Beetaloo Basin fracking company Tamboran Resources’ initial public offering to the New York stock exchange reveals the company does not have the money it needs to complete the exploration project it just received approval for, let alone the up to 200 wells it plans to drill before 2026.
The revelations come as Tamboran is due to appear at the Senate Inquiry into the planned Darwin Harbour Middle Arm precinct in Canberra today (Monday, June 17). Tamboran also called a general meeting yesterday (US time) to ratify issues of stock.
The public offering shows Tamboran has no proven source of income, no proven gas reserves, and no money for its planned development of six wells in the next eighteen months.
It also raises doubt over how much gas could be extracted from the Beetaloo and whether further investment could be justified, with only one of the six gas wells Tamboran has drilled so far in the region “capable of producing sufficient quantities of gas to justify completion.”
The Northern Territory Government approved Tamboran’s 15-well Shenandoah South fracking project earlier this month, leading to a massive outcry from community groups. The Territory Government has also signed a 15-year gas supply deal with the company.
As well, Tamboran has exclusive access to 420 acres of the Middle Arm industrial precinct, which the Albanese Government has allocated $1.5 billion for.
This public offering is Tamboran’s first since it delisted from the ASX last year and relocated to the known tax secrecy jurisdiction of Delaware in the United States, in order to raise more capital from US shale investors.
Lock the Gate Alliance Head of Research Georgina Woods said it was foolish for governments to be propping up a shell company like Tamboran with very little money of its own.
“Tamboran’s prospectus reveals a company in a questionable financial position whose plan to frack the NT is highly risky and wholly unwise. It admits fracking is a polluting fossil industry that faces massive community opposition.
“This is not the sort of company or industry Australian taxpayers should be propping up through the Albanese Government’s multi-billion dollar Middle Arm subsidy.
“The Albanese Government needs to urgently abandon its support for the Middle Arm facility and redirect funds to more sustainable opportunities, like capitalising on the Territory’s bounty of renewable energy opportunities”.
ENDS
Risk factors Tamboran identifies in its public offering include:
Financial
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Tamboran says, “Our recurring losses from operations, negative cash flows and substantial cumulative net losses raise substantial doubt about our ability to continue as a going concern.” (P17)
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Tamboran had accumulated losses of A$164.68 million as of June 30, 2023 and A$183.66 million as of March 31, 2024. As of April 30, 2024, Tamboran had A$29.90 million of cash and cash equivalents. (P32)
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Tamboran discloses that it has “identified a material weakness in our internal control over financial reporting. Any material weakness may cause us to fail to timely and accurately report our financial results or result in a material misstatement of our financial statements”. (P17)
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Tamboran needs to raise the full A$195 million to A$250 million net required for production phase gas extraction through this offering. (P4)
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Tamboran wants to drill six new wells in the next year and a half, with each new well expected to cost around $26 million. Tamboran acknowledges this may be an underestimation. The company notes its “business plan requires substantial additional capital, which we may be unable to raise… which may in turn limit our ability to execute on our plans.” (P16)
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Tamboran does “not currently have any commitments for future external funding” (P22)
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Because of higher operating costs than U.S producers, Tamboran’s business model is dependent on higher gas prices from Asian and domestic Australian markets relative to U.S prices. (P26)
Logistics:
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Tamboran is totally reliant on “third-party infrastructure projects'' including the unconstructed 1600km Beetaloo to East Coast Pipeline and the 40km Sturt Plateau Pipeline for its Beetaloo project. (P6)
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Tamboran has “no proved reserves at this time” and areas that it decides to drill “may not yield natural gas in commercial quantities or quality, or at all”. (P16)
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Only one of Tamboran’s seven wells is “a productive well, meaning it is capable of producing sufficient quantities of gas to justify completion”. (P21)
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Laboratory testing of another well, A2H, “identified a zone of reduced permeability, or a “skin,” which created an impediment to the flow of natural gas”. (P23)
Water:
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Tamboran says, "We may be subject to regulation that restricts our ability to discharge water produced as part of our natural gas production operations. The produced water must be transported from the leasehold and/or injected into disposal wells. The availability of disposal wells with sufficient capacity to receive all of the water produced from our wells may affect our ability to produce our wells. Also, the cost to transport and dispose of that water, including the cost of complying with regulations concerning water disposal, may reduce our profitability.) P46
Emissions:
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Tamboran “may not achieve, and there are potential risks associated with, (its) growth strategy and vision to become a net zero equity emissions producer for… equity share of Scope 1 and Scope 2 emissions”. (P40)
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Tamboran says: “International policy developments have the potential to have an indirect impact on our operations, given that domestic policy makers might consider those developments in formulating and in setting the direction of local policy… the International Energy Agency recently released a report in relation to its recommendations for a pathway to achieve global net zero emissions by 2050, and includes a key recommendation that no new oil and natural gas projects should be developed.”
Social:
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Tamboran “faces community opposition from certain parties… which could result in significant costs and delays and could impede… government approvals required for such operations”. (P39)
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Sacred sites and Aboriginal cultural heritage have been identified within areas covered by Tamboran’s tenements. The company notes: “Destruction, disturbance or harming protected sites and artifacts may result in… significant civil and/or criminal penalties, which may adversely impact or delay our activities.” (P40)
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Tamboran warns it may face difficulty attracting and retaining staff: “The supply of skilled workers is limited in the Beetaloo, and it is not guaranteed that we will be able to access a sufficient skilled labor force.” (P23)