Fal­con awaits cru­cial frack­ing re­port from an Aus­tralian judge

Ir­ish com­pany hope­ful that end to mora­to­rium will open up mas­sive shale gas field, writes Fearghal O’con­nor

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

AN Aus­tralian judge is due to is­sue a re­port within weeks that could have a pro­found im­pact on the fu­ture of Ir­ish oil and gas ex­plo­ration com­pany Fal­con Oil & Gas.

The Dublin-head­quar­tered com­pany, headed up by ex­plo­ration vet­eran Philip O’quigley, owns a 30pc share of the huge Bee­taloo Basin shale gas field, 600 miles south of Dar­win, where it and part­ner Ori­gin En­ergy be­lieve they have a ma­jor gas dis­cov­ery, which they claim could help tackle Aus­tralia’s grow­ing en­ergy short­ages.

Fal­con’s share price has al­ready gone up four­fold this year but could jump even higher if Jus­tice Rachel Pep­per’s long-awaited re­port rec­om­mends the lift­ing of a ban on all frack­ing in the North­ern Ter­ri­to­ries that was im­ple­mented by the prov­ince’s gov­ern­ment in Septem­ber of last year.

The judge has since car­ried out an ex­ten­sive ex­am­i­na­tion of the is­sue and has said she will pub­lish her re­port early next month. The in­quiry has looked at the im­pact of frack­ing in the sparsely pop­u­lated re­gion from a range of dif­fer­ent stand­points, in­clud­ing eco­nomic, sci­en­tific, en­vi­ron­men­tal and so­cial.

Ori­gin, Aus­tralia’s largest in­te­grated en­ergy com­pany, which farmed into Fal­con’s acreage and is pay­ing for and oper­at­ing a nine-well drilling pro­gramme at Bee­taloo, the last four of which will be drilled if the mora­to­rium is lifted, has es­ti­mated a con­tin­gent re­source of 6.6 tril­lion cu­bic feet of tech­ni­cally re­cov­er­able gas, up to 100 times the size of Ire­land’s Cor­rib gas field and com­pa­ra­ble to some of the big­gest shale gas fields in the world.

O’quigley told this news­pa­per that he be­lieves the pub­li­ca­tion of Pep­per’s re­port, which will make a rec­om­men­da­tion on the mora­to­rium to the gov­ern­ment, could be “the next ma­jor cat­a­lyst for the share price of this com­pany.”

“I can say this with con­fi­dence be­cause we have lived with the mora­to­rium for over 12 months. It’s com­ing to a con­clu­sion,” he said. “We are more than hope­ful that the re­port will con­tain a pos­i­tive de­ter­mi­na­tion to the mora­to­rium.”

The im­ple­men­ta­tion of the frack­ing ban has be­come a hugely po­lit­i­cal is­sue in Aus­tralia. But O’quigley said that the North­ern Ter­ri­tory’s chief min­is­ter had al­ready come out and con­firmed that he will act in ac­cor­dance with the de­ter­mi­na­tion.

“This is where it gets re­ally, re­ally ex­cit­ing. As­sum­ing I am right, and that we get a favourable de­ter­mi­na­tion; and as­sum­ing I am right and the gov­ern­ment moves to lift that mora­to­rium, we are back drilling. And back drilling means drilling five more wells on our prop­erty.

“Four of them are what I like to call ‘all-singing, all danc­ing’ multi-frack wells, es­ti­mated to cost $115m at zero cost to Fal­con as part of the deal we ne­go­ti­ated three years ago,” said O’quigley.

The aim of the new drilling pro­gramme will be to move the field from re­source po­ten­tial to a dec­la­ra­tion of com­mer­cial­ity, he added.

Ear­lier this year, Davy, which acts as bro­ker to Fal­con, pre­dicted “con­sid­er­able ad­di­tional up­side” for the com­pany, say­ing that it could dou­ble to over 40 pence per share from its cur­rent price of around 22 pence.

“In any event, Fal­con’s busi­ness model was al­ways to cre­ate value at the as­set level and exit prior to the devel­op­ment and pro­duc­tion stage,” it said.

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