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

0:01 Good afternoon, ladies and gentlemen, and welcome to the FALCON OIL and GAS investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the q and a tab situated on the right hand corner of your screen. We have received a considerable number of presubmitted questions. So if we may just ask you to reserve submitting those questions until we've completed a majority of those presubmitted questions, and then feel free just to type in your question at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can

0:32 review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, as usual, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to CEO, Philip Quickley. Thank you. Thank you very much, everybody, and, welcome all. We are, going to present a short presentation. And then as Mark said, we're gonna jump into a q and a session. And, really, this is a follow on from our AGM of last week. And for those of you on today, apologies for the communication problems we had last week, completely outside of our control. It was a issue in Canada. So we decided to rerun the presentation and most of the q and a again, for the benefit of those who did attend but couldn't hear, and then for those who weren't able to attend last week.

1:19 So let me jump into the presentation. It's very short. Give you a quick overview of the company. Again, corporate information, we've got a billion shares in issue. Cash in the bank, which is a very healthy $17,000,000. Our major shareholders have had one significant change in the last year, and that's the addition of Brian Sheffield coming in at 8.66%. So welcome. Very welcome addition to our share register. And then as a reminder of what, you know, most of this company is about is Beetaloo, a massive 18,000 square kilometers or 4,600,000 acres. We've already had a significant discovery of 6.6 TCF of gross contingent resources. We are, as you know, quoted on Toronto on the TSXV and, of course, in London on the AIM market.

2:05 So quick company overview. As I said, very focused on Australia, which is our Beetaloo sub basin in the Northern Territory Australia. It does measure, as I said, 4,600,000 acres and 6.6 TCF to date already discovered. Our board expertise now has, you know, expertise in over 4,000 unconventional wells, particularly in the addition of Tom Lehman to our board in the last few months, and he's certainly a welcome addition. Our joint venture in the is is with Origin Energy and has been since 2014, and they remain as our operator. And, unfortunately, for us, are carrying us through, the capital expenditure program since way back in 2014 and and still continue to carry us through, the work we're doing today.

2:53 And I'll talk a little bit mostly about what this current work program is in terms of the 2022. It's about to kick off very shortly and, obviously, the objectives of that as well. So let me jump into what this stage three work program looks like. Firstly, we're going to acquire 58 kilometer lines of high spec two d seismic in and around the Amanji Well leased area. We'll then in around September, we're going to split our first well on the Imunji Pad. So alongside the very successful 2016 well that we went back and retested in September last year, We're gonna drill a new 1,000 meter horizontal well there. Then we'll step out 10 kilometers from that pad to a new pad, which is currently final being the construction of it is being finalized, and we'll spud that second well immediately after the first well has been completed.

3:45 And then we'll drill oh, sorry. We'll track both of those wells about 15 stages for each 1,000 meter, horizontal section and then run those production tests for 90 or maybe a hundred and eighty days. In addition to that drilling and testing program, we'll obviously do follow-up work on our what we consider a very, very successful Valkari exploration well, the Valkari 76 that we completed last year, and there's further core and log analysis to go on there. And then finally, our Koyala well, which we're still doing, you know, a lot of work on where we struggle in terms of getting the well to flow on its own. We did get a decent flow rate at various stages using artificial lift techniques, but there's still, you know, answers questions to be answered, and further work to be done over the course of this year.

4:37 So I'll just moving on to the objectives of this year's program. You know, the primary objective of drilling these two wells is to, you know, one, obtain flow rates of two to 3,000 MCF of gas per day for each 1,000 meter lateral. And should we achieve those kind of rates, that would give us the confidence then to move into a multi well, multi pad pilot development program in '23 and '24. The other objectives of this program is to, you know, work on getting our drilling rates down, down to less than forty five days, to learn more about the natural fracture network and the complexity of it in the beach loop. And then, of course, to integrate all our well data, current and future well data, together with the seismic data to assess merits

5:26 of future three d seismic surveys in the beach loop, which we'd look to be doing that ahead of doing a multi well pilot program. Now in addition to what we are doing, it's also important to remember we're not the only ones in the Bitolu anymore. We have significant presence from Empire, Tamboran, and Santos. Empire are currently testing over the the well called the Carpenturia 2 H Well. They completed the drilling of that last year, and they're now started testing that in terms of, hydraulic fracture stimulation of that well started last week. And we'll expect to see results of that test before the end of August. So they're doing a multi. I think they're doing 25 stages across that 1,000 meter lateral. So that's pretty exciting because the direct read through on the Carpenteria 2 H well across to our Valkari 76 Flank well, very similar in terms of its geological setting, slightly shallower than ours. Ours is, you know, about seventeen, eighteen hundred meters. They might be 12 or 1,300 meters, but nonetheless, a very, very good read through. And then Empire also have plans to drill two additional wells, a horizontal well called the Carpinteria 3 H and a vertical well, the Carpinteria 4 B Well.

6:40 So a lot of activity to go between now and the end of this year.

6:44 Santos Tamberin, who completed their two tenonburini wells, very success wells in 2021. The what we get up there is an update on what the three hundred day flow test might look like, and that could be coming up shortly, which will be of interest to everybody, how that well has has worked and flowed over the last three hundred days. More interesting, of course, would be Tamron's own well. They own, you know, a 100% of the Maverick Block area, and they're gonna drill that well September, October spud date. Again, a very good well for us too given its proximity to our, Amundi Wells and our Volkari 76. So a lot a lot of activity going on at the Beadaloo. It's no longer FALCON OIL drilling. We've got a lot of, other activity, which will hopefully move this speedily towards, you know, declaration of commercial as we head into '23 and '24.

7:36 So that concludes the presentation. As I said, short and sweet. Most of what I'd like to talk to now is just going into the to the q and a session. So if I can hand back to to Mark maybe to to start some

7:46 of those questions. That's great, Philip. Thank you very much indeed, and thank you to everybody that submitted the the questions. We've got quite a few to get through. So I won't waste any time, Philip. I'll start with the first one, which reads as follows. Given the retest of the Imunji well, which were verified by outside sources, what level of confidence is there that the flow rates can be replicated in the upcoming 1,000 meter cracks? Our guidance is two to three MFCF. I'd assume that is to temper expectations. Could you elaborate? Mhmm. Look. Look. First of all, the the test results we referred to in September, they were they were fantastic. They did confirm we have what we call a deformation in the casing, and the results there was a calculation done that a normalized flow rate, if you didn't have the deformation over 1,000 meters, would have been in excess of 5,000 mcf a day.

8:34 So based on those test results and the flow rates we got from not just one of the stages of work, but, like, four stages of the 11 that did contribute to the actual flow rate, we're extremely confident that

8:44 these rates can be replicated. But it's really important to note, our success case rates are in the range of 2,000 to 3,000. We're not trying to temper expectations. These are the success case rates. 5,000 rates was is icing on the cake. 5,000 is possible. Yes. We could replicate it, but it's it's really important to know the success case is two to 3,000. Obviously, the higher up, the better it is, but two to three is is what we're aiming for. That's great. Thank you. Please, can you clarify the number of wells required to carry out a reliable pilot production project?

9:23 Yeah. I guess by reliable, I presume you mean, you know, one sizable enough to support going to full scale production. So success of this current program, we would envisage a pilot production something in the order of up to 12 wells, two to three pads, so three to four wells per pad. But more importantly, the length of those horizontal sections increasing from a thousand meters to up to 3,000 meters. And then once we achieve the success across the pilot production plan over the 2324 period, that then would move us towards full scale development heading into 2025, which is obviously the big the bigger objective. Thank you. Turning to the next question, if I may. We've been investors since 2011 when we invested in FALCON as our first and only since private placement.

10:11 We're curious to know a projected time frame for distribution or if there are any plans to IPO yet. In other words, what's our potential to regain on our investment? Yeah. So for this shareholder, presume you're a shareholder in FALCON Australia and not FALCON Canada. So the company you're you're in is a private company we own 98% of. We did back in 2013 offer all FALCON Australia shareholders the option to convert into Falcon Canada shares. About half the shareholders took up that offer. We don't have plans to repeat that offer. It's a it's a rather cumbersome process, an expensive process, and neither do we plan to IPO FALCON Australia. However, there's no bad news on any of

10:53 that, because the potential for any gain in your investment in in FALCON Australia is directly linked to any gain in in FALCON Canada, and you can track that by reference to the quoted share price for Falcon Canada, which you can get on the, t s x c at f o. Fee is a is a ticker for that one. And, ultimately, in terms of realizing a gain without an IPO, I mean, a gain for a FALCON Australia shareholder, you know, will you know, would be triggered on a sale of FALCON Canada, and your FALCON shares in Australia would effectively get the equivalent terms to your to a Falcon Canada share. So there'll be no there'll be no difference, really. Great. Thank you. Couple of questions, I guess, around the share price. It reads as follows. I'm curious as to when the management of the company expects some up or gain in the stock price of the company. Watched over the last several years as the stock has moved between $9.18.

11:45 When do we expect 30 to 50¢ or something along those lines?

11:49 Never soon enough for you, for the management, for the board, for anyone. I mean, look. The share price performance, it's been very disappointing over the last number of years, particularly when you take into account the exception results of last September, the current global energy crisis, and now this really exciting work program which we're about to kick off. But if we have the kind of results that we are confident that we get from these two well we're drilling this year, I think you're gonna see a fundamental and permanent upward shift in the value of FALCON. So it's not, you know, it's not it's it's it's not tomorrow, but it's within the next three to six months, certainly. That's great. Thank you. A long question here, if I may, just read it in full. It says, Philip, can you tell investors a bit more about the progress on the step out well pad for the second Amunji Horizontal Well and the approximate location? I'm also wondering

12:40 if the existing Amunji H 1 well pad is being used for the first horizontal or whether a new well pad is being constructed just across the Carpentier Highway. What level of confidence do you have that the actual drilling will start in September given that the hot rig is currently in use by another e and p company in Beetaloo and that they may extend that time for that rig? Do you have any financial estimates as yet as to what FALCON's 22% share of a 12 world pro pilot program may be. So a lot in there, Philip. Over to you, Lisa. Thanks. Let me break it down, actually. I think about four or five questions there. The step out well pad is location is 10 kilometers from the Mungi Well Pad. The pad itself is nearing completion, but it'll be ready in in plenty of time to receive that rig and splitting of you know, and for the splitting of the second well.

13:26 So we with no issues on that. Are we using the set the existing?

13:31 Absolutely. So the existing pad is being used for the second well. The reference on the half rig, the the rig is hot, but it is not being used by anyone at the moment. But it has been used recently and has been used in the beta loop, but it does not. So we're not dependent on another drilling program to expire. In fact, we are carrying out, some minor modifications on it before it's being mobilized to site. That's the only thing that that's holding it up from moving to site. And in terms of the the cost, it's far too early to give an estimate of what that. We haven't even designed what the the pilot program would be, so it's way too early what that might cost FALCON. Thank you. Do you expect the new Australian PM and his administration to have any negative impact on FALCON's operations in the future?

14:17 You can never be sure when it comes to politicians. But, look, we don't really expect any you know, we've a labor government in Northern Territory. We now have a federal labor government, and they're pretty aligned on their vision and views for the and very of the development of the BetaLoo. So we don't we don't see any any negative impact at all. Thank you. When will we find out whether the BetaLoo Basin project is commercially viable or not? Yeah. Like I said at the presentation, one of the key objectives of this current work program is to assess, you know, the commercial viability, at least as it pertains to the Mungi member b shield. You know?

14:58 That will be down to the flow rates we get from these two one thousand meter horizontal wells, that we're gonna be drilling and frac stimulating. So it's not a question of certainly not a question of years. It's just down to the next four to six months. And if we can achieve the success case flow rates of two to 3,000, then it becomes more commercially viable. You know, the real test for commercial viability will be the end of the pilot production. But I think going into the pilot production, you wouldn't go in there if you didn't think it was commercially viable to begin with. So it really is down to the next six months. Thank you very much indeed. A slightly longer question here. Over the last number of years, we're conditioned to believe that once commerciality was declared that the asset would be sold. There is now a change of plan. If you could elaborate on where you see the future and how it might unfold and likely timelines.

15:47 If the upcoming and monetary flow rates hit similar rates to the retest last September, would FALCON be up for sale if the right offer appeared, and what might the right offer be to tempt to sale?

15:57 Yeah. Look. That's a great question. And the the upfront answer to it, yes, there is a change of plan. We always had a plan about we talked about exit, and exit was kind of, you know, our our go to kind of thing on success. Now when you look at the kind of success we had in September last year and you look at the fact that it really only pertains to one eighth of our total acreage, even if we have success in the next six months, to sell in the back of that success, we'd be selling out way too early. You're not gonna capture value, real value for the other seven, eights no matter how much success we're going to have in the next six months. So I think there's a there has been a change in in in plan where, you know, we won't be looking and putting the for sale sign up on the back of success at the end of this year or into early next year.

16:45 As a public company, of course, there's also potential for somebody to make an offer for us. But our we're better off, you know, on success in the next six months is going into this pilot development program. And at the same time down the road, you know, seeing what we can do at

17:00 the Volkari flank and across the Kalla play as well. So that is a significant change in the the view of the board of FALCON over the last, let's call it, six or nine months and certainly since September last year. That's great. I mean, I think we have touched on the Australian government question, but it it may be a different, different view on it. But how will the recent change in Australian government leadership change the commitments to advance our interests? I think you may have touched on it. But Yeah. I I haven't. And no change at all to the commitments. None whatsoever. Perfect. Let's move on to the next question. I'm both a shareholder in FALCON and also a ORII owner in Mako in Hungary. Any chance that the dire natural gas shortage and the high oil and gas prices in Europe will incentivize Falcon to reenter a Mako well alone or with partners?

17:48 No. We're not looking to reenter the Mako, in in Hungary, not for the foreseeable future. But, you know, we always remain open as we've always done to the possibility that someone might partner up with us. And, yeah, given everything else going on, the dire natural gas shortage, that could happen. But as I said, we're not actively out looking for somebody nor are we looking to reenter it ourselves at the moment. That's great. Question or statement here, I don't know which, but there's a lot of coverage in the newspapers about stock prices, spot prices received for LNG shipments out of Darwin. Just wondered if you had any comments around that. Yeah. Indeed, there has been for good reason because, those spot prices have been they've been hitting $30 per Mcf, over the last six months. That compares to $6 at Henry Hub.

18:35 Hence, there's been a lot of talk about it. And even as we look out of what we call the JKM, the Japan, Korea marker, which is the benchmark for LNG in this part of the world, that price curve

18:44 and trend is trending upwards up to $40 an MCF. So that's really, really good news for FALCON and for the development of the feature there. And I guess an extension of that, can you provide us on prices paid for term contracts for one year or more? And have they moved in more recent months in percentage terms as much as spot prices? Yeah. We wouldn't have that degree of visibility on term contracts. They tend to be confidential between the various counterparties. But any term contract in today, for example, you know, on a twenty year term, that would be well north of $10 gas, and the will be hugely commercial at $10. Mean, our breakeven estimated by the likes of UBS and others is sub $5 gas. So any contracts we are hearing about is certainly north of $10. So it's it's, it's certainly in a in a really good place in terms of pricing. That's great. Thank you. Let's

19:36 turn to the next question. What sort of premium does LNG out of Darwin achieve compared to prices in The US? Yeah. I kind of hinted at that. You know, we're looking at, you know, $30 gas, out of Darwin, $6.60 on the Henry Hub. You're looking at about a 350% premium. So that's a that's about as healthy a premium as you're ever likely to see. So as again as as again as I said, it's very, very favorable for the development of the Beta Great. Drilling costs in the Beta so far as we can see today are are higher than in The US. Can one expect these costs will begin to come down now? And if so, can you explain how the drilling companies expect to achieve this?

20:13 Yeah. The cost of drilling, you know, early drilling in particular in a remote basin, which is two and a half thousand kilometers from the nearest oil field, I mean, they're significantly higher than in The US. But these costs will come down as soon as activities increase. US rig op operators, and we know it, are starting now to look at Australia as rig activity in The US starts to decline. So if we have success in not just we. We, Empire, and Tambern have success in 2022, you're gonna see US rig operators moving into the PLO for '23 and beyond. And with them, so too will all the oilfield service providers. And when that happens, that's when you'll see a dramatic reduction in in cost of drilling. Thank you. Tam Tamboran and Santos in the last twelve months got themselves into disputes with the landowners in the basin.

21:02 To date, Origin, stroke, FALCON have not experienced this. Can we expect this to continue?

21:08 Yeah. The speech you're referring to, I think, is one between Tamboran, Santos, and Rallon over land access. And you're correct. Origin hasn't experienced any similar disputes to date. And, you know, Origin, they invest a huge amount of resources and stakeholder management in the over the last eight years. We've seen that, you know, for upfront. Their track record in stakeholder management is is one of the key reasons we chose them as our partner back in 2014, and we are highly confident they'll continue to manage all stakeholders in the same proficient way and avoid any potential disputes. That's great. Can you confirm the position at present is that we have two royalties on our 22 and a half percent portion of the 4,600,000 acres, one with the Bayless family, 1%, and the other 2% with mister Sheffield?

21:55 Yep. That's largely correct. The Bayless family is it's not just the Bayless family. It's about four to five beneficiaries of that, and they do own 1%, overriding royalty. But this does amount to a total reduction from what was originally 12% privately held over now down to 3%, which is a great result for the company, great result for us to be able to get out and develop the b two l with just a 3% overriding royalty and not what was there, you know, up to two or three years ago, but as high as 12%. That's great. And there is a follow on to that. Can you confirm too that Origin has now only the 1% royalty with the Bayless family, which I think we've just Yeah. Well, Origin yeah. Origin would have had similar call options as to FALCON available to them. They could have exercised, and by doing that, they would have reduced their already down to, you know, 1%.

22:42 But I I'm not privy to whether they did or didn't, so I can't confirm, that they've exercised all of the call options, but it certainly would have made sense for them to do so.

22:51 That's great. We're halfway through the presubmitted questions, Philip. So if I may, I'll I'll crack on through the second half. The first of which reads as follows, how do FALCON's royalties compare to those of Tamboran, Santos, and Empire? Well, in Tamboran's case, I know from the 2021 perspectives that they have a range of ARIs very similar to what we had back, you know, when I when I came on board here in 2012. And they have call options in place to reduce them over time for various, you know, payments. Not too dissimilar to what we had. I don't have an inside knowledge into what royalties might exist at Empire of Santos,

23:26 but, yeah, similar Tamper is pretty much similar to what we had. Thank you very much indeed. Has there been any indication that there might be a differential pricing for BetaLu gas sold, internally, e g to the East Coast, and supplies shipped overseas? Yeah. Look. Gas, it's it's priced differently depending on what market you go, what route you go. There's a whole host of factors to take into account, when looking at pricing, you know, the length of pipeline associated tariff on a different pipeline. If you're going in LNG route, you're looking at liquefaction, shipping, degasification costs. Whatever it ends up being, you know, FALCON will always look to sell its 22 and a half percent share of beetle of gas into the highest market. And the great thing is we own the molecules at the end of the day, so it is up to FALCON to determine where those molecules go.

24:17 We don't have to go with where Origin decide to take the gas, for example, to their APLNG project on the East Coast. We can decide to take our share of the gas, 22 and a half percent of the molecules. We can take that to the highest market. So it's, wherever the when we find the best price is where we'll take our gas. Right. Thank you. Has any agreement been reached in principle that an initial quantity of BetaLu gas must be sold to internal users in the first few years before any export tails as a quid pro quo for federal government infrastructure assistance?

24:50 Short answer is no. But, look, there'll always be talk around a what they call a domestic gas reservation policy, particularly when you consider the fact that Australia is the largest exporter of LNG in the world, and at the same time, it's short gas. So, you you know, one might ask how could this even be allowed to happen, but the simple answer is that without twenty five year export contracts being put in place, when these projects are being developed, they would never have been developed. However, you know, the BLU, it's an onshore gas field, so there's a very good chance of being onshore that some of this gas will find its way into domestic market anyway and without, you know, any great need for federal government intervention. But, you know, as I said, the short answer to your question is, you know, we haven't seen any indication yet on a quid pro quo for federal government's infrastructure assistance. So we're we're pretty good. That's great. Thank you.

25:40 Congratulations to Anne Flynn, and congratulations too to Joan Nelly and Tom Layman for coming on board. Anne's contribution is very welcome and very clear.

25:49 But can you enlighten everyone here this afternoon where you see Joe and Tom making the most contribution to the company over the next couple of years? Yeah. Thank you for this question. I can certainly agree with your sentiments with regards to Anne, and thank you for that. We're very fortunate to have both Joe and, more recently, Tom join the board. And I did put these questions to them at the AGM, which they were on the call at the time. So let me maybe read out the answers from Tom and then from Joe when I put those questions to them. So Tom's answer was, my role as an independent director is to help the CEO, c o CFO, and the rest of the board achieve FALCON's goals. I have extensive oil and gas industry experience, including over twenty years working several US shale plays, including the Barnett, Marcellus, and the Utica plays, from the exploration and appraisal phases through to full field development.

26:40 In the near term, I am providing technical and business advice to the FALCON team regarding the 2022 appraisal program. Longer term, my experience with large capital programs will hopefully be of use in FALCON strategy development as the Beadrillo ramps up to become a world class producing basin.

26:56 Finally, I think that my experience working for large public e and p companies for about thirty years would allow me to help to guide the executive team to meet their objectives and fulfill the responsibilities to the shareholders. So that was Tom's answer to that question when he was put when he was put at the AGM, last week. Similarly, Joe was asked the same question and answered, having helped the company fund itself over the last number of years as its corporate stockbroker, I agreed to take the role of chairman on at my ret sorry. I've taken on the role of chairman on my retirement from the city of London. Given the comfortable financial position of the company that it is now in, funding is not an issue at the moment. I see my role as using my connections in assisting management and helping to monetize our asset by strategic partnership to enable us to stay into the early development phase, which would produce a multiple return to shareholders from their present position.

27:50 So I think and hopefully, answers, that shareholder's question. That's great. Thank you very much indeed, Philip. Can one assume FALCON works closely now with Santos, Empire, and Tamboran? Yeah. I talk regularly to the guys at Empire, Tamboran, less so to the people at Santos. The key guy at Santos actually now works over at Tamron, so we set up good connections to all. More importantly, Origin as our operator, they have a very good working relationship with all of the operators in the, and there's now both formal and informal relations between all parties because everyone knows success and, importantly, the the speed of success will depend a lot on the level of collaboration between all parties. And this is something

28:33 that Origin and FALCON, together particularly with Tom Lehman and a number of other companies are now actively very actively engaging in. Thank you very much indeed. We did a lot of work last year. And although not part of this year's program, I understand time was going to be spent this year going through the results on Kiela in order to assist if we were gonna go back to it at a future time. Can you share with us this afternoon if these studies have yielded new insights? Yeah. Origin, you know what, they have carried out a lot of studies. They continue to do this work. For shareholders listening in today that are relatively new to FALCON, as a general reminder, we successfully drilled a, you know, 1,600 meter lateral section into the liquids rich Koyala formation, and refract and flow tested at rates of up to 1,500 MCF a day. And on the back of that, we did issue a notification of discovery way back in January 2021.

29:26 However, we did encounter issues of saline fluid coming back up the wellbore, which impeded the flow of gas. And the studies have shown that the Lower Kala, you know, it has higher than average TOC values. It has good porosity. It has very good permeability averages, and it's a wet gas condensate. So in our view, all of these properties confirm that the Lower Kiela has the geological and geochemical characteristics comparable to several unconventional systems in North America. That's great. Thank you. Any chance of another Kiela well in 2023, or will funds be directed to a better understood and more predictable formation?

30:04 We'd love to get back to drill a little well at the Kiela, because simply because it has enormous potential. But I the answer to your question lies in the question itself. As we progress this year's program together with separate programs of Tambor and Empire, all targeting the member b shell, we will gain an even better understanding of the predictable formation. And this, no question, but this will remain the focus for Origin Falcon through to the pilot production plan. So, yes, we're gonna stick with, as I said, the Mungi member b show. Thank you very much indeed. Turning to the next question. Will twenty twenty three program consist of a second Valkyrie Flank well?

30:44 Again, I give a similar answer to the last question. We'd love to get back to the Valkyrie Flank, where we, you know, we really had excellent results from our first exploration well. But our focus for the next couple of years, it has to be the Mungi member b shell. In the meantime, we'll look very closely across the empire, test results coming out by the end of August. We can learn a lot from theirs, And then, you know, we can plan targeting it well. I wouldn't rule it out for 2023, to be honest, because the results we've got today were so good. And, you know, we're we're hopeful that Empire will have equally good results on their carpentry well in the next six weeks or so. So I wouldn't rule it out, but it won't it's not it's not top of our list to go after in '23. It's the pilot development program we really wanna go after.

31:31 If there's rig availability, resource availability, yes, we could do it, but maybe it's a 24 well.

31:39 Thank you. Might our 2022 program be altered in the next month or two if exceptional figures come through for Tamboran's Maverick well and Empire's drilling program? Absolutely not. Look. We're really, really excited about our program. Success amongst our neighbors, it'll it'll just add to the excitement. But, you know, we won't have results in time to alter anything anyway even if we wanted to. So that there's there's gonna be no change to our program. Our our program is fixed. It's a really good program. It's a a robust program, and it's it's not to be changed at any stage. So Thank you. Is there any progress on South Africa? Surely, given the greater interest from European countries in African oil and gas, one might see some prospects of South African putting together

32:22 a proper strategy. Yeah. Good timing on this question. So thanks. As a reminder to shareholders, FALCON has a technical cooperation permit over a huge 7,000,000 acres in the Karoo Basin in in South Africa. But we've been waiting over ten years to be awarded an exploration permit. The granting of this has been delayed due to the fact that the regulatory framework pertaining to the exploration production of onshore oil and gas, is just not in place. And then last week, the government published new regulations governing that same, work, and it's now going through a short period of public consultation. And, hopefully, we'll see these new regs being signed off by Parliament, which will then eventually pave the way for the grant of an expiration permit. But we've been here before.

33:07 Maybe we're here now for the last time. So maybe this side of Christmas, we might get a nice Santa Claus present and get our expiration permits final in.

33:17 That's great. Thank you. What's your view on how global markets will be impacted if Russia turns off its gas to European countries? I think three words sums that up. Security of supply. That's what's going to be at the forefront of every country's minds going into winter twenty twenty two. It's just gonna become the key issue for everyone. You know, countries that can turn back on their coal fired power stations have already started to do so. Take a look at Germany.

33:48 Gas, you know, it's gonna be in high demand across all of Europe, and there'll be increased demand for gas going into Asia, which will increase prices even further. You know, we see this as a absolutely huge opportunity for FALCON as countries such as Japan, Thailand, Taiwan, Korea, and many more will be looking to Australia to secure even more gas. In fact, only last week, Japan's industry minister, he was on a five day trip to Australia, and he pleading with the Australians to increase their LNG production because it's trying to protect its energy supplies after Russia seized control of the Sakhalin 2, which is one of the major sources of LNG going into Japan. And Japan, as you know, you know, it shut down all its nuclear facilities back some years ago. It has no desire to turn those back on again. So it's heavily dependent as in most of Southeast Asia, heavily dependent on gas. So security of of supply is gonna become the key focus for everyone, wherever they can get it. And it really puts the in a a a wonderful place given our connected way into

34:50 playing the Southeast Asian markets through Darwin and out through LNG exports. So it's it's good news for FALCON. It's not good news for, you know, world energy, but, nonetheless, we take we take the positives from it. Thank you. Is it too early to comment on where we might focus in 2023? Definitely not. I mean, '23, it's only a few months away. But like I said, we have success from this year's drilling program. We've been moving into the next phase, targeting the Mungi member dry gas play with this multi well program in 2324. So that's what our focus is going to be. Lovely. What is the time for the two one kilometer horizontals?

35:31 And is there enough time left this year to get both new wells drilled and fracked before year end with the sixty day flow testing running into the new year? Yeah. That kind of that sums up where we are. We expect to spud the first of the two wells in early September. Allow forty five days to drill each, in between a rig move. You know, we should be able to complete both wells by the end of the year. Fracking will be run, you know, immediately those wells are completed, and then, yeah, flow testing, you know, most likely won't commence until early January. So it'll really be that January phase when you're looking for those big numbers in terms of the flow rates themselves. But we're we're not weather dependent. We're right bank slap next to the highway, so we don't have, you know, weather issues that we can't move, resources in and out of the area. So we can operate, you know, all through the wet season if it does come to that.

36:19 But, yeah, we're we're on target to complete the drilling this year and then get the flow test going as early as we can in January. That's great. And next question really around the the hot rig and whether the rig is now on-site for the first one kilometer horizontal. And if not, when will it be on-site? Yeah. I touched on a bit on the hot rig earlier, you know, and for other shareholders listening today, you know, the reference to a hot rig is an important one because it refers to a rig that, you know, it's been in recent operation. Whereas a cold rig has been lying idle in a yard and, you know, in a 150 or 250 pieces. You put it all back together again and mobilize the site. But, look, I can confirm, you know, Origin is using a hot rig. It's a rig that has recently been operating in the Beelaloo, not currently operating, but has been operating in the Beelaloo. And it'll come with some of the crew that operated its most recent drilling activity.

37:08 The timing, as I said, is just going through some final modifications. It'll be mobilized to site in plenty of time for the splitting of this first well in September.

37:19 Thank you. What can you say about the 2023 pilot product production plan? It'll probably be well, first of all, won't be '23. It'll be '23 stroke 24. I think I've touched on it. It's gonna be, you know, hopefully up to 12 wells. Maybe it's eight. Maybe it's nine, ten, but certainly, you know, up to 12 wells over two to three pads. It's too early to get into any specifics at this stage. But the great news is that once we confirm our success case of two to 3,000,000 scuffs of gas a day, we will be moving into the pilot development program. No more exploration. No more appraisal. Success case flow rates means pilot development. And, again, more critically, targeting the Mungi men Mungi member B Shell So then we can move into kind of full scale development as we go into 2025.

38:09 Thank you. What are the overall plans for capitalizing on the beta loop permits, and what might that timing look like? Yeah. This touches on the question asked earlier. The overall plans, you know, for capitalizing the beta, it's it's shifted a bit since our fantastic results in September 21 when we retested in. We always as I said, we talked about the exit strategy, which is always a viable option, but it's no longer considered the only option. I think that's that's the key difference. Success with this current trading program would lead to a pilot production plan, and that will have a significant change in the valuation of the beta loop. Success, you know, it'll also attract attention of potential sources who may look to acquire FALCON. However, you know, our potential success, no matter how fantastic it is, you know, it won't capture value for the entire 4,600,000 acres should we look, you know, to do an exit in in 2023.

39:03 And it's unlikely, you acquire will pay full value for the eight eights, and, you know, they wouldn't pay full value for what we really like if they'll carry 76 or or for the play. So our overall plans to capitalize on the beetle has to include looking to bring in a strategic investor, you know, that could see us capturing more of the value over the entire 4,600,000 acres rather than selling out too soon. Thank you. And what's your understanding of what might happen under Canadian law with our largest shareholder shareholding in the next year or so? So what largest shareholder you're obviously referring to is the Mesa Holdings, whose ultimate beneficial shareholder is Victor Vexenburg. So we put out a press release on the March 23. We detailed the full position in regard to this shareholding given the fact that The US imposed sanctions on mister Vexenburg back in April 2018.

39:54 Nothing has changed since that PR. But, you know, at the end of the day, it's actually not a matter for Canadian law. The message is shareholder in FALCON. It's afforded the exact same status and legal entitlements under Canadian law as any and every other shareholder, and that's I don't think that's ever going to change. So, there's no issue there in terms of of Canadian law with regard to our largest shareholder at all. Well, great. You'll be pleased to hear, Philip. That's the end of my voice asking you questions. I I guess everyone else might believe as well. But, thank you to all of those that took time to pre submit the questions ahead of today's event. And as you can see, Philip, there's a number of questions that have come in. And apologies if some of those may be duplicated as they came in perhaps before some of the final questions were submitted to you. But if I may, can I just ask you to open up the q and a tab and read out the questions and and give a response where it's appropriate to do so? And, of course, anything, you know, we can cover that if we don't have time, we can cover and present the job. And thank you for all these questions.

40:51 If I start with the first one is where does the pilot program come from? We work to prove and sell. So I think I've answered that, that our change in strategy is you're not gonna capture value by proven sell as in get these results in '22 and sell in in q one twenty three. That's where we talk about going into this pilot development program. Second question, when is the size we're getting started imminently? That's all I can say there. It will be going ahead very soon. Next question, I've noticed a large increase in dilution. We now are at 1,040,000,000 shares. Is the cons company considering a reverse split at some point? Why have insiders not bought up more shares in institutions?

41:38 So reverse split is something that is very tricky. Reverse split means, you know, what we call it in our part of our consolidation where you might do, you know, one for 100 and have your shares outstanding down to 10,000,000,000 rather than 1,000,000,000, and your share price goes to, you know, $3 instead of 30¢. But that's very tricky to play with because your $3 can become $2.50 an awful lot quicker than your 30¢ becoming 25 no. Not 30¢, but 12¢. So it's it's something you could only ever do when you got, you know, real momentum going forward and a real momentum story going forward for this foreseeable future. We've looked at it time and time again as the questions come up from shareholders over the last several years given the number of shares we have outstanding. So we're not looking at it anytime in the near future in terms of reverse split.

42:28 Insiders, myself, we the board, we bought shares back, I think it was the end of the year or the first week in January, was the last time. I think I meet everyone on the board, I think, bought shares, including Anne, who's the CFO at that time. Next one. I've been a shareholder since 2009. You mentioned a permanent shift in share price next week to six. What kind how much of a permanent shift would you expect? You know, whatever I expect, it'll never happen, is the simple answer there. Look. We are we are massively undervalued at, you know, $121,314.15 or, anyway, up to 30¢. We're still massively undervalued. Success here, you know, at at the two to 3,000,000 scuffs of gas per day, you are gonna see a, you know, a multiple increase in that share price, a lot of activity, a lot more shareholders coming into FALCON. And that's why I think it's gonna be permanent. It's not just gonna be a blip, you know, for for one week in January, 2023.

43:23 And you also got, you know, the added benefit of everybody else around us, Tamber and and Empire, hopefully coming out with positive results. You know, can I see the share price go to $30.40 cents in the back of these results? I'd love to see it. I don't see why it shouldn't to me. We've been there before with with nothing like this, going for us. And now you look at the energy market and the pricing dynamic and everything else and the activity around us, you know, we've never ever been in a better place than we are right now. So success here now should really materialize into a a a significant and permanent shift in the share price. Next one. Do we see any negative input in the next hundred and eighty day program by environmental protestants? Will it slow it down? No. I mean, look. You'll always have environmental protesting. We do everything by the book as do Origin. They are the operator. We have all our premise and approvals in place. We have all our stakeholder engagement fully onboard.

44:20 So, no, nothing there that's going to slow us down. I mean, you know, the moratorium we had up 2016 is done and dusted. It's not coming back. And we're, you know, sticking with those recommendations from from the, that moratorium from the Pepper, inquiry. So I don't see anything like that slowing us down. Why isn't FALCON buying back shares for a few millions to do something with the share price? So buying back shares, it would be using, you know, our own resources, which are better deployed, for future investment in the B2B rather than buying back shares. You know, we did, as I said, a board of management bought shares, you know, as a vote of confidence back in, I think it was done at, $8.08 pence or slightly higher than 8p back around early January.

45:06 We are very confident of this company. And, but, no, we don't plan to do any further purchase in order to FALCON itself. Corporate buying back shares is not on the agenda. And then I see a question here. Is any talk of a windfall profits tax in Australia given the run up on gas prices? We saw that in The UK recently. I haven't heard anything of the kind in Australia yet is the answer to that. Next one from Ulrich. Any more comments on the under sanctioned status of your largest shareholder, Lamesa, due to the Russian invasion as you're backing away from the one stated objective of monetized related to the situation which you made as a shareholder? As I understand it, Lamesa is making any as I understand it, Lamesa making any money from Beetle isn't acceptable to just trading the government.

45:58 So, look, we put out a full detailed press release in March. Nothing has changed since then, at all. The shares have been in the mess. They've been sorry. Look. Victor has been sanctioned since 2018. His shares through the mess that that hold the shareholding at FALCON, they've been quarantined. And since since that date, those shares have not they haven't been able to vote those shares since 2018 at the AGM. So they're they're it's kind of a benign shareholding. If, for example and and by the way, there's no connection with the shareholding at all at all in terms of backing away from our our one stated objective of monetizing. There's there's no connection whatsoever. If we were to sell the company, as I understand it, any proceeds from the, shareholding held by will go back to that same entity that currently holds those shares of quarantine so that vector Victor Bergsberg cannot get any benefit drive any benefit from the sale of FALCON shares. And this is something that's been looked at by, the Australian government, and signed off on accordingly based on everything they've seen and know about that shareholding. So there's no issue there at all. It's as I said, it's a benign shareholding.

47:13 It is what it is. Although, like I said, under Canadian law, they are a shareholder, no different from any other shareholder. Nothing has been said about funding. When does the carry end? Good question. Nothing has been said about funding. We are fairly funded. We've got over $17,000,000 in the bank. 10,000,000 of that came in in the form of Brian Sheffield in early April this year, which is, as I said, a welcome addition to our share register. Our carry carry runs out. Our carry was, you know, started back in 2014. So we've had a pretty good run since 2014, and here we are. We're still carried. We've got an additional uplift in the carry of about 150,000,000 the beginning of COVID. But that carrier won't last forever. If it'll it'll certainly have been exhausted before we finish this current program. So between now and the end of this program, that carrier will be exhausted, and then we'll be paying our own way. But, you know, the reason we don't talk about raising money or or or funding is because we don't need to. So we have 17,000,000, and even at the end of the carry, you know, that'll that won't impact a huge amount on the 17,000,000, not not at least for, you know, the next six to nine or twelve months.

48:24 And what share price do you plan to raise money for the drilling program 23? Pass. No idea whether I'll raise money or bring in a strategic partner or what the share price might like might be. We would as I said, on if we're going into a 23 program, there's no question we're going to have a massive increase in our share price. Because as I said, we'll only go into the '23 trading program on that success case flow rates of two to 3,000,000. And if we have those kind of flow rates, that will translate into a a much higher valuation and a higher share price for FALCON. Philip, as you can see, you've answered every single question from investors, investors, both have presubmitted and came in during the live event. So thank you once again to everybody for your engagement. Philip, I know that investor feedback will be particularly important to you and to the company, and I'll shortly redirect investors on the call to give you their thoughts and expectations.

49:16 But I wonder before doing so, if I may, Philip, just ask you for a few closing comments, and then I'll send investors to give you their feedback. Yeah. Look. Thanks, Mark. My closing comment really is is thanks to you all, for attending, but particularly thanks to you all for your your questions. That's what makes this hosting this, session with Investor Meet really worthwhile is getting all of those questions from you. Some of them came in in advance, which is great. And it's great to be able to then, you know, share those answers with you. My my final comment, whether you pick it up or not, I've never ever been more excited about FALCON and the b flu than I am right now. And there's lots and lots of great reasons for that. You know, we are really excited about the program. We're really excited about all the macro issues going on around us. Our timing could not have been better.

50:04 We have a great board, great additions to our board. As I said, we're well funded. We've got this great new addition to share register. Our success never guaranteed. But as I said, I've never felt more optimistic, more excited about the prospects for the company that I am today. So I wish us all good luck. That's great, Philip. Thank you very much indeed. Could I please ask investors not to close this session as we're now automatically redirect you for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This may take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of FALCON OIL and GAS, we'd like to thank you for attending this afternoon's presentation. That concludes today's session, and may I wish you all a very pleasant afternoon.