Tamboran Resources shares plunge after Beetaloo gas deal with Origin Energy

The gas explorer’s shares tanked nearly 19 per cent after emerging from a trading halt following its buyout of Origin’s 77.5 per cent stake in the Northern Territory’s Beetaloo.

Junior gas explorer Tamboran Resources was belted by investors after its big ticket deal to buy Origin Energy’s share of the Beetaloo Basin permits in the Northern Territory.

Tamboran shares plummeted nearly 19 per cent to 22c after coming out of a trading halt following its buyout of Origin’s 77.5 per cent stake in the Beetaloo for $60m and a 5.5 per cent royalty on future production over the life of the field.

The acquisition will be funded through an institutional placement to new and existing shareholders to raise up to $138m at 21c a share, representing a 22.2 per cent discount to the company’s closing price on September 14.

The institutional placement included a $98m private placement of shares to strategic partners and US cornerstone investors, supported by investments of $30m by Sheffield and $22m by Helmerich and Payne.

The second of the two-tranche placement is subject to shareholder approval at a general meeting on October 25.

Tamboran says it intends to launch a share purchase plan allowing existing shareholders to participate on the same terms as the placement at 21c per share, targeting $3m.

Origin Energy's Kyalla well gas site near Daly Waters in the Northern Territory's Beetaloo Basin

Tamboran’s small balance sheet and sizeable exploration spending needs raised questions over how quickly the Beetaloo resource may be developed, according to broker Morgans.

“What’s unclear though is how quickly Tamboran will be able to fund a large project given its modest cash balance ($26.8m) at 30 June, although it is currently raising money. A sizeable amount of exploration and appraisal activity still needs to be undertaken. Even if this is successful, we anticipate the project will still be several years away from paying Origin any royalties,” Morgans analyst Max Vickerson said.

UBS said while it was a medium-term prospect, it could yet deliver on a big scale.

“While we don’t anticipate first gas from Beetaloo until the mid/late 2020s, we maintain that the basin’s unique geology makes it one of the largest and most interesting contingent gas resources in Australia,” UBS analyst Tom Allen said.

Tamboran and Bryan Sheffield entered into a binding 10-year gas sales agreement for up to 36.5 petajoules annually with Origin.

The junior company has forecast the Beetaloo scheme, 500km south east of Darwin, could supply up to two-thirds of all volumes on Australia’s east coast should it live up its potential with the company’s backer, Mr Sheffield, comparing the resource to the giant Permian shale basin which revolutionised the US energy sector.

Tamboran will become operator of the joint venture, which is 22.5 per cent owned by Falcon Oil & Gas, which held pre-emptive rights on the deal.

The junior explorer, which listed on the ASX last year, has been targeting an aggressive drilling plan covering eight wells by 2023 with an aim of supplying gas by 2024 before forecast shortages hit the east coast of Australia.

Tamboran is targeting gas supplies at about $6-$8 a gigajoule, which would make it competitive with existing supplies and potentially cheaper than a slew of LNG import plants dotted through NSW, Victoria and South Australia.

It’s also plotting a route to market as part of a $6bn plan to open up the Beetaloo for east coast users and Darwin LNG exports via a pact with distributor Jemena.