4.5 Talon 12 month work plan After the conclusion of the restructure to be undertaken under the Demerger Deed, and any adjustments made under the Scheme Implementation Agreement, Talon is expected to have cash reserves of approximately $8.8 million if the Acquisition Scheme is not implemented or $7.8 million17 if the Acquisition Scheme is implemented.
Based on current estimates, Talon has sufficient cash to fund its committed expenditure over the 12 months following the Implementation Date. This committed expenditure is set out in the table below and comprises one firm well commitment in the Roundhouse prospect (see Section 4.4(c)) and funding to progress its remaining portfolio.
Talon 12 month work plan and budget Committed Work Program A$million Roundhouse Drilling 3.3 Prospect generation 0.6 Working Capital 1.9 Total 12 months estimate 5.8
Talon has a portfolio of prospects with large equity positions with material value upside should exploration prove successful. Where Talon does hold large equity positions, the potential exists to farmout these prospects, and still retain material equity positions. Talon is currently examining partial sale and farm out options, which if successful will result in an expanded work program on its Olmos and other projects. The funding options available to Talon are described in further detail in Section 4.6.
4.6 Funding strategy In the event the Demerger is implemented, Talon will retain its existing cash resources and operating cashf lows from the Olmos and Wilcox assets.
Based on current estimates, Talon has sufficient cash to complete its current committed 12 month expenditure as set out in Section 4.5. Talon will look to expand beyond its current committed work plan to drive shareholder value through a range of funding options other than capital raisings. Funding options likely to be available include asset sales and farmout arrangements whereby the costs, risks and returns of developing the assets may be shared with other parties. Talon holds high working interests in a number of projects including the Olmos that has production and approximately 1.3 MMBOE in reserves, and also the Redfish, Catfish and East Bank prospects in East Texas.
Among other options, Talon would be in a position to participate in one commonly used farmout structure that involves parties farming in for a 25% share in the well in return for the payment of 33% of the costs. Through this methodology, 100% owned prospects can be fully funded by a farminee with Talon retaining a 25% free carried Working Interest.
TXN Price at posting:
45.0¢ Sentiment: Hold Disclosure: Held
