Falcon hopeful Australian fracking ban will be lifted

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Falcon hopeful Australian fracking ban will be lifted

Irish gas explorer remains confident as Northern Territories inquiry steps up

Falcon Oil owns a 30pc share of a huge Australian gas field that could be 100 times bigger than the Corrib gas field in Ireland (stock picture)
Falcon Oil owns a 30pc share of a huge Australian gas field that could be 100 times bigger than the Corrib gas field in Ireland (stock picture)

Fearghal O’Connor

The Dublin-headquartered company, headed up by exploration veteran Philip O’Quigley, owns a 30pc share of the huge Beetaloo Basin shale gas field. The company has predicted that Beetaloo could ultimately compare in size to the world’s biggest unconventional gas fields, where fracking is used for extraction. Studies have suggested a technically recoverable resource of 85 trillion cubic feet – about 100 times the amount of gas in Ireland’s Corrib gas field.
Last week, an Australian judge appointed economic consultants to examine the issue of fracking in the Northern Territories, a key step in a politically-charged inquiry into whether a ban on the controversial extraction process should be maintained in the region.

The scientific inquiry was ordered last year after the fracking ban was instigated. Justice Rachel Pepper is due to release an interim report into the matter later this month and is expected to make a final ruling by October.

If Justice Pepper moves to lift the ban it will clear the way for the Irish company, and its Australian partner, Origin, to further develop the potentially huge gas field. Falcon chief executive Philip O’Quigley said the process was “very transparent and is being managed in a time efficient way”.

“We remain very hopeful that at the end of the process the moratorium will be lifted,” he said.

A new report last week by Davy, which acts as broker to Falcon, placed a net asset value on the company of $525m, or 41.5 pence per share.

Davy said it believes “there is still considerable additional upside” in Falcon’s valuation based on more established shale plays in the US.

“Given the shortage of gas and the Federal position on supply security political ramifications, an outright drilling ban looks unlikely,” it said. The Davy report said that “considerable value has already been created and there is still plenty of scope to increase this despite the complexities involved.”

Falcon, listed on London’s AIM market, has seen strong share price growth, from just over 5 pence per share at the beginning of the year to over 22 pence in recent days.

O’Quigley said that a lifting of the fracking ban would allow Falcon avail of a further AUS$115m towards an appraisal exploration programme promised by Origin as part of a farm-out deal the two companies agreed in 2014.

“We still have five more wells to drill and Falcon does not have to pay a cent,” said O’Quigley. “If the moratorium is lifted our focus will become the deployment of this programme to deliver further value from this asset before we look at what the options are for the company beyond that.”

Sunday Indo Business