Falcon will retain a 10% working interest in the enlarged area of around 72,000 acres surrounding the pilot and also retains an additional A$16.67m ($11m) of gross carry that will be used to offset the costs related to the pilot in 2024
Falcon to reduce its interest in Shenandoah South pilot. (Credit: WORKSITE Ltd. on Unsplash)
Ireland-based Falcon Oil & Gas is set to reduce its working interest in the proposed Shenandoah South pilot project from 22.5% to 5%, in a move to optimise its interest in the Beetaloo Basin in Australia.
The company will retain a 10% working interest in the enlarged area of around 72,000 acres surrounding the pilot and a 22.5% working interest in the remaining 4.52 million acres.
Falcon’s decision to reduce its working interest will significantly reduce its share of costs for the two wells planned to be drilled this year, as part of the pilot.
The company also retains an additional A$16.67m ($11m) of gross carry that will be used to offset the costs related to the pilot in 2024, further reducing its cost to participate.
Falcon CEO Philip O’Quigley said: “Falcon’s election to reduce its participating interest to 5% in the Pilot is a prudent use of our capital resources as it significantly reduces our cost exposure.
“Post a successful Pilot, Falcon will own a weighted average interest of 10% in the enlarged area of around 72,000 acres around the Pilot and will be able to participate in any future development of this area, whilst still retaining 22.5% interest in the remaining 4.52 million acres.
“This election by Falcon demonstrates our ability to optimise our interest in the Beetaloo for the benefit of shareholders.”
Last year, Falcon participated in the SS1-H well at its 22.5% working interest, which created a Drill Spacing Unit (DSU) of 20,480 acres.
This year, the company will participate and retain a 5% working interest in the two wells, which will create two new DSUs totalling 51,200 acres.
Falcon’s combined weighted average ownership and future participation entitlement of this enlarged area of 72,000 acres post Pilot will be 10%.
The company will retain its full 22.5% participation interest in the remaining 4.52 million acres in the Beetaloo Basin, which makes a net one million acres to Falcon.
Falcon Oil & Gas is engaged in the exploration and development of unconventional oil and gas assets, with the current portfolio focused on Australia, South Africa, and Hungary.