Falcon Oil & Gas (LSE:FOG) — Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the FALCON OIL and GAS LTD. Presentation. Just simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. These will be available via your Investor Meet company dashboard and will notify you by email when he's ready for your review. I'd also like to remind you that

0:32 today's presentation is being recorded. But before we begin, I'd like to submit the following poll. I'd now like to hand you over to Philippa Quickley, CEO. Good afternoon to you. Good afternoon, and thank you for that introduction, and welcome all. Good morning or good afternoon, wherever you may be. For current Falcon shareholders, just thought it'd be a very good way to wrap up 2021 on what's been a very busy year and for people where it's this FALCON story is new to you and would like to welcome to this meeting, and to give you an idea of what's going on, particularly this as we enter a really exciting time, for FALCON OIL and GAS. So perhaps if I can just jump into the presentation, If I just give you a quick brief overview of our corporate, information, we've roughly about a billion shares in issue.

1:19 We're quoted on the TSXV in Toronto and also on the A market in London. Our market cap is about, in U. S. Dollar terms, about $100,000,000. Current share price is, I think, 8p and 13.5p sorry, dollars 13.5 Canadian. A few large shareholders you'll see on the right hand side, Lamesa, Burlingame and Nicholas Mathis making up about 24%, 25% of the share register. Our board won't go through all the detail, but newly appointed Chairman, Joe Nally. Joe, I've known for twenty five years, and he'd been known, more importantly, in the city of London for about forty five years as a stockbroker, particularly, in the oil and gas and resources sector. So a great recent addition to the board of FALCON OIL and GAS.

2:08 So let me talk a little bit about our company overview and strategy. Explore, which is what our initial game was, which we've done a lot of, and I'll talk a little bit about how much exploration we've done. Moving then towards appraising of our key assets and then monetization, which is basically code for looking for the best exit strategy, not looking to stay in long term in any of our assets in terms of not looking to stay there for the full production scenario. So exploration, appraisal and then monetize. On the map on the left, our key asset is in the Beetaloo Basin, which is in the Northern Territories, Australia. The area marked in blue on that map is our acreage, which is a massive 4,600,000 acres. So if we put that in the context of a country, it's about the size of Wales, which is a huge area.

3:00 While I'm on this map, just to point out a couple of other blocks, not our blocks, but certainly of interest to us is Block E P 161 is there to the east in the dark brown and E P 136 in the light brown. I'll tell you why that they both of those blocks are of of significant interest to our interest in the Beetaloo Basin, given the level of activities going on. And let me just jump into the Beetaloo Subbasin, which is our key asset in the portfolio. We do have other assets, which I'm not really gonna talk much about today. But the Beetaloo Basin is and has been for the last few years the significant focus of this company. We own 22.5% of that 4,600,000 acres. So net to FALCON, it's about 1,000,000 acres.

3:46 I brought in, Origin Energy, an Australian oil and gas, utility company, homegrown Australian company. They came in as our partners in 2014, for initially what was 70% of that 4,600,000 acres. And then we farmed down a further 7.5% of them, in April 2020. And all of this for basically a carried capital expenditure program. The total deal initial deal in 2014, in fact, was worth about 200,000,000. And then we added to that about another CHF 150,000,000 in terms of CapEx being provided by our partner, Origin, who are also obviously operating all exploration and appraisal activities on the acreage. So we currently have a $264,000,000 programme, stages two and three, who were carried.

4:34 And I'll talk a little bit about what that money has been spent on, particularly over the last twelve months and what we look to see as we head into a really exciting 2022. One of the big things of this year was the increased activity, across the entire Beetleu. We had a total of eight well activities, from three separate operators, ourselves and Origin, Santos with Tamboran and then Empire Energy. I'll talk a bit more detail on our own in the next few slides. On the Santos wells, these are the ones I mentioned on that block to the east, 161, where they've just completed the drilling of two horizontal wells measuring 1,000 meters each. And they've actually started fracking both of those wells about six days ago. We would expect flow rates from those wells coming in, in and around about Christmas Day, New Year's Eve kind of time. So that's a pretty exciting development.

5:26 And then also Empire Energy further east, also playing into the same, Beetaloo Sub Basin. They started drilling a well there about, three, four weeks ago, and they're into the horizontal section now of that well. So a lot of activity in 2021 that we've not seen ever in the history of the Beetaloo. Again, just a nice, burial view map of where this activity is going on. If you look here in this kind of north central part of the basin, the Amunji Well, which we went back to this year and had some really exciting results in September this year, the Belkari Well that we completed drilling of towards the end of the year, again, a really exciting, well that we drilled. And then the Cayela well that we've been working on for the last couple of years, and I'll talk a bit more about this as we go through the slides. And then here you'll see the proximity of the these are the Santos Tamburin wells called the Tanumbirini 2H and 3H. These are the two wells that are currently being fracture stimulated, right now. And then you've got this Carpentaria 2H well that the well has currently been drilling. This is your Beetaloo Subbasin.

6:32 You know, the distance, for example, from Amunji to Tanumbirini is about 70 to 80 kilometers or about 50 miles. Similar distance here, about 70 miles sorry, 70 kilometers down to our Valcari Well and something shorter down to the Kyala Well. But the great thing about this play we're all going after, what we call the Middle Balcari B shale, it's very homogenous across the entire basin. It's a very pervasive shale. And what we drill here and discover and flow here will have a direct impact on what this might look like over in in the Santos acreage and vice versa. So it's a lot of activity going on in the basin. Let me talk a little bit about our own specific operations in 2021 that we've since just recently completed. We went back to a well, that Amundi well I pointed out to. We had a great success of this well in twenty sixteen-seventeen.

7:23 We drilled the well out about 1,100 meter horizontal section you'll see in that schematic. We fracked it, we flowed it and we got what we considered a very good rate of 1,100,000 scuffs of gas a day. So 1,100 MCF per day initial flow rate from what we thought then was the full horizontal section of 1,100 meters. On the back of those flow rates and the other well data we had in the area, Origin was able to book and confirm a six, a huge 6.6 TCF of contingent resource, which net to FALCON is quite a significant 1.46 TCF for our 22 and a half percent share. But despite the fact that being a very good result, Origin were, I guess, questioning the the flow rate as to whether we actually got a flow rate from the entire, 1,100 meter horizontal section.

8:15 So they went back in in August this year and they went back in with a production logging tool to see and test a hypothesis that maybe this yellow line here on the schematic, which signifies a potential deformation in the casing, prohibited flow of gas during our testing phase from these first seven stages, seven stage one through to stage seven. And it may be a lot of the production came from here. So this tool we ran in August with Schlumberger, and it confirmed, in fact, that almost all of the production came from the last four stages of the 1,100 meters. So rather than us thinking we had a good rate of 1,100 meters over a thousand meter horizontal, 1,100 MCF right over 1,000 meter horizontal. In fact, it now looks like we've got all of that flow rate or most of it from just 200 meter section.

9:02 So Origin quickly came out and announced and confirmed that a normalized flow rate over a 1,000 meter horizontal would look more like 5,000,000 scuffs of gas a day, which is like a fivefold increase than what we thought we had back in 2017. So that's a significant development in the Beadaloo, and it plays very well into what Santos, as I said, that there is flow results coming out playing into the exact same middle Valkyrie B shale, what it might look like relative to what we have confirmed only two or three months ago. These were the contingent resource numbers that Origin and Ourselves published back in 2017. The top half talk of this, table talks to the entire, basin of our 16,000 square kilometers.

9:48 Original gas in place, a huge four ninety six TCF, and a technical recoverable resource for our acreage across the entire basin of 85 TCF. Down in the second half of that table, you'll see reference to the area of nineteen sixty eight square kilometers. So roughly one eighth of our acreage in and around the Amunji well that we flow tested, where we had other data that we could actually confirm a resource number. And this is where we calculated the resource of 6.6 Tcf for the middle Valkyrie B shale and just for one eighth of our acreage. So quite a good start back in 2017. With the fivefold increase we've just seen in the last couple of months, many questions people ask, would that see a fivefold increase in the resource number? And the simple answer is no. But what I will see is a huge acceleration in converting some, if not all, of that resource into a reserve. And that will actually give you a fivefold increase in value without any necessary increase in volume.

10:51 So all in all, a pretty good day at the Amunji Well. The second activity we undertook during 2021 was drilling a new well. And if you remember from that slide, previous slide, on the flanks of the basin, it was a really interesting well, drilling to a shallower depth. We intersected the middle Belkari shales around about 1,900 meters. We got the A shale, AB, the B and the C shales all came in on prognosis. We, acquired actually 93 meters of core, and did extensive wireline logging. And all of that data is now being evaluated to see and assess the prospectivity of this area. On the preliminary petrophysical analysis, it all looks fantastic.

11:37 Whichever way you look at this and every characteristic of the well and the shale in terms of 54 meters thick shale, porosity of very high 7.7%, TOC total organic carbon, 4.3% on the higher end of anything we've actually seen in the Beetaloo. So this all points to a really, really good, exciting well, that we'll have to go back soon as we can to drill horizontal and flow test this particular area to see what it looks like and how well it compares to our dry gas play. One of the things about this area here is it's a wet gas. What wet gas means, it'll have higher heat value. Higher heat value means it'll have a higher economic price you'll get for your gas. So if this, for example, is, you know, 20% higher heat value than the dry gas that we'd expect at a mungee, then it'll get 20% higher value per dollar per Mcf.

12:28 So all in all, a very, very exciting development during 2021 and an area of certainly significant focus going into 'twenty two and 2023. The third activity was our Cayela play, a unique play within our acreage. Doesn't extend across to the acreages owned by Tamborn or even Santos. And this is an area of focus because it's very rich in liquids, again, higher economic value from a hydrocarbon stream from a well heavy in liquids. So we drilled this well, we fracked it, we flow tested it. And even though we had initial flow rates at the very beginning, the well struggled to come on and stay flowing on its own. We went in two to three attempts with an artificial lift using nitrogen. And even though we got the well to flow from time to time, it still didn't manage to continue flowing on its own. And we didn't get what we were hoping for was like a thirty to sixty day extended production test. So further work needs to be done on this area to assess what we can do to overcome the challenges we encountered.

13:31 Technically, everything went well. Mechanically, everything went well. It was just an issue with the formation fluid heavy in saline that the well struggled to produce gas rates of what we'd hoped to. So a bit more work to be done on this in 2022 before we take this part of our Beetaloo Basin further. So that kind of completes our 2021 operations. Just to give everyone a quick overview and a reminder of what the market overview and gas prices is in this part of the world. You know, the Beetaloo Basin, we're quite remote. We're 600 kilometers south of Darwin, but we're pretty well interconnected with pipelines. So you'll see on the map on the left on this slide, you've got pipelines running up to Darwin, you've got pipelines running down through into the East Coast Of Australia, both huge

14:21 market opportunities for gas from the Beteloux. Australia is short and getting desperately short gas at the moment, on the East Coast. And Darwin, you've got two big plays. You've got the Total, impacts, impacts of the Japanese, who operate a huge LNG facility out of Darwin. They spent a combined of $45,000,000,000 on that infrastructure. And you've got the Darwin LNG operated by Santos. So you've got two easy routes to access a huge market North Of Darwin into the Japanese, the Chinese, the Korean market, where there's a massive appetite certainly for LNG. And also you've got this great appetite for the East Coast in terms of building, extending pipelines, huge appetite from companies like Gemina, owned by State Grid, which is the largest utility company in the world, commitment to spend billions of dollars on additional pipelines once and when they are required.

15:18 So all in all, infrastructure wise and getting gas to market, not a huge issue for, the Beetaloo Basin. Another important factor, I guess, is the gas prices in this part of the world. The last time I looked at the JKN, known as the Japan Korean marker, which is a kind of benchmark for LNG in this part of the world, it's in the $30 range. Domestic prices in Australia are $8 to $12 an Mcf. So huge, robust pricing, huge increase in demand forecast, easy route to market both domestically and export. So where does that leave us as we go into 'twenty two and I guess the value proposition for FALCON based on our results to date, based on the results we expect to see coming through from Santos shortly, and more importantly then based on what activity we expect to see in 2022.

16:13 So we haven't yet confirmed what it is we're going to do. We're still working daily with Origin finalizing our 2022 program. We'll announce that in the next few weeks. It won't be dependent on the Santos results. We pretty much know what we want to do and where we want to go. But we'll see from FALCON OIL an increase in drilling activity, more than likely focusing on the Middle Valcari B shale, where we've had our success at Amunji and at Valcari, and more likely Santos also will have success in the Middle Valcari B shale. So that's likely going to be our area of drilling and appraising further our, interest in the Beetaloosa Basin. And the question mark down here at the bottom of this slide, declaration of commerciality. How real is that achievable in 2022?

17:02 And what does commerciality even look like? And we talked about flow rates of 5,000,000 scuffs of gas a day or 5,000 MCF. What's a commercial flow rate need to look like? Well, it's in the order of 2,000 to 3,000 MCF a day. So certainly, if we can bring in wells in the region of 3,000 to 5,000 MCF a day per 1,000 meter horizontal section. So if we're drilling longer section, obviously a 2,000 meter horizontal section, you will want twice that flow rate as you go into 2022. So as we all get together between Santos, Tamboran, Empire and Amunji, you could see as many as six horizontal wells being drilled in the Middle Balcaribi shale in 2022 between all four operators. You could see more importantly as much as 10,000 meters of horizontal wells being fracked and flow tested during 2022.

17:51 So a massive, massive step up in the activity we've seen to date in the Beetleu and yes, could move us towards declaration of commerciality for certain sections of, the Beetaloo Basin. It won't be for the entire because there's large areas of the basin will still be left relatively underexplored unlike the areas around the Mungi for example or Tannam the Tannamorini wells. In terms of what does that translate to in value proposition at FALCON, as I said at the outset, our market cap is roughly about $100,000,000 You look at how acres are traded, particularly in North America, where there's been lots of m and a deals done over many years and even recently. And hand and acres changing hands, you know, undeveloped, undrilled acres changing hands at, you know, north of $1,000 per acre.

18:41 And here we have, you know, FALCON with a with a net, you know, 1,000,000 acres in the Bidiloosa Basin. Multiple news events coming up. Obviously, the most immediate one is the Santos and then launching the various CapEx programs by all four operators. And then the drilling of those, programs starting in Aaron is probably not until May next year. For those not familiar with this part of the world, there is the wet season coming in around about now, and you don't get out onto the beetlew until about April stroke, early May before you can get back on the ground with mobilizing rigs and equipment and everything else. So our focus next year, as I said, hopefully will be on the Middlewell Carry B. We'll confirm that in the next few weeks with Origin, hopefully moving some of this, if not all of the continued resource into reserve and getting to this declaration of commerciality.

19:30 We also we remain carried. There's a $264,000,000 carry as part of our program. We still have a good chunk of that left. It was a program that was started in August 2018. So Origin have been busy working away. Unfortunately, for FALCON, we haven't had to pay for any of that work, from actually since they came on board in 2014 right through till now. And still, we have a sizable amount of that carry left as we go into 2022. So all in all, a pretty exciting time. We've just had more excitement coming. And '22 is, I think, is gonna be the pivotal year for the beta loop. So if I can hand over to the q and a sessions, we have there's appendix here. We can if there's particular questions that come up, we can draw your attention to some of the answers that may be provided for in the appendices.

20:18 Philip, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated in the top right hand corner of your screen. But just while FALCON takes few moments to review those investor questions submitted already, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A can be accessed via your investor dashboard on the Investment Company platform. I'd also like to remind you that your feedback is important to the company and immediately after the presentation has ended you'll be redirected for the opportunity to provide your feedback in order that the company can better understand your views and expectations. Philip, ahead of today's event, we received a number of pre submitted questions, and I just want to start the Q and A session with those. The first one reads as follows: About ten years ago, we paid $25,000 for the preferred stock directly with FALCON OIL and GAS. Can you explain how those shares are doing and how they differ from the normal OTC shares, please?

21:10 Yeah. That's an interesting question. We don't have any preferred stock. What the person asking the question may be referring to might be shares in FALCON OIL and GAS Australia, our 98, percent subsidiary. But look, the simple way to clarify that question, if the person who asked the question could just submit some more information directly to me on email. Email address, you can get it on the website, but it's poquigley@falconoilandgas.com. I'd be very happy to take up that further.

21:37 Thank you. The next question reads as follows. Could you please disclose in your standard post shareholder announcement the exact number of votes for each proposition? I've never been able to find that information online. If you choose not to release that publicly to shareholders, could you at least provide a link for those that are interested to view it? Yeah. Again, it's not a requirement from the TSXV. Obviously, we're a British Columbia company, but very happy, you know, again, direct your question directly to us. We can very happily provide that information as we do on the day of the EGM for anyone attending. I don't have the numbers to hand, but that's certainly something I can provide after the meeting. Thank you very much. I'd really appreciate a better understanding of how a core area in a shale gas field is determined. FALCON is a neighbour that is claiming that EPE permits one hundred sixty one and one hundred thirty six represent the entire core area of the Beetaloo. And I really appreciate a better understanding whether that is correct or not.

22:30 Yeah. This is a question I've been asked a lot in the last couple of months. There's been a lot of emphasis by Tamron about the core area. I mean, look, in reality, a core area, you can't, by its definition, you can't define a career for several more years. You need a number of data points before you can calculate. And it's almost a look back to see what is or what was the core area. You're going to have areas such as depth alone or TOC or mineralogy or porosity or permeability. They all will factor into what's going to be the core area. But ultimately, the test will be is what is the most commercial area. And at this stage, it's impossible to tell what the most commercial area is going to be. You know, it it depends on how expensive your CapEx is, how deep you are versus a shallow play will be less expensive from a CapEx. I mean, will you have higher flow rates of DPUR versus, you know, lower pressure at at a shallower rate? But then again, might have higher porosity and permeability. So there's a whole number of factors.

23:31 No one we certainly wouldn't be claiming, you know, to be in the core area. Our acreage was staked by our predecessors twenty two years ago when there wasn't anybody else in the Beetaloo Basin. We'd certainly like to think back then when we had a clear runway to go after whatever acreage you like, we did pick up what we thought was the best. It certainly is the acreage that has the greatest degree of variability in terms of the depth horizons that the Valkyrie shale play is in. So for example, the Valkyrie 76, we're at 1,900 meters. At the Amunji, we're at 2,500 meters. At Beeloo W1, we're down to 3,000 meters. And we don't know yet which of those areas will be core overall, but likely or most of it will be commercial. Some will be sweeter spots and more core than others, but certainly we wouldn't be claiming anyone to be the core area at this stage.

24:24 Thank you. Just moving on. The Beetaloo, which is now the number one new gas project for the government support in Australia and has recently become much more widely known across the entire world of shale gas developments.

24:37 This raises the question how best to capitalize on FALCON's beastly position when commercialization is clearly on the horizon. Therefore, I was wondering if you could give us any kind of update on whether you have interested parties making any early overtures to FALCON or more generally the types of companies that you believe would be most suited to working with Origin for the long term. Okay. Well, the first part of that question, you know, I I couldn't really answer. I wouldn't answer I couldn't answer it now or anytime in the future due to just, you know, commercial sensitivity around that particular question. In terms of who would be interested, who might be looking at this, you know, you you don't have to look too far outside of Darwin. You've got Totales of this world. You've got INPEX. As I said, combined, they've invested $45,000,000,000 in Darwin, with two LNG trains. They've stated or at least INPEX have stated they would like to expand that to six LNG trains if they can get more molecules of hydrocarbon.

25:32 You got the Santos operated LNG facility. So there are there's a few obvious players, if you like, who would have an interest in getting more equity gas if there's equity gas to be had in the beetleu. But the size and scale of the beetleu and FALCON's, you know, 22 and a half percent interest is of such a significant scale. It you know, unsuccessful attract the interest of all the super majors, and certainly many of the NOCs, operating around this part of the world. So there'll be, you know, hopefully when that time comes, there will be no short list of potential suitors for FALCON's interest in the Bishnaw. Thank you very much. Just turning on to the next question, which reads as follows. I'm interested in the macro gas field in Hungary. Is extraction planned there or is there any progress on the matter? We have had a share of FALCON for more than ten years. We hope the price will rise.

26:25 But why is the exchange rate so low? Yeah. The macro trough, you know, it's it's probably the it it is the asset that most shareholders originally got interested in FALCON, when that was our sole asset on the books back in two thousand six, seven and eight. We didn't get the results we wanted when drilling that. Some very deep wells out to 6,000 meters. It is an area that remains of interest. We do get the odd serious company coming through the data room. Hopefully, sometimes somebody will have another look at it and see a way of taking on the macro trough, which still, as I said, remains of interest. We have no immediate plans to do any major work in the next year or two on it. But as I said, the data room is always open and people do always pick up that phone and are curious to see what they might do with it.

27:14 Thank you. Just moving on. Given expectations that FALCON might monetize its holding in the Beetaloo Basin at the end of twenty twenty two or in the first half of twenty twenty three and due to current high LNG price in East Asia, can we assume if you were to receive approaches, you'd consider offers next year for the company's South African Hungarian interests. I pose this, of course, in context of FALCON's former partner, Chevron, and the Hungarian national company, Moll, might have longer times horizon than than FALCON does. Yeah. Look, when we we talk about monetizing, as part of our strategy, that that is part of our strategy. And it's it's something we've we've all set ourselves up for that company that won't wanna see going into production.

27:59 How we monetize, one of the things we look to is being very tax efficient. So if an offer, for example, came in tomorrow and they wanted the beetleu assets, which is the key assets in our portfolio, The tax efficient way to do that is actually sell the parent company, which is the Canadian listed company. To sell the asset at the asset level just wouldn't work. However, that wouldn't stop us, for example, if somebody came along and their sole focus was on the macro trough. And certainly, if somebody wanted to come along and acquire that, that's something we could easily do also. Similarly with South Africa, not so easy because it's still held as a technical corporation permit, is held at the parent company level and is not directly transferable to anyone just yet until we get an expiration permit.

28:44 But the overall message in terms of a monetization event right now, the way we're set up, it will be done by selling the entire company at the top co level to manage the tax efficiency of doing that sale. So there's no tax payments to be made at local levels in either Australia or in fact, back up in Canada. That's great. In addition to FALCON's two planned horizontal wells next year, might there be an opportunity to undertake further useful research following on from Origin and FALCON's useful work at the end of twenty twenty and early twenty twenty one in the Kiala area where results showed high quantities of wet gas? Yeah. Look, we haven't confirmed what our planning drilling planning is for next year yet. Hopefully, will be, you know, perhaps two horizontal wells.

29:33 As I we'll we'll announce that in the next few weeks when we finish our discussions with Origin. In terms of going back to Kalla, absolutely. It's unfinished business as far as we're concerned. It's a really, really interesting area. The high liquids value component makes it very interesting. So certainly, there will be quite a lot of additional research work being done on the Kalla area over the next year. Thank you. The next question asks why FALCON doesn't do more to promote the company and help increase buyers and the share price. Yeah, good question. And we started. So for the last few years between a moratorium, little activity in terms of news flow, until we kind of came into the second half of twenty twenty one, we didn't have a whole lot to do to promote the company. It wasn't that we didn't want to, whether we didn't have a huge amount of news activity.

30:24 So that kind of changed at the back end of August. I reengaged with Camarco, who we had back in the day as our IR firm here based in London. Taking on Joan Alley as my chairman, forty five years in the city, was part of that. This platform, Investor Meet, is another part of what we're trying to do and many other things we're doing to promote this company and get the value appreciation we need. Promotion on its own doesn't work in isolation. You need to do that and have it backed up with results. So the timing of how one promotes the company is kind of critical to get the best bang for your buck for getting out there and promoting the company. Now, I think, is the right time. And as I say, we've engaged in many, many different fronts over the last few months, we will certainly continue to do an awful lot more into 2022. Thank you. Turning to the next question.

31:13 When is there likely to be an exit option event for Australian shareholders? What form is it likely to take? And what sort of share price range is being targeted? Yeah. So for people that are not familiar with, FALCON owns roughly 98% of Falcon Australia. And then Falcon Australia, the other 2% is held by about 50 or 60 individual shareholders. So the question is probably coming from one of those shareholders in terms of the exit. We've always you know, the easiest way we did offer up a an exchange for shares in FALCON back in 2013, I think it was, where many of the shareholders took up that offer close to about 100 out of the 150 would have had. The exit now will be linked and timed with the exit from by FALCON itself. So when we do find that monetization event down the road selling Falcon PLC, that will be the time when Falcon Australia will also find its exit. It's very unlikely, again for tax reasons, that we would sell Falcon Australia on its own and Falcon Australia shareholders will find an exit then. Again, that just wouldn't be smart tax planning. So the timing of the exits for Falcon Australia shareholders would be done at the same time as Falcon Canada, the main parent company.

32:25 Thank you. Of the $260,000,000, carry on exploration costs, how much has Origin drawn down and how much is left for further explorationdevelopment? Yeah. Again, it's a kind of a it's a good question, slightly commercially sensitive. Origin don't publish that number. So we're not really at liberty to talk openly about it. As I said, is a big carry, $264,000,000. It started back in August 2018. They'll be drilling and doing lots of work since then. The carry is not finished. There's still quite a good bit to go, but I can't be more specific exactly on how much is left. But there is still a good bit to go that we've no real concerns in terms of having to make any contributions in the real short term for certain.

33:11 Thank you. The next question asks if you're proactively engaging with energy firms and seeking a buyer or is the strategy to sit and wait to be approached? It's a combination of both, actually. And you don't want to go too early. You don't want to seem too eager. When I founded this out to Origin in 2014, I started that journey actually in May 2012 sorry, 2013, where I did kind of, you know, warming up some people, telling them who I was. We're not ready for that just yet. You know, the results coming out this year together with Santos results, I think you'll see a few probably inbound calls. We'll stay alive to it. We're not going chasing anyone.

33:59 One of the things I firmly believe in, the true way we will maximize shareholders value in FALCON on an exit is to stay in absolute complete control of the timing of that exit. So that's a bit of, you know, call it chess playing, poker playing, but being positioned well enough and smart enough that you know who's out there, you know when to go to them and what proposition you're bringing to them at the time. So it's all about getting all our ducks in a row, if you like. Thank you. The next question reads as follows: What do you think the government's B2L strategy document published in January 2021 when it suggested the drilling of 200 to 300 wells per year off by 2025 at 20 per well. Was this confused with CBM drilling as it equates to $6,000,000,000 billion dollars followed by exclamation mark?

34:54 Yeah. Look, first of all, I mean, we absolutely welcome the government's BLU strategy document and certainly in the form of a $224,000,000 financial commitment by the government. That's fantastic. However, I think it is a little bit optimistic to think we can drill two to 300 two to 3,000 meter horizontal wells per year, in the Beetaloo. That will be some achievement. But, certainly, we would hope to see by twenty twenty four, twenty five, a massive increase in activity of drilling wells and certainly less than, you know, the $20,000,000. That 2 to 300,000,000 that two to 300 well count, yeah, that's more that is more like a CBM territory where you're popping wells every one or two days, but certainly not drilling 3,000 meter laterals at two and a half thousand meters of depth. But still, nonetheless, great to see that government support.

35:41 Thank you, Philip. That deals with the pre submitted questions. I just wondered if I could hand back to you to open up the Q and A tab and respond to those which are appropriate to do so. Could I ask you just to simply read out their name and the question and then answer it where? Okay. Thank you. So let me just see. Is John Craven still involved in the business? No. John, resigned or retired as chairman several years ago at this stage. No. And I haven't spoken to John for some time. Sorry. That was a question from you and l. Question from Trey G. What is the current status of the ORE options available? So yeah. So ORE refers to the overriding royalty interest on the Beetaloo.

36:30 Back when I started with the Beetaloo and Origin sorry, Falcon in 2012, we had 12% privately held overriding royalty interests. We bought out 9% of those over the years. There's 3% left. I have has a call option to acquire 2% of that 3% at a cost of 6,000,000 US dollars. And that call option expires in April 2022. But it has expired previously. Negotiate an extension and we most likely will do so again when that time comes into April 2022. Richard S, do you think FALCON OIL will benefit from any Australian government grants?

37:18 So there's two parts to this question. But the first part of your question, Richard, is, look, the grants are there. So the government offered $50,000,000 of grants for drilling, up to $7,500,000 per well or 25 of a $30,000,000 well. But they're only for accelerated work in the Beetaloo, not for work program that we'd already committed and signed up to. And we don't have accelerated work. Our work program we set up back in 2014 with the government we're working through still has two more wells to be drilled in it next year. So we don't there isn't an acceleration. There isn't anything to land a grant application, unlike some other companies who got their timing different to ours and can put accelerated program into it, we couldn't we were not in a position to do that.

38:04 Part of the other question from Richard S, will FOG have to raise additional funds during 2022? No. I mean, no and yes. No and that we don't have to. Different question maybe might be, would we want to? And I go back to one of my fundamental, beliefs is to stay in complete, utter control of the timing of our exit. So I don't want to ever be in a position that I have to raise money. We raised money in last money we raised was $9,000,000 in 2019. And our bank balance today is $9,400,000 today, two and a half years later. That's the time we raised money we wanted to raise, not needed to raise. So I don't see us needing to raise money, during 2022. And I think that is I've got Kevin S. Sorry, just another question coming in.

38:52 When would you expect to have a certificate of commercialization? It's not so much a certificate, Kevin. It'd be more where we or Origin or Santos will say, you know, declaration, of commercialization. And that's likely sorry, not likely. That's hopefully going to come out at the back end of the 2022 work program by all operators, not just FALCON. But if FALCON has success and Santos has success and Tamron has success and Empire has success and it's all looking like and it's all focused, for example, on the middle of Valkyrie V shale, and it's all putting in rates, you know, north of two and a 500 to 3,000 MCF a day, and the gas market stays where it is and so forth and so on, then I think we're likely to have, you know, let's call it the the concept of declaration or a notional declaration of commerciality on the back of all of that work.

39:41 But it won't be for the entire 4,600,000 acres. It'll be on, you know, one eighth of that, for example, if it's around the Amunjan area, it won't be around all of it. Question from Peter D. Any activity in South Africa? Unfortunately, no. We we acquired and were granted a technical cooperation permit way back in 2010, and we submitted shortly after as an application for an exploration permit. And we've been working. I've spent a huge amount of time, some years ago, actually, working with directly with the government, in trying to get those applications through, not just for for FALCON, but for everybody else operating onshore, in South Africa. But unfortunately, there hasn't been any activity. We're still waiting for legislation to get passed. And until that gets passed through parliament, they're not even in a position to grant exploration permits. So nothing happening just yet.

40:33 Philip, if I could just button that. Just want to say thank you. You've been very generous with your time. You've pretty much answered all the questions from investors today. And of course, the company will review any further questions submitted and publish responses where it's appropriate to do so. Perhaps I could ask you for a few closing comments just before I redirect investors. Yeah, I suppose, look, the key thing is now we've just had a huge activity in 2021. We've had the fivefold increase of the mungee. We've got Santos rates coming in in about three weeks time that will hopefully confirm those flow rates are not just a one off. And then we're gonna step into 2022, as I said, with a massive increase in activity, potentially up to six wells, 10,000 meters of horizontal. And I don't think at the end of '22 is is the question around the beetleu, the question around FALCON, it won't be about one about success or failure anymore.

41:22 It'll be about what does success look like and how big can success be. You know, and a and a fame a quote famously said by Dave Close, who's very close to the Beetleu, once asked when we had our results at Amunji, Dave was asked how big could this really be? And he turned around and he said it's like trying to identify an elephant by its toenail in terms of its potential size. So I think we're heading into a really exciting time. We're very excited. We know Origin are very excited. I'm sure Tambern and Santos will share that excitement around Christmas. And, yeah, it should be a great year ahead of us. Philip, thanks again for updating Investors Day. Could I please ask investors not to close the session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations.

42:12 This will only take a few minutes to complete however it's greatly valued by the company. On behalf of the management team of FALCON OIL and GAS LTD, we'd like to thank you for attending today's presentation. That now concludes today's session and good afternoon to you all. Thank you all.