EEG vs Tamboran

If Tamboran is raising $195m there is clearly a lot of value not yet recognised in eeg share price given that our market cap is only $70m.

Makes EEG look massively undervalued/recognised

Sarah Thompson, Anthony Macdonald and Tim Boyd

Jul 21, 2020 – 9.35pm

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East coast gas market hopeful Tamboran Resources is in front of fund managers outlining the biggest mooted Australian oil and gas sector initial public offering in years.

Tamboran Resources is seeking to raise $195 million in the coming six months to fund commitments across its three assets, including one jointly owned with local heavyweight Santos.

More than $US350 million has been spent exploring the Betaloo Basin since the 1960s, and Origin Energy and Santos’ emergence in recent years combined with regulatory changes has revived interest. James Davies

Its pitch is about becoming the ASX’s only pure-play Beetaloo Basin project developer (and later producer) of size, at a time when Australia’s east coast gas market is screaming out for new sources of supply.

The Beetaloo Basin is one logical place to help fill the gas market supply shortfall, which is forecast from 2024. Tamboran has three assets in the McArthur Basin, within the Beetaloo sub-basin, which is located about 500 kilometres south of Darwin.

Tamboran has told potential investors its goal is to develop at least 5 trillion cubic feet of proven and probable reserves to help with the shortfall, with initial production of at least 36 petajoules a year. It says more than $US350 million has been spent exploring the Beetaloo Basin on and off since the 1960s, and Origin Energy and Santos’ emergence in recent years combined with regulatory changes has revived interest.

First, though, Tamboran needs fresh capital. It is seeking to raise $30 million to $50 million in a pre-initial public offering raising via Bell Potter Securities to fund pressing commitments now, with plans to return to the market for another $160 million in an IPO slated for as soon as the December quarter.

Funds raised would be used to complete a pair of acquisitions – including Paul Fudge’s Pangaea Resources for $19 million, and an American company called Sweetpea Petroleum, both of which are neighbours in the Beetaloo.

Whopper deal

It’s a mammoth raising in Australian oil and gas and particularly given challenges in energy markets globally. The world leaders in shale, the US producers, are mostly either in distress or even bankrupt. Locally, there are doubts about how much time Santos and others will spend trying to progress their Northern Territory projects next year.

But fund managers reckon that if anyone could pull it off, it could be Tamboran whose team is spearheaded by some US shale pioneers and Australian industry players. Chairman Patrick Elliott founded Eastern Star Gas, which Santos bought for $924 million in 2011, while former Petrohawk Energy Corp founder and president Dick Stoneburner is a director. BHP bought Petrohawk for $US12.1 billion.