MELBOURNE, Sept 19 (Reuters) - Tamboran Resources (TBN.AX) said it attracted strong interest in a A$133 million ($89 million) sale of new shares on Monday to pay for a majority stake in a promising Australian shale gas prospect and help fund its development.
The acquisition of the 77.5% stake in the Beetaloo joint venture from Origin Energy (ORG.AX) in a 50-50 partnership with its top shareholder, ex-Parsley Energy CEO Bryan Sheffield, turns Tamboran into the dominant player in a sub-basin seen as comparable to the biggest U.S. gas field, the Marcellus Shale.
Tamboran and Sheffield agreed to pay Origin A$60 million up front plus a 5.5% royalty on future production from the Beetaloo joint venture and sell Origin 36.5 petajoules of gas, or 100 terajoules a day, over 10 years. read more
Tamboran aims to start producing gas in 2025, focusing on a permit acquired from Origin called Amungee, underpinned by the gas sales agreement, Chief Executive Joel Riddle told Reuters.
The share sale to pay for the deal was pitched at A$0.21 a share, a 29% discount to Tamboran's close last Wednesday and nearly half the price investors paid in its initial public offering in July 2021. read more
Riddle said the deal sharply boosted the company's growth prospects, with gas sales locked in with Origin and the potential to eventually supply gas to liquefied natural gas (LNG) export plants in Darwin or on Australia's east coast.
"No one wants to take dilution, of course. But when you look at the opportunity, by acquiring the Origin assets this is hugely accretive," Riddle said in an interview.
The challenge now is to cut drilling costs to A$20 million per well with rigs that can drill 4,000-metres horizontally, four times what it can do with rigs now in Australia. That would bring the cost of its pilot project to around A$300 million, Riddle said.
Ireland-based Falcon Oil & Gas (FO.V) owns the remaining 22.5% stake in the Beetaloo joint venture.
($1 = 1.4950 Australian dollars)
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