Tamboran Resources Corporation (TBN) Earnings Call Transcript

Just a heads-up that this call is being recorded. At this point I'll hand things over to Todd Abbott, our Chief Executive Officer. Thanks, and go ahead whenever you're ready.

Good day, everyone, and thank you for joining us for Tamboran Resources' earnings presentation for the third quarter of Financial Year 2026. I'm Todd Abbott, Chief Executive Officer of Tamboran Resources. With me today are Eric Dyer, our Chief Financial Officer, and Chris Morbey, Vice President, Investor Relations and Corporate Development. Starting with this call, I'll be taking a different approach than in the past: instead of walking through every slide one by one, I'll cover the key highlights, operational updates, and upcoming catalysts, and then go directly to Q&A. The rest of the presentation will remain available for your reference. If you turn to slide two, you'll find our disclaimer covering forward-looking statements contained in the presentation, and I'd encourage you to review it when convenient. On slide three: the March 2026 quarter was an eventful one for Tamboran, with several major steps forward as we keep executing our Beetaloo Basin strategy and move toward first production from the pilot area in the third quarter of this calendar year. We announced a significant transaction with Daly Waters Energy, our partner in the Beetaloo Basin, to farm out approximately 10,000 acres across the pilot area and the Beetaloo Central Development Area, in exchange for a staged carry of up to $28.5 million.

The economic terms for this deal are very close to those in the farming agreement between Daly Waters Energy and INPEX. That INPEX–Daly Waters transaction has given us a significant data point for high-quality core acreage in the Beetaloo Basin, and it mirrors the farm-out acreage we hold across the lease line in the Orion Block. It also marks a significant step up from where Tamboran is trading right now. Once the transaction with Daly Waters Energy completes, we will hold a 44.375% interest in the pilot area and a 10% interest in the Daly Waters Energy acreage. We are continuing to advance our joint venture on the Orion Block, which lies north of the pilot area. A lot has changed since our last call. The basin has been rerated by the INPEX transaction. Our follow-on deal with Daly Waters Energy has provided a carry for our near-term capital program. Those are two of the most important advantages any farm-out can offer. Let me be clear: we still believe a joint venture with a strategic partner matters. Those discussions are ongoing. The upward movement in asset valuation markers, progress in de-risking the Beetaloo, first gas sales coming closer, strong interest in Australian natural gas assets, and a number of additional tailwinds leave us in a strong position.

What's happening in the Middle East right now has also made energy security matter more, and it underlines how valuable the Beetaloo is as a big in situ CO2 gas resource for Asia Pacific. That factor, together with INPEX coming in — a sophisticated and highly credible international gas company — has sharply raised the level of attention on the basin. Since certain of these companies already know the asset quite well while others are only now starting their process, predicting timing is extremely difficult. Thanks to our recent capital raise, we have the financial flexibility to pursue the right partnership at the appropriate value while we keep de-risking the asset. Despite tough weather, development activities for the pilot project moved forward during the quarter. At the end of April, construction at the Sturt Plateau Compression Facility stood at 88% complete, with solid headway on electrical, instrumentation, controls, and piping installation. Importantly, we are still inside the P50 budget and schedule forecast for this project, and first gas remains on track for the third quarter of this calendar year. The APA-owned pipeline that links the facility to the Northern Territory gas network is in final commissioning before tie-in to the SPCF.

I want to give full recognition to the Tamboran operations crew and our contractors for carrying out this project safely. The three remaining wells that we need in order to achieve initial gas sales of roughly 40 million cubic feet per day gross to the Northern Territory government, under the long-term gas contract with CPI escalation, are now being readied for stimulation over the next few weeks. That program should cover 180 stages in total, spanning 30,000 feet of stimulated length. The Liberty Energy fleet will handle the stimulation work, and the SS-4H and SS-5H wells will undergo zipper fracking. In addition, we intend to trial several stages using local sand sourced from the Beetaloo Basin over the course of the campaign, and if that works, it will be a significant contributor to our strategy for lowering costs. On future wells, this has the potential to cut stimulation costs by $4 million, based on 60-stage horizontals of 10,000 ft. The operations team is likewise getting ready for the two-well program at the SS-1 pad, which sits about 3 mi to the south of the SPCF. Startup there is scheduled for mid 2026. The two commitment wells with Daly Waters will be connected to the SPCF infrastructure in the second half of the calendar year. We are also taking part in two wells alongside our partner Santos, located in the EP 161 acreage within the Beetaloo Eastern Depot Center, where our interest is 25% and non-operating.

Santos right now is in the process of upgrading the Ensign 971 rig before drilling work that's set to start in the third quarter of this calendar year. Each of the two wells is designed to be stimulated with 60 stages over 10,000 ft, with flow testing running for as long as 30 days. We're really enthusiastic about working alongside Santos to advance this development opportunity, and we look forward to carrying on that partnership as we unlock value from the Beetaloo Eastern Depot Center acreage. Since the previous call, we've made our balance sheet considerably stronger, bringing in $198 million through an underwritten public offer along with an institutional and retail entitlement offer. That came on top of the $32 million that came in from the PIPE transaction in January of this year. The money from these raises puts the balance sheet on firm footing and gives us considerable financial flexibility. When the quarter closed, Tamboran held $95 million in cash along with $39 million in undrawn debt net to Tamboran for funding of the SPCF. On a pro forma basis, after the recent equity raise our cash liquidity rises to $298 million, which takes in the $188 million raised net of fees plus the $15 million we anticipate getting from Daly Waters in connection with the acreage sale on May 25, which is still subject to certain conditions precedent.

And lastly, a brief update on the Falcon transaction. We've gotten approval from shareholders of both Tamboran and Falcon to move ahead with acquiring the Falcon subsidiaries, along with approval from the Supreme Court of British Columbia regarding certain amendments to the Plan of Arrangement. With the remaining regulatory approvals now in hand to complete the deal — including those tied to OFAC licensing — we expect this transaction to wrap up imminently. Assuming the mechanics for delivering Tamboran shares to eligible Falcon shareholders are finalized, closing should occur by the end of the month. Turning to slide four, you can see we have several meaningful catalysts to deliver in 2026. The biggest one is first gas sales from the Beetaloo Basin in the third quarter of this calendar year. Those initial pilot project gas sales generate royalties for the Northern Territory government and native title holders. Tamboran already has a sizable local workforce, and we expect it to keep growing as activity levels rise in the years ahead. Importantly, these gas sales let us deliver the basin's first long-term production data. That's a key milestone for Tamboran, the Beetaloo Basin, and the Northern Territory, and it reinforces the basin's potential to deliver long-term economic benefits for all stakeholders.

For the 2026 program in the Beetaloo Basin, we see a major turning point, and Tamboran intends to take part in stimulating 5 wells as well as drilling 4 wells throughout the basin. We're eager to share more news about what we're doing during our September earnings call. With that said, I'll turn things over to the operator for questions. Thank you.

The first one asking something comes from Scott Hanold of RBC Capital Markets. Go right ahead.

Thanks. Morning, and good afternoon as well. That INPEX–Daly Waters transaction, you know, really amounted to both a confidence vote and a validation of the activity taking place in the Beetaloo. It does feel as though momentum is building considerably, particularly given, as you pointed out, the persistent troubles in the Middle East. Could you give us a broad sense of how that has shaped your thinking regarding how the Beetaloo might advance across the short, medium, and long term? As you begin to consider, say, Phase 1 and Phase 2, just help us understand what that implies for pricing across some of those prospective contracts and outlets — whether that's backfill LNG or something else?

Yeah, no, thanks, Scott. I'll just sort of restate a bit of what was in those remarks. If you look at what's happening overseas, the conflicts in the Middle East, it's definitely sharpened the attention on energy security. We hear that loud and clear from the folks we speak with. The way I'd put it is, look, it would be great if that conflict got resolved today. Even if it does, that fresh awareness of how much energy security matters isn't going anywhere. It definitely puts a sharp focus on an asset like the Beetaloo, which is a large gas resource, you know, in a jurisdiction such as Australia, in the neighborhood of the Asia-Pacific, with very low in situ CO2. There are just a lot of things that make it really important. We hear that rhetoric loud and clear. When I think about kind of short, medium, long term, I'll sort of give you a sense of how I see the play evolving. I can't comment on pricing. You know, there are active discussions on there, I can't get into that. Look, in the near term, we're focused on that delivery to the Northern Territory.

So that comes to $40 million per day. It's a price that gets escalated by CPI, though the specifics are confidential—regrettably, we're unable to reveal those. We'll get that underway during Q3 of this year. There's room to grow our throughput through that route. I'd describe that as a medium-term prospect. That pipeline can handle $100 million a day. By twinning the compressor at that location, we'd be able to push another $50 million per day via a second compressor—$100 million in total. Some of that added gas might head to Darwin; some might travel north toward INPEX, now that the INPEX Daly Waters deal is in place. Other volumes could supply manufacturing and mining operations nearby. One key point to grasp here: under an agreement, our gas and the Daly Waters gas are marketed jointly. We're fully aligned on progressing that. Over the longer horizon, we're discussing large-scale pipelines—north and east. Those lines are commercial. I believe we all share confidence that they'll proceed. The schedule hasn't been pinned down as yet; they are commercial. An asset of this magnitude requires several outlets.

I hope that answers your question.

Yeah, no, I appreciate all of that — all of that context. Obviously, a lot is going on, so I appreciate any kind of color there. My follow-up was going to be about the cost savings, and I want to delve into that a little bit more. You talked about, obviously, the testing, some of the local sand. Can you — obviously, you've been here now a few months. Can you give a sense of what other opportunities you see to lower cost? And as you look into next year, what is the hope to get, you know, well costs down to?

Yes, I would. First, thanks for raising the local sand question. On the next completion program we'll run 10 stages with local sand, and tracers will be included across all of it, so we can observe how much each part contributes and basically verify that it performs. The lab results look good to us. We're quite optimistic about it. If it does work, that comes to roughly $4 million in savings per completion. That's a 10,000 ft, 60 stage well, so it's a meaningful step. On the drilling side, other things we're considering include oil-based mud and synthetic oil-based mud. At present we use water-based mud. Once there are waste disposal facilities in the basin capable of handling oil-based cuttings, that will be beneficial. It will raise our ROP. It will cut our drilling times. There are definitely further optimizations at Make Scout, but until we're essentially running at pace with a full-time program, we won't see everything you'd expect in a more mature U.S. shale basin. That's simply where we stand today.

Yeah. Do you have any sense of where you think costs might land by next year?

No, it's a bit difficult to give a clear answer for next year, since the number of wells we're drilling is limited. There are those 2 wells. Altogether, we'll drill 4 wells next year. So that will involve some of the same things — bringing the rig in, moving the rig out — a bit of stopping and starting. As a result, you won't have full efficiency at that point. Looking ahead, once we have more wells and a more sustainable program, that's the point when you'll really begin to see costs come down.

All right, that's clear, and thanks.

Sure.

Charles Meade from Johnson Rice has our next question. Go ahead, please.

Yes. Todd, hello to you and everyone else on your team.

Over to you.

Thank you. Your prepared remarks. I appreciate the great detail on the Falcon close. I'd like to ask about that and the farm out's timing. It makes sense to me that you would wait to finalize the farm out until after the Falcon deal closes. It sounds like you're now expecting the Falcon close in May, if I heard you correctly, and it looks like the farm out is sliding more toward the back half of 2026. Is that the right read on the sequence here? What implications does that have for the competition in that deal? People are going to be worried that you slide it. It seems like it's not — I should put a risk of this not happening, but perhaps it's because there are more people in the data room who weren't involved before.

Right, and that final piece is the freshest update, Charles. So yes, on the Falcon transaction — great news. Having that land near the finish line feels good. Rowan is with us on the call. He's available for any specifics you'd like to raise on it. The team has put in substantial effort on a highly intricate transaction, and reaching the point where we can see the finish approaching is genuinely exciting. Now, that subject definitely came up during the farm-out process, as you'd expect, from other prospective partners. They were asking where things stand and clearly sought assurance it would complete. It settles that question. Still, there's a good deal more involved, and the situation carries added layers. Plenty has unfolded since we first announced the farm-out process. We've covered the Middle East matters already, and there's no need to go over those again. The INPEX Daly Waters transaction mattered significantly, along with our tag into it. That has revalued the basin. It has introduced a highly credible third party — one that is not merely sophisticated but extremely well informed. That brings considerable enthusiasm and confidence to those with interest in assets of this kind.

We're having fresh discussions and more of them. After the capital raise, we have substantial financial flexibility and the capacity to be patient here. My attention is less on securing a quick timeline. I get how that can be interpreted by the market. Timing isn't where my focus lies. What matters to me is landing the right partner at the right value for us, and allowing some of these other parties time to catch up and grasp the asset puts us in the strongest position to achieve that. I understand it can be frustrating that the answer isn't fully there yet, but we're being extremely deliberate, and we feel really confident about where we stand right now.

That's a really valuable perspective on how you think and work — I appreciate it. Now, for a follow-up: I want to ask about those 2 wells that you'll be drilling together with Santos. It seems like these 2 wells are located in a different deep section of the basin. It's a different operator, as you know. What I'm curious about is whether you could explain how Santos might be handling the drilling and completion of these wells in a different way. After all, they're using a different rig — an Ensign rig. On your slide 8, I believe it mentions that they plan to flow test the wells for 12 months. Perhaps that's tied to the fact that they'll be connecting to those pipelines as part of the flow test. Could you just describe how their approach differs, and whether there's any cross-pollination happening between your team and theirs, and anything that might result from that?

Alright, let me take a step back for a moment. That 161 acreage is genuinely strong acreage, correct? You've got central core benches in place there. It's something that has us quite excited. Santos will be drilling the two 10,000 ft wells. They have, you know, what amounts to a full modern completion. Slightly different from the previous wells. It will feature larger casing, and that gives them a better — kind of a better completion job, a better frack job on it. We feel optimistic regarding what those wells will deliver. As for how long the flow test runs, honestly that hasn't been finalized at this point. You know, I could describe how we would approach it if we were the operator. We aren't the operator — Santos is. That's going to be a matter for discussion between the two companies. It hasn't been set yet. I'd kind of be talking out of school if I told you kind of where I believe that was going to land exactly.

Understood — thanks.

That's right.

Paul Diamond from Citi has the next question for us — go ahead, please.

Thanks. Morning, everyone. Appreciate you joining the call. I'll keep this brief. It feels like we're in an environment with quite a lot of catalysts right now. If you can sort of look past all that and speak to what comes after — say, once the pilot is up and running — what does that next operational stage look like, I suppose? Is that operation cadence?

Hello there, Paul.