Business Irish

Tuesday 25 September 2018

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

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. (stock picture)
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. (stock picture)

Fearghal O'Connor

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.

Sunday Indo Business

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