and sorry. Included in that then is is outside of drilling and fracking is the gas gathering from oppression, which will come in at about $86,000,000. Were we to participate at 22 and a half percent across all of the pilot activity starting now until the end of next year, we would have needed to raise $78,000,000.

21:17 We also opted out apart from going from 5% on the drilling of these wells, we actually dropped to 0% on the gas gathering compression. This is kind of the midstream part, which has been taken up by Tamberin and Daily Waters. There may be an opportunity in the future where this will simply be just being warehoused by them, that they may sell this in in its entirety or mostly to a third party who come in and operate that as a midstream operator. But right now, we have elected to go to 0%. So our share of this pilot, the 5% of the pilot, the 0% of the gas gathering, in fact, it's gonna cost us 10 to 13,000,000 US dollars, which is a net cash saving of 65,000,000. And when you look at our market cap of 65,000,000 relative to a 100,000,000 market cap, that's a significant dilution we've avoided by not raising 65,000,000 and diluting our shareholders by 65%, at the same time giving up point eight seven, just 1% of our acres.

22:18 And when you park the pilot and you look past the pilot, and what does this actually mean? And the great benefit of these DSUs means that we can never get drilled out. We can never get outspent by our partners. If the capital is not there, if we don't like the geology, we drop down to zero. We don't lose anything. What do we do? We lose one seven hundred and eighteenth of our acreage. While they drill up that air area that we may not be in, they're proving out everything else around us. So we've removed the risk of not being able to keep up with our partners, and we protected our shareholders' interest in the literally for the life of the project. So I think these the significance of these DSUs is is is is huge. So if that wasn't enough in terms of numbers to slightly confuse you, I wanna now move on to the checkerboard, which is no. It's not connected to the DSUs.

23:10 The checkerboard is, again, from a US perspective, they'll be very familiar with with acres get checkerboarded out in the Permian Basin. And it is, as it suggests, it's a checkerboard. So there'll be kind of uniform squares, black and white, for example, or red and white, whatever you want. This checkerboarding concept is a fifty fifty JV between Tamron and Daily Waters. Falcon are not party to how the checkerboard gets done. It is simply an agreement at the Daily Waters, Tamron JV level. And either Daily Waters or Tambur have the right to propose implementation of a checkerboard strategy. But Daily Waters, importantly, has first selection on which checkerboard it wants, and then the second selection goes to Tambur and back and forth until all checkerboard pieces have been allocated.

24:00 Important also to note in terms of the timing, when is it likely that the checkerboard will be implemented? Well, all I can say is that there is a cash penalty must be paid by Tambran to Daily Waters of 7,500,000 or 50,000,000 in in Tamburin stock by the end of this year if the checkerboard is not implemented. And payment of these, amounts of money to Daily Waters does not alleviate the requirement of checkerboard. So, for example, if it's not done by December 31, those payments in either cash or shares have to be made, and the checkerboard still has to be executed sometime after that. So what is a checkerboard block, and what's the size of a checkerboard block? Well, each block will contain what's called in the Northern Territory Area a 10 particular blocks, and a graticular block is roughly 20,000 acres.

24:48 So each checkerboard piece will measure a huge 200,000 acres, and they will be divided evenly. And it'll be divided evenly across what we call the the Iliwa, the indigenous land use agreement area, which we've identified. It's roughly 1.2, 1,300,000 acres. It's that that area itself would be then split into six areas of 200,000 acres each. And then each of those areas, each of those checkerboard pieces will then be advanced to a production license. So I said the initial area to be checkerboard is this is 1.2, 1,300,000 acres. The balance of three point whatever it is, 3,300,000 will be checkerboarded on a future date. So we're just talking about doing the initial checkerboarding.

25:39 Hopefully, by the end of this year, it might run into next year. And what it then means is Tamron will own and operate 77 and a half percent of three of those blocks. Daily Waters will own and operate 77 and a half percent of the other three blocks. Interestingly, FALCON will be the only player to have an interest in both. So we'll have '22 and a half percent interest in both blocks. In terms of scale of these blocks, talked about the 200,000 acres. Each block contain up to 500 wells. And if one was to assume an EUR of 18 BCF, well, then potentially, you're looking at each block having a staggering nine TCF of gas just for one single block.

26:25 And there are six just in the in the initial 1,300,000 acres. I talked about the first strategic development area, 88,000 odd acres, might be a little bit less around the pilot to be excluded from the checkerboard. Because clearly, no one would want the checkerboard to include the pilot and then daily waters to have option over the pilot and tampering us out, so that can't happen. So what will happen is there's an area larger than the pilot area itself, larger than the 51,200 acres that will include the first 20,000 acres created by the first Shenandoah OIL a little bit more. And that would be split and operated by Tamburin, in the same way, as as it is now. And as I said, we may end up with instead of having 5% of the 50,000 acres, we end end up with something closer to 10,000 oh, sorry, 10% of this first strategic development area.

27:19 And then as I as I mentioned already, the balance of the of 3.3 that will remain under the existing, Tambor and JV with FALCON having 22 and a half percent and the rest being owned fifty fifty between Tamborn and Daily Waters. The big benefits of the checkerboard. Clearly, if you're going to have a checkerboard executed and Daily Water becomes an operator, well, you're have accelerated development of the Beadaloo because we're gonna have two operators, not one. We need more, but at least we're now doubling the number of operators. So the introduction of daily waters as an operator is going to increase and accelerate the development of the beta loop. More importantly, I think, is when we've looked at farm out opportunities of the beta loop. And that's what we've done over the years from back two thousand and nine and ten with Hess, Origin, Sasol farming down initially, you know, 70% to, Origin, then going down to 22 and a half percent.

28:15 When we look at future farm downs, it's never been very appealing to farm down any further than our 22 and a half percent. And the reason for this is for a meaningful farm in need to come in, they'd look for perhaps 10% as a minimum of our 22 and a half, and that will be equivalent to selling half the value of the company. Not an attractive proposition for FALCON ever to consider, and I said we wouldn't consider it. But now when you carve up the Beadaloo into these pretty sizable 200,000 acres, but there's still only 200,000 acres out of

28:45 the 4.6, I think it's gonna create a lot more m and a opportunities, a lot more farm out opportunities, both for FALCON, for Tamborum, for Daily Waters. And then it'll be because of the size of each of these of 200,000 acres, it'll be attractive for US majors to come in, perhaps alongside Tamborin, alongside Daily Waters, and alongside, indeed, Falcon where they're coming in to join an operator like Daily Waters for 20 or 30%. They might want a bit more. Daily Waters might not wanna go down below 50 or 60%. We might participate in a farm down of just one of our blocks, but certainly would never contemplate farming down out of any piece of the total of 4.6. So this checkerboard, when it gets implemented, as I said, increases the attractiveness of farm out and farm in opportunities.

29:35 So significant, increase in our optionality as we go forward. Where will the checkerboard be? Again, it's not FALCON's gift to determine the checkerboard area. I can only assume at this stage, that it's going to be around the deeper part of the basin perhaps. But as I said, I have no visibility on where it's going to be other than it's going to be somewhere in the order of the total of one point two, one point three million acres, which is roughly this this area, this deeper part of the basin here. But as I said, excluding the strategic development area around the current pilot. So that's pretty much everything today in terms of updating you. A lot of exciting stuff going on with the pilot, which will kick off in earnest in the next month or two with the drilling of the first of two wells. And And as I said, Liberty Energy will come on-site. We're ready to track those wells before the end of the year. We should have initial flow rates by the end of the year.

30:34 We will, as I said, do an extended production test on at least one of those wells into the new year, but we'll have extended product we'll have initial production test by the end of the year, and then we'll start a drilling program in April, May of the following year to drill four wells and frac those four wells and then hook that up into production by, you know, close to the end of the year into q one next year. So we're selling gas to the Northern Territory government by the first half of twenty twenty six. So if I can maybe hand back to Jake in terms of any potential q and a's that have come in. I know there's a few pre submitted q and a's. So if you wanna maybe start with those, Jake? Absolutely, Philip. And and thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right corner of your screen. But just while we take a few moments to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

31:33 Philip, as you quite rightly say, did receive a number of pre submitted questions ahead of, today's event. So perhaps if we dive straight into those before then turning to the live ones, that'd be great. The first question that we have here asks, the share price is currently trading close to all time lows. When do you believe the share price will start to show gains, to the upside? Yeah. Look. We're all pretty disappointed, as to how the share price reacted to what we, Tamber and Daily Waters, believe to be fantastic news earlier this year. And also would have actually in fact would have expected the complete opposite, you know, an increase significant increase in in all our share prices we would have seen or would have expected to see. But I don't think the market fully appreciated the significance of the flow rates. And I think they also know that both, as operator and ourselves, you know, there's a need to go out and raise money because, obviously, we wanna go to this pilot.

32:25 And this knowledge of by the market of us having to raise money can often hold the share price back and, in fact, can even hurt the share price in the short term. And I think that's that's what we've seen going on since February of this year is is certainly a a a damaging to our share price, which I believe to be very much short term. In terms of what we can expect to see, you know, in terms of the share price appreciation, Cameron, as I mentioned earlier, they filed the rest one. They are moving forward on an IPO on the New York Stock Exchange. There's a further press release and update yesterday, and I believe they're targeting at the outer end something in the region of a 175,000,000 US dollar raise, which will be a fantastic result for Tamron, but also for the. I'm not sure the exact timing of that, but perhaps it's gonna be before the end of this month. But, again, I think that would be a significant endorsement.

33:15 It's not about the direct read through and the valuation of this deal and what it means in terms of the value per acre for Tamber and what the what even what price they're doing at, but the fact that they're able to IPO their company on the New York Stock Exchange and get the following support and raise something up to, let's say, it's a 150,000,000 even, that will be a significant positive development, which should reflect well on FALCON and any other player in the beetle, including Empire. Secondly, and more importantly, think, will be the starting of the drilling in the first in the next, you know, six to eight weeks, and the pilot will get underway. And then the real probably the real increase may not happen until we start seeing these initial flow rates by the end of the year. Perfect. Thanks, Philip. Just turning to the next question, which asks, what is the latest position in South Africa?

34:03 Gosh. What are we? Fifteen years later, and no great, update from South Africa. As I've said, year after year after year, we're still waiting for the proper legislation to be put in place. It's not. And until it's in place, they're not even in a position to grant an exploration license. We still hold hold the technical cooperation permit over about 7,000,000 acres that they can't take away from us. But right now, there's there's no update whatsoever, unfortunately. Perfect. Thank you. When do you expect gas sales to happen, and how much per barrel, would you be looking to sell the gas at? Gas sales to happen first half of twenty twenty six. So as I said, drilling in '24, drilling in '25, hook it all up, and then be selling gas before the end of of the first half of twenty twenty six. And that gas, as I said, is gonna be sold under the gas sales agreement between ourselves, the JV partners, and the Northern Territory government to sell 40,000,000 scuffs of gas a day.

35:01 In terms of of the price of gas rather than the per barrel of oil per MCF, price of gas typically on the JKM, which is the Japan Korean market for for pricing, for export of gas, which we're not doing, that's a very, very robust $13 US per MCF. But you've looked more to the domestic market, particularly on the East Coast, you're looking at Australian dollar 10. So that's a kind of a good idea in terms of what the market is. And, certainly, when you compare that to US prices, and anyone on the call would be very familiar with Henry Hub prices in around $2.50, $2.60. So it's a it's a pretty big step up from what one could get for gas in The US Of A. Thanks, Philip. The next question that we have here talks to the recent fundraise, and really asks, why did you do a fundraiser at a ridiculously low 6p per share, when only two months earlier, the price was double that?

35:53 Yeah. Look. And, again, a a good question. We hate having to raise money. In fact, we don't like raising money pure unless we have to. We certainly don't like raising money, you know, at these, call it correctly, these derisory price of 6 p. We do want to be funded for our 5%. So we don't wanna go naked into a pilot development and not having any money at all. But what we did consciously do at the time was because the way the market reacted to basically halving our share price, rather than going out and raising, you know, roughly $35,000,000 this year and significantly diluting our shareholders, we reduced the equity raise to less than $5,000,000. And we've done that by reducing our interest down to 5%. And, again, by just giving up less than 1% of the acres. So it is a situation. We, you know, we don't generate cash flow, so we do need money. Our carry is you know, there's a small bit of carry left that kicks in on the July 1, about three point seven five million Aussie dollars, I believe it is. But we do need to be able to finance our 5% share of the pilot and all the other auxiliary costs. So So we did have to raise some money, but as I said, we we limited that raise to the absolute bare minimum given particularly where the share price is at.

37:04 Thank you. Have there been any discussions with Tamboran about them acquiring FALCON? Simple answer, no. None whatsoever. No. Perfect. The next question really looks to the future and asks, what is your strategy for the future? That's a good question. I could take half an hour maybe to no. I'm kidding. Look. Our strategy you know, I'll be very public about what our strategy has been as a company, is to build value and monetize by. But maybe that strategy may evolve a little bit over the next six months or so, particularly with the introduction of the DSUs, and we see now how they're working, particularly and also to our advantage.

37:50 But more importantly, because of the introduction of the checkerboard, whereby instead of exiting, as one way to monetize and create value, maybe there's a an alternative in terms of how we might reshape and how our strategy might evolve over over time. Not today or tomorrow, but certainly over the next year or two years. And maybe with those opportunities, as I said earlier when I was talking about the checkerboard, maybe there's opportunities to do m and a activity on a single piece of the checkerboard. So for example, you know, at the 200,000 acres, we're at 22 and a half percent. Maybe we'll go down to 12 and a half percent of that, and that will finance the development of that entire checkerboard. And as it does that, it proving up the other piece of the checkerboard. So maybe that will you know, as I said, we're all about creating value for the shareholders, and we can do that many, many different ways. Exiting today or tomorrow or at the end of the pilot when it's up and running in in early twenty six may not be the best time to do it.

38:47 Because when you look at the tiny, tiny 50,000 dot acres that is around the pilot area, there's no way we can capture the real value of the other 4,550,000 acres that won't have been developed as much as the pilot. So what we do need to do is better promote the company in the markets that are more important to the beetle loop, so The US in particular, to get the appreciation in the share price and get a recognition of the value of the company, and build that into our strategy rather than focusing on exit. Focus more on promoting the company, more on m and a opportunities, more on how we see developing this thing, you know, for us for maybe a longer period than than exiting at the end of the pilot. But as I said, at the beginning of this thing, you know, that that strategy will evolve over the next six to eighteen months.

39:36 But the pure straight, let's exit tomorrow, I don't think that that probably will not form and end up being the key strategy piece when we see how this whole checkerboard and DSUs evolve over the next eighteen months or so. Perfect. Thank you. The next question that we have here, I believe you did touch on briefly during the presentation, but perhaps if there's anything further to add. The question asks, Tamboran and Sheffield intend to drill two three k horizontals this year, and four three k horizontals in 2025. Will FALCON continue to participate at 5%, in this pilot program? So as I said earlier, we are committed at 5% for these two wells. We are maxed at 5%, in the next four wells. We can't go above five because we set our limit by by establishing 5% when the pad is being proposed, and that's the max we can go.

40:28 We don't have to do 5% next year. We most definitely will wait until we see the results of these wells before electing to be go 5%. Obviously, these wells are really good. Why wouldn't we, participate at the 5%? So we'll be somewhere between, you know, 5% most likely, but there's a reason or whatever reason may be, we can easily go to 0%. If for for whatever reason we go down to 0%, I think it's important to know we don't lose any more acres. The DSUs are set. So that will be, you know, where we're at in terms of our participation. There might be the creation of one more DSU, a smaller DSU, 6,400 acres in into 2025 drilling program. So we may wanna participate on that at 5% to retain our our value in this enlarged kind of strategic development area. So we end up in around about this 10%.

41:15 But as I said, no decision has been taken yet, but it'll be somewhere between zero and five percent, but it can't be above 5%. Perfect. Thank you. Do you have any concern that FALCON is vulnerable as a takeover target at their current depressed price? If the two wells this year meet expectations, do you have a plan to promote FALCON stock? With these two wells, along with the planned twenty twenty five wells, there is going to be, news that could be used to promote FALCON stock. Yeah. Some very good points in this question. Look. As a public company, you've you've always gotta be mindful of a possible takeover because you are a public company. And when you're a public company with the assets that we have of a net million acres and at the very current depressed share price, then, yes, you are a target. You're potentially vulnerable. One of our weaknesses, and I call it a weakness, is the depth of our share register or rather the lack of depth of our share register.

42:09 You know, we have a a significant, very important shareholder in in Brian Sheffield at around about 10%. But beyond that, we don't have any real visible shareholders that one could mount a, for example, a hostile takeover of the company. It's not like you can look for our share register and pick the top 20 shareholders, and all of a sudden, can talk to forty, fifty, 60% of the company and get support for a takeover of FALCON. So while it's a weakness as a as a in terms of of the lack of depth in our share register, it's actually a strength in terms of being vulnerable to a hostile takeover. The other thing that you you brought up in terms of promoting FALCON stock, yes. I I referenced it earlier. We do have plans to increase promotion, particularly in the markets that are more interested in the b to b. So promoting FALCON in the London market may not be the best market to continue or well, not to continue, but to to focus all our efforts in promoting the beetle. Maybe we need to look at additional markets in addition to London and in addition to Toronto, I e, to look more maybe to The US market and how do we go about promoting FALCON in The US where Tamron are hopefully will be hugely successful in the next week or two, where Brian Sheffield, HMP, Liberty Energy, and no doubt a lot of US money and US funds will be participating in the Tamron IPO in the next week or two weeks.

43:37 Maybe that's the better market to focus more of our time on in in the coming in the coming not just months, but certainly in the coming years beyond this. Perfect. Thanks, Philip. And perhaps we'll just take a couple of final pre submitted questions here before then looking to take any that came in this afternoon. What are the steps that we need to take in order to start drilling again? Do we need landowner agreement? Do we need agreement on water extraction? Where are we with each of these? Yeah. Look. We have everything we need in place. There's been a delay, to getting out to start the civils. That is a delay purely because we've had a very, very, very wet season. Much wetter than than previous years. It's taken a very long time for the access roads to dry up. In terms of all the, agreements in place, they're all in place. EMP is in place. Landowner access is in place, so there's nothing there to stop us. In fact, we are out, civils work has commenced.

44:27 And as I said, hopefully, drilling will start in the in the next month or two. So everything needs everything that needs to be in place is in place in terms of getting this this pilot drilling program up and running. Perfect. Thank you. Will there be sufficient capacity in the pipeline for the predicted pilot flow in 2026? Yes. Simple answer. So I referenced the AGP pipeline. There is capacity there to take this 40,000,000 scus of gas a day, and that's what we have under contract to sell to the Northern Territory government. So, yes, that pipeline has sufficient capacity. There might be more capacity in time, but right now, we're we're just focused on this 40,000,000, scuss of gas a day that will be transported once you know you know, before the end of the first half of twenty twenty six. So, yeah, the pipeline capacity is there. We just do need to build this short 30 kilometer pipeline to hook it up.

45:15 Perfect. Thank you. And that actually concludes the the pre submitted questions that we had coming ahead of today's event. And I know we have touched on quite a wide variety of topics there, but perhaps if there's anything that's coming live that you'd like to cover off in a bit more detail, then please feel free, sir, and I'll pick up from you at the end if that's okay. Yep. Thank you. So a few questions here. Plan for return. What's the plan? Well, look, as I said, the plan is we're out drilling. We'll see how these first two wells go. We'll have pilot production in in, you know, first half of twenty six. We'll hopefully be at a larger 10% in post pilot production area. We'll have to check a board, hopefully execute it. So there's a lot gonna happen over the next eighteen months that will change the course of where we've we we will end up going.

46:04 You know, in terms of, you know, people ask about when can I realize profit on my my investment? You know, a lot of people have been shareholders in this company for a very, very long time and even longer than I've been been on board the company. And people are looking to see when are they gonna see a return on their investment. That is getting obviously, it's getting closer and closer, but I think we're now at a point where instead of stop start, stop start that we've seen over the last ten years or so, with Tamberin starting the pilot program in the next couple of months with a fairly good ambitious not only ambitious, but a good program to drill and frac six, three thousand meter wells with H and P, with Liberty Energy. You know, we're gonna we're gonna bring in results akin to what we we announced at the beginning of this year, and these wells come in something like 18,000,000 scuffs of gas on on an IP 30 basis, I think you're gonna see a significant rerating of all companies involved in the future, not just FALCON.

47:01 So, again, a question, you know, you've you've some years ago, I did a presentation. Plan is to develop the asset and sell. What happened with this plan? I think I've explained that. This is an evolving strategy. It may still be the case. We'll never dismiss any potential offer from a from any acquirer. We'll take all we don't have any offers on the table. We're not talking to anybody about any offers. But way this whole thing is playing out, we may just need to, as I said, evolve our strategy around what is the best thing for the shareholders here. How do we get the best value? And it may not just be, as I said earlier, a simple, exit and sell off, as quickly as possible. Sorry. Let just dismiss. What could you say is the end goal here for an investor for FALCON for over nineteen years?

47:47 Will we see dividends from income of product sales? Not in the medium term. Any cash flow that we generate even from the the pilot sales in in '26 and beyond that would be reinvested into? We don't plan on on making dividends. Shares finally start to rise. Yes. I think that's what you can look for. And, again, talking about is it is it is it to build a discovery and then sell FALCON off? Yes. At some stage, but maybe not today and maybe not tomorrow. But as I said, working through the optionality being created by the DSUs and the checkerboard to get a better overall valuation proposition, which might take a little bit longer than trying to do it all at the end of the pilot. So question is, my memory was Hess did three d seismic on all the JV acreage.

48:39 Why is FALCON now doing new seismic? Well, actually, Hess did two d seismic. Very large, about three and a half thousand kilometers of two d, but there's no this would be the first three d program, and that's how we're doing it. We've been getting good news for a while. It seems every time we get good news, FALCON share price falls. Yes. That has happened. And, certainly, as I said, it happened in between February and now, where the market uses the, their kind of perceived knowledge that we need to raise money, and the share price gets hurt in the short term. We've got enough money now to see us into the back end of next year. We'll have a lot of news flow between now and then and hopefully a huge appreciation and share price long before we need to go back to the capital markets.

49:30 Positive presentation not reflected in the share price. Why not? What has been done to improve the shareholder value? Well, on the on the ground, I guess, all the drilling will will be done and operated by Tamron. What do we need to do? What do I need to do? What does FALCON need to do is, as I said, get in front of a more the the market that matters more and promote FALCON in the place that matters more. Promote FALCON, you know, where there's more interest in the beta loop coming, particularly, as I said, coming out of of the USFA. So that's that will be one of our key things going forward. Let me just see if I can get some detailed questions here. There we go. Will the presentation be available on your website?

50:19 Yes. If it's not later tonight, it certainly will be tomorrow morning. Will we be stepping up promotional activity? Yes. Seems very underappreciated. Could not agree more. We need more to do more. And as to do more in the right area. In terms of FALCON's licensing end, look. Our license are a five year license period, and then you renegotiate and you get an extension by 2027 and certainly by the development of these checkerboard pieces, these will all actually be developed into into development license areas. So they won't be need to renewed. And the goal will be that each each checkerboard piece of 200,000 acres will be its own development license. So there's no there's no real concern there in terms of licensing ends anytime soon.

51:10 Has there been any interest from larger oil and gas companies since there's such positive news? Honest answer, directly to FALCON, no. But, look, there's a lot of noise going around The US at the moment, particularly H and P, Liberty Energy, and Brian Sheffield. There's no question, but, you know, I was speaking to one large fund manager in The US in the last few months, and he says every single person in his oil and gas universe is now in the bead loop. I already meant by, he knows Brian Sheffield, but he knows people at H and P. He knows people at Liberty Energy. And he knows all his other peers in fund in managing funds who are all investing in either Empire, FALCON, or Tambour. So there is a lot of lot more interest. The oil and gas companies still may be a tiny bit too early for them.

51:56 They'll probably wanna see the results of the pilot before they get more excited about what's going on. Clearly, with with, Daily Waters, Stroke Brian Sheffield becoming an operator on three of these blocks in the next, whatever, short period, there may be opportunities for these, oil these larger oil and gas companies as we refer to, not just, you know, showing interest, but actually coming into the beta as well. Clearly, the company needs to raise capital much better for existing shareholders to do an ambitious rights issue with the clear potential shareholders should be willing to follow on this including. You look at we'll something we'll always look at in terms of rights issue. We don't need capital for for quite a good while yet.

52:43 And, certainly, if there's an opportunity to do a rights issue, we'll we'll certainly look at that because I do understand why some shareholders would like to participate if it was a rights issue, and that we will certainly do. Question, would we consider a US listing instead of LSE and TSXV? Well, it might not be instead. It might be in in in addition. We may and, certainly, it's something we will look at. As I said, looking to promote the company in the market that matters most, maybe it's time to start looking at The US market. And, certainly, maybe it's time to start considering a US listing of some sort. Cameron are doing it, and I'd say we'll probably have it executed by the end of this month. Maybe it's time for us and FALCON to look at something similar. So if there is anything on that, we'll update shareholders in due course.

53:32 And then another question. How do I plan to fund FALCON's 22 and a half percent share of the drilling cost outside the pilot program? We don't expect much activity outside the pilot program until the pilot program is finished. So that question guess you're talking about how do we how do we anticipate funding the company 2026 and beyond? Well, look, we look to the capital market at that stage. We look at, as I said, farm down opportunities of a single, checkerboard piece. There may be a lot more opportunities for us to to fund our 22 and a half percent interest outside the pilot. What has stopped from buying controlling interest in FALCON? Well, he's gotta find a willing buyer willing seller.

54:21 As I said, one of our weaknesses is the depth of our our share register. So, you know, if we were to go out and issue more shares tomorrow, which we're not gonna do, yeah, Brian might be there to to buy those up. Brian has, as said, a a you know, already got 10%, almost 10% of FALCON's, I think, 17 or 18% of Tamberin, a good chunk of more recently in in Empire. But his real focus is gonna be his 38.75% direct working interest in the B2B. That's what he's raised a $120,000,000 through Foremantera Australia for to invest in that. But there is nothing stopping him buying a controlling interest. He just needs to find the willing seller, identify the seller, and then acquire that. But but right now, don't see how that's even possible given that our share register said is the depth of it is not there. If Time Warner Daily Wars decide to farm out a portion of their interest, would FALCON be required to farm out a portion too?

55:13 Absolutely not. So if, for example, Daily Wars or the Monadier Blocks wants to farm down from 77.5 to 50.5, we have no obligation to do anything. We can we'll just simply we can say 22.5. If the opportunity were arise, for example, that, let's say, Daily Water has worked to frown down to 50.5, they don't wanna go below 50, but the incoming partner party wants more than the 27% on offer. You know, Daily Waters and or that party may approach FALCON, and we can then elect to or not to participate in the farm down. But as I said, this this whole checkerboarding thing creates a lot more m and a opportunity than we would have ever seen before. And I think that covers pretty much I may have missed one or two questions, but I think that pretty much covers, all of the q and a for today.

56:00 Perfect. Philippe, if I may just, jump back in there. Thank you very much indeed for addressing all of those questions that came in for investors. And, of course, we will be able to give you back all of the questions, that were submitted today as well as any further ones that do come through. We'll give you those back immediately after the presentation has ended just for you to review to then add any additional responses if required, and we'll put publish all those responses out on the platform. But, Philip, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, If I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. Look. I may have said this before, but but, look, I'm I'm as excited and more excited than I've ever been about the people there. We've had a lot of stop starts over the last ten or so years. The start of the pilot is really the start of the development of the.

56:49 The IPO of Tamber in the in the next few weeks on the New York Stock Exchange is a is a massive endorsement for the. The entry of Liberty Energy, massive endorsement for the together with HMP and, of course, the the the huge support coming from the from Brian Sheffield. But it's really it's all gonna be down to the results of the drilling. And the fact we are gonna be out drilling in the next couple of months, we are gonna have results before the end of this year. We are gonna then follow that up. There's gonna be no pausing of 2025. We are gonna be drilling in 2025 and and and four more wells and four more results. And when you look at what we did this year, it's still gonna 500 meters of results. Now we're gonna do 18,000 meters, six wells, 3,000 meters each, and flowing and selling gas at the end of all that. So I think that's what we should all be looking at, over the next coming months, as we see this get more and more attention, as we see get more and more developed, as we see more and more positive results, coming out of the drilling and of the the flow rates at the end of the year and into next year. So, hopefully, this time next year, we have a completely different view on the future of FALCON. We have a completely different valuation reflected in the share price of FALCON and our JV partners in the.

58:02 And, you know, hopefully, when we when we meet again at the next AGM, and I'm sure we'll have opportunity to do this investor meet long before that, we'll be looking at a much healthier picture than than this this current share price today. Philip, that's great. And thank you once again for updating, investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected, for the opportunity to provide your feedback in order the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of FALCON OIL and GAS LTD, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all. Thank you.