Tamboran Resources' Q1 2026: Contradictions in Capital Spending and Farm-Out Timing

Guidance:

• Target first gas sales mid‑2026.
• SS6H stimulation to complete by end‑2025; IP30 flow testing in Q1 2026 after a ~20–30 day soak and ~30‑day flow test.
• Stimulate remaining wells in H1 2026 to reach initial sales of 40 TJ/day; management sees 40–50 TJ/day upside and potential expansion to ~100 TJ/day with added compression in 12–18 months.
• SPCF and Sturt pipeline on time and within P50 budget; SPCF financed up to AUD118M with NT government support.
• Expect Falcon acquisition, PIPE shareholder vote and Phase‑Two farm‑out to conclude in Q1 2026; near‑term cash inflows ~A$100M plus A$39.6M balance.

Business Commentary:

• Transformational Progress in the Beetaloo Basin:
• Tamboran Resources sanctioned the Shenandoah South Pilot Project, a significant milestone for initial gas sales from the Beetaloo Basin.
• The decision follows execution of key commercial documents and stakeholder approvals, positioning the company for mid-2026 sales.

• This development is crucial for Tamboran's growth as it aligns with the Northern Territory Government's beneficial use of gas legislation.

  

• Capital Raise and Financial Strength:

• Tamboran raised $56.1 million before fees through a public offer and entered into subscription agreements for an additional $32 million via a PIPE transaction.
• The company ended the quarter with $39.6 million in cash, expecting near-term cash inflows of $100 million.

• These funds will support Tamboran's pilot project to initial gas sales and ensure operational and financial stability.

• Stimulation Program and Well Performance:

• Tamboran successfully completed the stimulation program on the SS6H well, expected to be completed by year-end.
• The company adjusted stimulation designs to match proppant and fluid intensity with previous wells, optimizing well performance.

• This reflects a strategic response to previous well performance data, indicating that lower proppant intensity can be effective in the Beetaloo Basin.

• Infrastructure Development and Timelines:

• The project for the Tamboran-operated Sturt Plateau Compression Facility was 68% complete, tracking the P50 budget and schedule, on track for mid-2026.
• The APA-operated Sturt Plateau Pipeline is within budget and on schedule, with 60% of the pipeline now welded, aiming for practical completion by year's end.

• These infrastructure developments are critical for the timely delivery of gas to the local market.

• Strategic Acquisitions and Acreage Expansion:

• Tamboran acquired 22.5% of non-operated interests in the Beetaloo Basin from Falcon Oil and Gas, enhancing its acreage position.
• The acquisition increased Tamboran's total net acres to 2.9 million, with an enterprise value exceeding $500 million.
• This strategic move strengthens Tamboran's position in the Beetaloo Basin and supports future development plans.

Sentiment Analysis:

Overall Tone: Positive

• Management described the sanctioning of the Shenandoah South Pilot as a "major milestone," stated the SPCF was 68% complete and "tracking the P50 budget and schedule," reiterated projects are "on track to deliver first gas in mid‑2026," and highlighted a cash balance of A$39.6M with near‑term inflows of ~A$100M — all indicating constructive execution and financing progress.

Q&A:

• Question from Scott Hanold (RBC Capital Markets): Can you talk status quo on capital spend over the next few quarters into first production and whether the Falcon acquisition will be a net cash inflow net of fees?
  Response: CFO: Company is well funded for the pilot — A$39.6M cash plus A$56M public offer and A$32M PIPE (vote pending) and up to A$30M SPP, approaching ~A$160M; Tamboran's remaining spend ~AUD95M (company share) and Falcon contributes cash components (~A$23M) less transaction costs; no immediate market raise expected.

• Question from Scott Hanold (RBC Capital Markets): What caused the coil tubing issue on SS4H and any details from SS6H pressure testing/initial stimulation work?
  Response: CEO: Coil was sheared due to service company rigging error (service company covers costs); team moved to SS6H to avoid delay; SS6H stimulation progressing as planned, early stages tougher but overall low risk to schedule.

• Question from Calay Akamine (Bank of America): Please explain the completion/proppant design choices (lower proppant intensity on 6H versus 2H) and any geological rationale; and do you see upside to the 40 TJ/day pilot contract with Darwin?
  Response: CEO: Design is iterative — early data suggest lower proppant/water intensity can match or improve performance while cutting costs, so SS6H uses a reduced intensity; regarding volumes, 40 TJ/day is conservative, management sees 40–50 TJ/day upside and expansion to ~100 TJ/day possible with modest compression additions.

• Question from Charles Mead (Johnson Rice): Any update on the farm‑out process (data room/participant interest) and rationale for increasing the Phase Two Development Area to 500k acres?
  Response: CEO/CPO: Farm‑out has robust, high‑quality interest and remains on track for Q1 2026; Phase Two acreage was increased to 500k acres in response to participant demand and post‑Falcon pro‑forma holdings to create a larger, geologically consistent, and more attractive unit for bidders.

• Question from Paul Diamond (Citibank): How will SS6H flowback/testing affect EUR/IP/decline expectations and any update on sourcing local sand?
  Response: CEO: Plan conservative flowback to manage pressure (flow ~1 week to 10 days to ~150 bbl/MM then shut for a 20–30 day soak) followed by ~30‑day flow test to optimize performance; local sand testing is underway with tracer‑tagged stages to compare performance and initial tests indicate in‑basin sand is pumpable.

• Question from Anisha Pati (Hannam & Partners): For the farm‑out, how important is partner technology/track record vs price, and any view on impacts of lower LNG pricing on the gas market?
  Response: CEO/CPO: Priority is partners who bring shale operational and midstream/marketing capability — mix of global and North American experience is valued over pure price; on markets, domestic and East Coast gas demand remains strong despite softer LNG pricing, and Tamboran prioritizes serving local/East Coast shortages first.

Contradiction Point 1

Capital Spending and Cash Flow Impact

It involves differing statements regarding capital spending and its impact on cash flow, which are crucial for financial planning and investor understanding.

What is the current status of capital spending over the next few quarters before first production? How will the Falcon acquisition impact cash flow? - Scott Hanold(RBC Capital Markets)

2026Q1: We are well funded, with $127.6 million in total. Approximately $136 million is required to complete the pilot project and SPCF. Falcon acquisition adds $13 million in costs. Despite this, we have sufficient funds to deliver on our commitments. - Eric Dyer(CFO)

How do you see 2026 cash flow shaping up? - Scott Handled(RBC Capital Markets)

2025Q4: Our current capex estimate is $155 million for 2026, which could be reduced by up to $20 million depending on the farm out agreement. - Eric Dyer(CFO)

Contradiction Point 2

Farm Out Process and Timing

It pertains to the progress and expected timing of the farm out process, which is crucial for strategic partnerships and financial planning.

Are there any updates on the farm-out process? - Charles Mead(Johnson Rice)

2026Q1: The process is robust with a wide range of interested parties. We have more interest than expected, with strong operational and midstream experience among participants. - Dick Stoneburner(CEO)

When do you expect to complete the farmout process—will it be in 1Q 2026 or potentially delayed to 2Q 2026? - Charles Mead(Johnson Rice)

2025Q4: Ideally, a conclusion and announcement could be made around 1Q 2026. However, specific timing remains uncertain due to the involvement of multiple parties in the process. - Dick Stoneburner(CEO)