10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on November 12, 2024
1
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
_________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the quarterly period ended September 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the transition period from to
Commission file number 001-42149
_________________________
(Exact name of registrant as specified in its charter)
_________________________
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
||
(Address of Principal Executive Offices) |
(Zip Code) |
(+61 ) 2 8330 6626
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
|
☒ |
Smaller reporting company |
|||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
The number of shares of common stock, par value $0.001, of Tamboran Resources Corporation outstanding as of
November 1, 2024 was 14,224,274 .
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4
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Part I - Financial Information
Item 1. Financial Statements.
The Condensed Consolidated Financial Statements of Tamboran Resources Corporation (the “Company”)
presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such
information for the periods and at the dates indicated. All adjustments are of a normal recurring nature. Because the
following unaudited Condensed Consolidated Financial Statements have been prepared in accordance with Article 10 of
Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial
statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes thereto
appearing in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.
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TAMBORAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In dollars)
Note |
September 30,
2024
|
June 30,
2024
|
|||
ASSETS |
|||||
Current assets |
|||||
Cash and cash equivalents |
$ |
$ |
|||
Trade and other receivables: |
|||||
Joint interest billing |
|||||
ATO receivable |
|||||
Other tax receivables |
|||||
Assets held for sale |
3 |
||||
Prepaid expenses and other current assets |
|||||
Total current assets |
|||||
Natural gas properties, successful efforts method: |
|||||
Unproved properties |
3 |
||||
Assets under construction - natural gas equipment |
3 |
||||
Property, plant and equipment, net |
3 |
||||
Operating lease right-of-use assets |
4 |
||||
Finance lease right-of-use assets |
4 |
||||
Prepaid expenses and other non-current assets |
|||||
Total non-current assets |
|||||
TOTAL ASSETS |
$ |
$ |
|||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||
Current liabilities |
|||||
Accounts payable and accrued expenses |
5 |
$ |
$ |
||
Current portion of operating lease obligations |
4 |
||||
Current portion of finance lease obligations |
4 |
||||
Total current liabilities |
|||||
Operating lease obligations |
4 |
||||
Finance lease obligations |
4 |
||||
Asset retirement obligations |
6 |
||||
Other non-current liabilities |
|||||
Total non-current liabilities |
|||||
Total liabilities |
|||||
Commitments and contingencies (Note 11) |
|||||
Stockholders’ equity |
|||||
Common stock, $
stock authorized;
outstanding at September 30, 2024 and June 30, 2024, respectively.
|
7 |
||||
Additional paid-in capital |
|||||
Accumulated other comprehensive loss |
( |
( |
|||
Accumulated deficit |
( |
( |
|||
Total Tamboran Resources Corporation
stockholders’ equity
|
|||||
Noncontrolling interest |
|||||
Total stockholders’ equity |
|||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
$ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TAMBORAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(In dollars, except share amounts)
Three months ended September 30, |
|||||
Note |
2024 |
2023 |
|||
Revenue and other operating income |
$ |
$ |
|||
Operating costs and expenses |
|||||
Compensation and benefits, including stock-based compensation |
( |
( |
|||
Consultancy, legal and professional fees |
( |
( |
|||
Depreciation and amortization |
( |
( |
|||
Loss on remeasurement of assets classified as held for sale |
3 |
( |
|||
Accretion of asset retirement obligations |
6 |
( |
( |
||
Exploration expense |
( |
( |
|||
General and administrative |
( |
( |
|||
Total operating costs and expenses |
( |
( |
|||
Loss from operations |
( |
( |
|||
Other income (expense) |
|||||
Interest income, net |
|||||
Foreign exchange (loss) gain, net |
( |
||||
Other expenses, net |
( |
( |
|||
Total other income (expense) |
|||||
Net loss |
( |
( |
|||
Less: Net loss attributable to noncontrolling interest |
( |
( |
|||
Net loss attributable to Tamboran Resources Corporation stockholders |
$( |
$( |
|||
Comprehensive income (loss) |
|||||
Net loss |
$( |
$( |
|||
Other comprehensive income (loss) |
|||||
Foreign currency translation |
( |
||||
Total comprehensive income (loss) |
( |
||||
Less: Total comprehensive income (loss) attributable to noncontrolling interest |
( |
||||
Total comprehensive income (loss) attributable to Tamboran Resources
Corporation stockholders
|
$ |
$( |
|||
Net loss per common stock |
|||||
Basic and diluted |
10 |
$( |
$( |
||
Weighted average number of common stock outstanding |
|||||
Basic and diluted |
10 |
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TAMBORAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(In dollars)
Common
stock
|
Additional
paid-in capital
|
Accumulated
other
comprehensive
loss
|
Accumulated
deficit
|
Total
Tamboran
Resources
stockholders’
equity
|
Noncontrolling
interest
|
Total
stockholders’
equity
|
|||||||
Balance at July 1,
2023
|
$ |
$ |
$( |
$( |
$ |
$ |
$ |
||||||
Issuance of
common stock, net
of issuance cost
|
— |
— |
— |
||||||||||
Contributions from
noncontrolling
interest holders
|
— |
— |
— |
— |
— |
||||||||
Stock-based
compensation
|
— |
— |
— |
— |
|||||||||
Foreign exchange
translation
|
— |
— |
( |
— |
( |
( |
( |
||||||
Net loss |
— |
— |
— |
( |
( |
( |
( |
||||||
Balance at
September 30,
2023
|
$ |
$ |
$( |
$( |
$ |
$ |
$ |
||||||
Balance at July 1,
2024
|
$ |
$ |
$( |
$( |
$ |
$ |
$ |
||||||
Issuance of
common stock
under greenshoe
option, net of
issuance cost
|
— |
— |
— |
||||||||||
Contributions from
noncontrolling
interest holders
|
— |
— |
— |
— |
— |
||||||||
Stock-based
compensation
|
— |
— |
— |
— |
|||||||||
Foreign exchange
translation
|
— |
— |
— |
||||||||||
Net loss |
— |
— |
— |
( |
( |
( |
( |
||||||
Balance at
September 30,
2024
|
$ |
$ |
$( |
$( |
$ |
$ |
$ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TAMBORAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In dollars)
Three months ended September 30, |
|||
2024 |
2023 |
||
Cash flows from operating activities: |
|||
Net loss |
$( |
$( |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|||
Depreciation and amortization |
|||
Stock-based compensation |
|||
Foreign exchange (gain) loss, net |
( |
||
Loss on remeasurement of assets classified as held for sale |
|||
Accretion of asset retirement obligations |
|||
Changes in operating assets and liabilities: |
|||
Trade and other receivables |
|||
Prepaid expenses and other assets |
( |
( |
|
Accounts payable and accrued expenses |
( |
||
Other non-current liabilities |
|||
Net cash used in operating activities |
( |
( |
|
Cash flows from investing activities: |
|||
Payments for exploration and evaluation |
( |
( |
|
Payments for assets under construction |
( |
||
Advance received for sale of assets held for sale |
|||
Net cash used in investing activities |
( |
( |
|
Cash flows from financing activities: |
|||
Proceeds from issue of common stock |
— |
||
Proceeds from issue of shares under greenshoe option |
— |
||
Contributions received from noncontrolling interest holders |
|||
Common stock issue transaction costs |
( |
( |
|
Net cash from financing activities |
|||
Net (decrease) increase in cash and cash equivalents and restricted cash |
( |
||
Cash and cash equivalents and restricted cash at the beginning of period |
|||
Effects of exchange rate changes on cash and cash equivalents |
|||
Cash and cash equivalents and restricted cash at the end of period |
$ |
$ |
|
Supplemental cash flow information: |
|||
Non-cash investing and financing activities: |
|||
Accrued capital expenditure |
$ |
$ |
|
Asset retirement obligations |
$( |
$( |
|
Stock-based compensation |
$( |
$( |
|
Contribution receivable from noncontrolling interest holders |
$ |
$ |
|
Operating lease right-of-use assets and lease liabilities |
$( |
$( |
|
Interest accrued on finance lease liabilities |
$( |
$( |
|
Finance lease right-of-use assets and lease liabilities |
$ |
$( |
|
Non-cash finance lease costs capitalized to unproved properties |
$ |
$ |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TAMBORAN RESOURCES CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
General
Tamboran Resources Corporation (the “Company” or “Tamboran” and together with its consolidated subsidiaries,
the “Group”) is an early-stage growth-oriented natural gas company with a vision of supporting the net zero CO2 energy
transition in Australia and Asia-Pacific through developing low CO2 unconventional gas resources in the Northern
Territory (“NT”) of Australia. The Group is in the exploration stage with a current focus on exploiting its primary assets,
which are rights to working interests (“Tenements”) in exploration acreage in the Beetaloo sub-basin (“Beetaloo” or
“Beetaloo Basin”), NT Australia. To date, the Group has not determined whether the Tenements contains any natural gas
reserves that are economically recoverable. Further, the Group had no revenues from its gas operations as of September 30,
2024.
The accompanying condensed consolidated financial statements have been prepared on the basis that the Group will
continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the ordinary
and usual course of business.
As of September 30, 2024, the Group had:
•not generated revenues since inception, and is unlikely to generate earnings in the immediate or foreseeable
future;
•a working capital surplus of $47,264,270 (excluding assets held for sale);
•an accumulated deficit of $136,274,345 since inception; and
•significant expenditures planned for the unproved properties in the next 12 months.
These factors raise substantial doubt regarding the Group’s ability to continue as a going concern for the 12 months
following the date these condensed consolidated financial statements were available for issuance. The continuation of the
Group as a going concern is dependent upon the ability of the Group to obtain necessary additional capital to fund ongoing
exploration, appraisal and development projects and/or obtain gas producing properties to attain future profitable
operations. No assurance can be given that the Group will be successful in these efforts in the future.
Management has several plans in various stages of progress to source additional funding to provide operating capital
for continued growth of the Group. Therefore, these condensed consolidated financial statements do not include any
adjustments related to the recoverability and classification of recorded assets and liabilities that might be necessary should
The accompanying condensed consolidated financial statements have been prepared in conformity with the
accounting principles generally accepted in the United States of America (“U.S. GAAP”) and rules and regulations of the
Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Pursuant to such rules and
regulations, certain disclosures and information required by U.S. GAAP for complete consolidated financial statements
have been condensed or omitted. The accompanying condensed consolidated financial statements and notes therein should
be read in conjunction with the financial statements and notes included in our consolidated financial statements for the year
ended June 30, 2024 (“Group’s Annual Financial Statements”).
These condensed consolidated financial statements reflect all adjustments, in the opinion of management, which
include normal and recurring adjustments necessary to fairly state the Group’s consolidated financial position, results of
operations, and cash flows for the periods presented herein. The interim results are not necessarily indicative of results for
any other future annual or interim period. The June 30, 2024, condensed consolidated balance sheet was derived from the
audited Group’s Annual Financial Statements but does not include all disclosures required by U.S. GAAP for annual
financial statements.
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The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires
management to make certain estimates and assumptions that affect the amounts of assets and liabilities, revenue and
expenses and related disclosures of contingent assets and liabilities reported in the condensed consolidated financial
statements and the accompanying notes. There have been no significant changes to the Group’s accounting estimates from
Significant Accounting Policies
The Group’s significant accounting policies are described in the notes to the consolidated financial statements for the
year ended June 30, 2024, included in the Group’s Annual Financial Statements. There have been no significant changes in
accounting policies during the three months ended September 30, 2024.
These condensed consolidated financial statements are presented in US dollars (“$” or “dollars”) and the functional
currency of the Group is the Australian Dollar (“A$”). Adjustments resulting from the translation of functional currency
financial statements to reporting currency are accumulated and reported as a part of “Accumulated Other Comprehensive
Loss”, a separate component of stockholders’ equity.
Foreign Currency Transactions
Foreign currency transactions are translated into the Company’s functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in
As a Lessee
The Group accounts for leases under ASC 842, Leases (“ASC 842”). The Group determines if an arrangement is a
lease at inception of the arrangement and if such lease will be classified as an operating lease or a finance lease. The
Group’s leases represent its right to use an underlying asset for the lease term. Right-of-use (“ROU”) assets and liabilities
are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the
Group’s leases do not provide an implicit rate, the Group used a proxy for its incremental borrowing rate, which is the rate
incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar
economic environment.
The Group has elected to account for lease and non-lease components in its contracts as a single lease component for
all asset classes except for office premises.
Operating leases are included in “Operating lease right-of-use assets” within the Group’s condensed consolidated
balance sheet. The Group’s related obligation to make lease payments are included in “Current portion of operating lease
obligations” and “Operating lease obligations” within the Group’s condensed consolidated balance sheet. Operating lease
expense for lease payments is recognized on a straight-line basis over the lease term.
Finance leases are included in “Finance lease right-of-use assets” within the Group’s condensed consolidated balance
sheet. The Group’s related obligation to make lease payments are included in “Current portion of finance lease obligations”
and “Finance lease obligations” within the Group’s condensed consolidated balance sheet. Finance lease expense includes
amortization of the ROU assets and interest on lease liabilities. The Group capitalizes the finance lease expense as a part of
unproved properties when the leased asset is directly involved in the drilling of wells (i.e. the finance lease expense is a
direct cost of drilling wells).
Leases with a lease term of 12 months or less are not recorded on the condensed consolidated balance sheet and are
recognized as lease expense on a straight-line basis over the lease term. When it is reasonably certain the Group will
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Sublease income is recognized on a straight-line basis over the term of the sublease agreement and is recorded within
The Group is in the exploration stage and has not yet realized any revenues from its operations. The Group holds a
number of exploration permits that are grouped into areas of interest according to geographical and geological attributes.
Expenditure incurred in each area of interest is accounted for using the successful efforts method, as defined within ASC
932, Extractive Activities – Oil and Gas.
Under this method, all general exploration and evaluation costs such as geological and geophysical costs are
expensed as incurred. The direct costs of acquiring the rights to explore, drilling exploratory wells, and evaluating the
results of drilling are capitalized as exploration and evaluation assets (as a part of unproved properties) pending the
determination of the results of the well. If a well does not result in hydrocarbons being present, the previously capitalized
costs are immediately expensed.
Tamboran (B1) Pty Ltd (“TB1”) is a 50/50 joint venture between the Company, through its wholly owned subsidiary
Tamboran (West) Pty Ltd (“TR West”), and Daly Waters Energy, LP ("DWE") governed by the amended and restated joint
venture and shareholders agreement dated June 3, 2024 (the “TB1 Joint Venture Agreement”). In assessing the primary
beneficiary of TB1, the Company determined the primary activities that most significantly impact the economic
performance of TB1 include serving as the manager, determining the strategy and direction of TB1, and the power to create
a budget.
The Company was appointed as the manager to manage and carry out day-to-day operations which supports the basis
of Tamboran as the primary beneficiary. The Company, as manager, also prepares the work plans and budget of TB1. As
such it was determined that the Company has the power to direct TB1’s activities that most significantly impact TB1’s
economic performance. As a result of the assessment performed, the results of TB1 have been included in the
accompanying condensed consolidated financial statements. TB1 has no assets that are collateral for or restricted solely to
settle its obligations. The creditors of TB1 do not have recourse to the Group’s general credit.
The Company also assessed which party to the TB1 Joint Venture Agreement has the obligation to absorb losses or
the right to receive the benefits of the VIE that could potentially be significant to the VIE. The future profits and losses of
TB1 are shared by the Company and DWE in proportion to their respective equity interest in TB1, however, to date the
Company has contributed a greater proportion of the capital and has no ability to recoup any of the excess funding the
Company has made to TB1 from DWE and therefore has a greater exposure to absorb losses.
A loan was provided to TR West from Tamboran Resources Pty Ltd (formerly known as Tamboran Resources
Limited) ("TR Ltd."), a wholly owned subsidiary of the Company. The loan was used by TR West to acquire its interest in
TB1. On November 9, 2022, TB1 completed the acquisition of a 77.5 % share of Beetaloo Basin assets, EP 76, EP 98, and
EP 117. As a result of the TB1 Joint Venture Agreement, the Company and DWE each beneficially acquired a 38.75
interest in the permits for the total undivided interest of 77.5 %. Falcon Oil and Gas Australia limited ("Falcon") holds the
remaining undivided interest of 22.5 % in the assets (collectively known as the "Beetaloo Joint Venture").
On March 4, 2024, Falcon, the owner of the remaining 22.5 % interest in the Beetaloo Joint Venture assets, capped its
participation to 5 % in the Beetaloo Joint Venture’s second Shenandoah South well pad (“SS2”). On March 21, 2024,
Tamboran B2 Pty Ltd ("TB1 Operator") (a wholly owned subsidiary of TB1 in which the Company has a 50 % interest)
agreed to pick up Falcon’s interest, increasing TB1 Operator’s working interest to at least 95 % in the wells drilled from the
SS2 well pad.
12
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condensed consolidated balance sheet as of September 30, 2024 and June 30, 2024:
September 30,
2024
|
June 30,
2024
|
||
ASSETS |
|||
Current assets |
|||
Cash and cash equivalents |
$ |
$ |
|
Trade and other receivables: |
|||
Joint interest billing |
|||
Intercompany receivable |
|||
ATO receivable |
|||
Prepaid expenses and other current assets |
|||
Total current assets |
|||
Natural gas properties, successful efforts method: |
|||
Unproved properties |
|||
Assets under construction- natural gas equipment |
|||
Finance lease right-of-use assets |
|||
Prepaid expenses and other non-current assets |
|||
Total non-current assets |
|||
TOTAL ASSETS |
$ |
$ |
|
LIABILITIES |
|||
Current liabilities |
|||
Accounts payable and accrued expenses |
$ |
$ |
|
Current portion of finance lease obligations |
|||
Total current liabilities |
|||
Finance lease obligations |
|||
Asset retirement obligations |
|||
Loan from Tamboran |
|||
Total non-current liabilities |
|||
TOTAL LIABILITIES |
$ |
$ |
Natural Gas Properties
The Group held unproved natural gas properties as of September 30, 2024 and June 30, 2024, amounting to
$259,656,933 and $230,119,448 , respectively. These amounts reflect the Group’s exploration and evaluation projects,
which are pending the determination of proven and probable reserves and were not being depleted for the three months
ended September 30, 2024, and 2023. These assets will be reclassified to proven gas properties upon commencement of
production and then subsequently depleted.
During the three months ended September 30, 2024 and September 30, 2023, the Group recognized no impairment
related to unproved natural gas properties.
Natural gas properties |
|||||||
EP 161 |
EP136 |
EP 76, 98 and
117
|
Total |
||||
Balance at July 1, 2024 |
$ |
$ |
$ |
$ |
|||
Capital expenditure |
|||||||
Restoration assets |
|||||||
Interest on finance lease liability and related
depreciation of ROU assets capitalized
|
|||||||
Effect of changes in foreign exchange rates |
|||||||
Balance at September 30, 2024 |
$ |
$ |
$ |
$ |
|||
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Property, Plant and Equipment
The Group held property, plant and equipment, including leasehold improvements, as of September 30, 2024 and
June 30, 2024, amounting to $74,792 and $102,244 , respectively.
Assets Under Construction
In April, 2024 the Group began to execute agreements for long lead items required for the Sturt Plateau Compression
Facility (“SPCF”) in the Beetaloo Basin. These items included essential plant components comprising of a compressor and
dehydration unit that would convert future raw gas to meet sales gas quality, subject to the terms of definitive development
agreements. During the three months ended September 30, 2024, the Group commenced detailed design of the SPCF. The
Group held total assets under construction related to the SPCF as of September 30, 2024 and June 30, 2024 of $10,411,399
and $7,542,064 respectively.
The 40 MMcf/d SPCF is expected to be connected to the Amadeus Gas Pipeline ("AGP") via the construction of
the 35 -kilometer Sturt Plateau Pipeline ("SPP") subject to achieving project milestones and executing further agreements.
Loss on Assets Classified as Held for Sale
During the three months ended September 30, 2024, the Group had rig 403 classified as held for sale. In September,
2024, the Group entered into an exclusivity agreement with a third party for the sale of rig 403 for $8,500,000 (excluding a
sales commission of 6 %). On September 30, 2024, the Group received a non-refundable advance payment of $400,000 for
a 30-day exclusivity period. As this exclusivity agreement indicated a firm offer, the Group recognized a loss on assets held
for sale of $376,000 to reduce the asset to the lower of its carrying amount and the fair value less costs to sell.
Subsequent to September 30, 2024, the Group completed the sale of rig 403. Refer to Note 13 for additional details.
As a Lessee
The Group’s operating lease activities consist of leases for office premises.
cing July 1, 2024, the Group entered into a new lease agreement with Drecom Pty Ltd ATF English Family Trust for their
office premises in Darwin, Australia. The term of the lease is three years , with an option to further renew the lease for two
Commencing October 1, 2023, the Group entered into a new lease agreement with Lendlease IMT (OITST ST) Pty
Ltd for their office premises in Barangaroo, Australia. The term of the lease is four years , with no option to renew.
On September 9, 2022, Sweetpea Petroleum Pty Ltd (“Sweetpea”), a wholly owned subsidiary of Tamboran, entered
into a drilling contract with Helmerich & Payne International Holdings LLC ("H&P") for H&P to assist the Group in
carrying out its onshore drilling operations in Australia. The drilling contract grants Tamboran the right to use the drilling
rig from H&P over the non-cancellable contract term of 25 months starting from July 1, 2023. Under the terms of the
agreement, the Group has the right to place the drilling rig on a temporary suspension rate between wells for a period up to
term. As of September 30, 2024, the end date of the drilling contract for the current rig is mid-July 2026. The drilling
contract is recognized as a finance lease under ASC 842 (“H&P Rig Lease”).
The present value of the minimum future obligations was calculated based on an interest rate of 13.5 % p.a., which
was recognized in finance lease liabilities in the condensed consolidated balance sheet.
14
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balance sheets:
September 30,
2024
|
June 30,
2024
|
||
Right-of-use assets: |
|||
Operating lease right-of-use assets |
$ |
$ |
|
Finance lease right-of-use assets |
|||
Lease liabilities: |
|||
Current portion of operating lease obligations |
|||
Non-current portion of operating lease obligations |
|||
Current portion of finance lease obligations |
|||
Non-current portion of finance lease obligations |
|||
$ |
$ |
Three months ended September 30, |
|||
2024 |
2023 |
||
Operating leases: |
|||
Operating lease cost charged to profit and loss |
$ |
$ |
|
Finance leases: |
|||
Interest on lease liabilities |
|||
Depreciation on right-of-use assets |
|||
Total finance lease cost |
|||
Less: Lease cost capitalized to unproved properties |
( |
( |
|
Finance lease cost charged to profit and loss |
$ |
$ |
|
September 30, 2024, and 2023:
Three months ended
September 30,
|
|||
2024 |
2023 |
||
Cash paid for amounts included in the measurement of lease liabilities: |
|||
Operating cash flows for operating leases |
$ |
$ |
|
Financing cash flows for finance leases |
|||
$ |
$ |
||
ended September 30, 2024, and 2023:
Three months ended
September 30,
|
|||
2024 |
2023 |
||
Operating leases: |
|||
Weighted-average remaining lease term |
|||
Weighted-average incremental borrowing rate |
|||
Finance leases: |
|||
Weighted-average remaining lease term |
|||
Weighted-average incremental borrowing rate |
|||
15
Table of Contents
as follows:
As at September 30, 2024 |
Operating leases |
Finance leases |
|
Fiscal year ending June 30, 2025 (excluding three months period
from July 1, 2024 to September 30, 2024)
|
$ |
$ |
|
Fiscal year ending June 30, 2026 |
|||
Fiscal year ending June 30, 2027 |
|||
Thereafter |
|||
Total lease payments |
|||
Less: Imputed interest |
( |
( |
|
Present value of lease liabilities |
$ |
$ |
As a Lessor
On October 15, 2023, the Group entered into an agreement with a third party to sublease its former office premises in
Manly, Australia. The commencement date of the sublease was October 1, 2023, with a lease term of 17 months. Sublease
income for the three months ended September 30, 2024, was $81,637 and is included within “Other expenses, net” on the
Group’s condensed consolidated statements of operations and comprehensive loss. There have been no indications of
September 30,
2024
|
June 30,
2024
|
||
Accounts payable |
$ |
$ |
|
Accrued payroll |
|||
Compensated absences |
|||
Defined contribution superannuation payable |
|||
Accrued capital expenditure |
|||
Accrued expenses |
|||
$ |
$ |
The Group recognizes the liability for an asset retirement obligation at their estimated fair value in the period in
which the obligation originates. Fair value is estimated using the present value technique (level 2) based on a number of
observable inputs including estimates and assumptions such as future retirement costs, future inflation rates and the
Group’s credit-adjusted risk-free interest rate.
The Group capitalized the present value of the estimated asset retirement obligations as a part of the carrying amount
of the related natural gas properties. The liability has been accreted to its present value for three months ended
September 30, 2024.
follows:
Three months
ended
September 30, 2024
|
|
Beginning asset retirement obligations |
$ |
Liabilities incurred |
|
Accretion expense |
|
Effect of changes in foreign exchange rates |
|
Long-term asset retirement obligations |
$ |
16
Table of Contents
Date |
Tamboran
common stock
|
Issue price |
Details |
Net proceeds |
|||||
Balance at July 1, 2024 |
$ |
||||||||
Capital raise |
July 2024 |
$ |
$ |
||||||
Less: Transaction costs |
— |
$( |
|||||||
Balance at September 30, 2024 |
$ |
July 2024 Greenshoe Option
Subsequent to the Initial Public Offering (“IPO”) in June 2024, the underwriters exercised the greenshoe option
granted to them to purchase additional shares of common stock of the Company. Under this option, underwriters purchased
a total of 308,750 shares of common stock of the Company on July 30, 2024. The net proceeds from the IPO and from the
issuance under greenshoe option will be used for natural gas exploration and appraisal activities, progressing the Group’s
three phases of development and other general corporate purposes.
Milestone Options
During the three months ended September 30, 2024, the Group did not grant any new milestone options to its
employees and no milestone options were forfeited.
As of September 30, 2024, the milestone options are substantially below the current market value of the underlying
securities. As such, the Company accelerated the recognition of the remaining expense. The Group recognized $138,996
(inclusive of accelerated expense) and $268,403 as stock-based compensation expense related to milestone options for the
three months ended September 30, 2024, and September 30, 2023, respectively.
Restricted Stock Units
On August 6, 2024, the Group adopted the 2024 Incentive Award Plan (the "2024 Plan"). As of September 30, 2024,
the maximum number of shares of common stock that may be issued under the 2024 Plan was 1,600,000 shares.
The 2024 Plan, allows, among other things, for the grant of Restricted Stock Units ("RSUs"). On August 6, 2024, the
Group issued RSUs to certain eligible service providers, employees and executive officers (the “participants”) to provide
them an opportunity to participate in the growth and profits of the Group and to attract, motivate, and retain their services
to promote the long-term success of the Group.
On August 6, 2024, the Company granted 47,400 Restricted Stock Units (“Retention Awards”) to its employees in
Australia and U.S. The Retention Awards granted to Australian employees entitle them to CHESS Depository Interests
("CDIs") representing 39,250 shares of common stock (each CDI represents 1/200 th of a share of common stock).
Similarly, the Retention Awards granted to U.S. employees entitle them to 8,150 shares of common stock. The vesting
conditions state that all Retention Awards will vest in full on December 31, 2025, provided the employee remain in service
as of the vesting date. The fair value at grant date of the Retention Awards was $21.73 per common stock and $0.109 per
CDI.
On August 6, 2024, the Company also granted 795,000 Restricted Stock Units (“IPO Awards”) to its employees in
Australia and U.S. The IPO Awards granted to Australian employees entitle them to CDIs representing 620,000 shares of
common stock. Similarly, the IPO Awards granted to U.S. employees entitle them to 175,000 shares of common stock. The
IPO Awards will vest in following three tranches:
•Tranche 1 – 397,500 IPO Awards granted to Australian and U.S. employees will vest in full on July 3, 2027,
provided the employee remains in service as of the vesting date. The fair value at grant date of Tranche 1 was
$21.73 per common stock and $0.109 per CDI.
•Tranche 2 – 98,750 IPO Awards granted to Australian and U.S. employees will vest subject to the completion
of the Group’s Phase 1 Development Plan to establish first production of the Shenandoah South Pilot Project
17
Table of Contents
and establish first production of 40 TJ/d measured by completion of the milestones (“Vesting Trigger
Conditions”). Full vesting of Tranche 2 may occur at any time between July 3, 2027, and July 3, 2029, should
the Vesting Trigger Conditions be satisfied, or unless otherwise determined by the Board of the Company. The
fair value at grant date of Tranche 2 was $21.73 per common stock and $0.109 per CDI.
•Tranche 3 – 298,750 IPO Awards granted to Australian and U.S. employees will vest subject to the Company’s
Total Shareholder Return (“TSR”) reaching or exceeding the 75th percentile of the Benchmark Index TSR
between July 3, 2027, and July 3, 2029. TSR will be measured against the S&P SmallCap 600 Energy (or any
other market index determined by the Board in their sole discretion) (“Benchmark Index”) over the same
performance measurement period. The fair value at grant date of Tranche 3 was $19.64 per common stock and
$0.098 per CDI
The grant date fair value of the Tranche 3 RSUs were determined through the use of the Monte Carlo simulation
method. This method requires the use of subjective assumptions such as the price and the expected volatility of the
Company’s common stock and its self-determined peer group companies’ stock, risk free rate of return, and cross-
correlations between the Company and its peer group companies. Expected volatilities for the Company and each peer
company utilized in the model are estimated using a historical period consistent with the awards’ remaining performance
period as of the grant date. The risk-free interest rate is based on the yield on U.S. Treasury Constant Maturity for a term
consistent with the remaining performance period. The valuation model assumes dividends, if any, are immediately
reinvested.
granted on August 6, 2024:
Expected term for performance period (in years) |
|
Expected volatility |
|
Risk-free interest rate |
The Retention Awards and IPO Awards entitle the participants to receive the equivalent value (in cash or shares of
common stock/CDIs) of dividends paid on shares of common stock and CDIs, respectively.
The RSUs are not transferable. There are no participation rights or entitlements inherent in the RSUs and the
participants will not be entitled to participate in new issues of capital offered to stockholders or holders of CDIs.
If the Company makes a bonus issue of common stock, CDIs, or other securities to existing stockholders or holders
of CDIs (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment), the number of
shares of common stock or CDIs that must be issued on the exercise of a Retention Award or IPO Award, respectively, will
be increased by the number of shares of common stock or CDIs that the participant would have received if the participant
had exercised the RSUs before the record date for the bonus issue.
September 30, 2024:
Expense recognized
during three months
ended September 30,
2024
|
Remaining expense to
recognize, if all vesting
conditions are met
|
Weighted average
remaining contractual
term (in years)
|
||||
IPO Awards (Tranche 1) |
$ |
$ |
||||
IPO Awards (Tranche 2) |
$ |
$ |
||||
IPO Awards (Tranche 3) |
$ |
$ |
||||
Retention Awards |
$ |
$ |
||||
Total |
$ |
$ |
The effective tax rates for the three months ended September 30, 2024, and 2023 were both nil
effective tax rate differed from the applicable statutory income tax rate due to operating losses incurred for the three
18
Table of Contents
months ended September 30, 2024, and 2023. The Group has accumulated losses for tax purposes as of September 30,
2024, in the amount of $290,783,210 which may be carried forward and offset against taxable income in the future for an
indefinite period, subject to meeting Australian tax rules around continuity of ownership or business continuity test.
Basic net loss per share applicable to common stockholders is computed by dividing earnings applicable to common
stockholders by the weighted average number of common shares outstanding. Diluted loss per share assumes the
conversion of any convertible securities using the treasury stock method.
Three months ended September 30, |
|||
2024 |
2023 |
||
Numerator: |
|||
Net loss after income tax attributable to Tamboran Resources Corporation
stockholders
|
$( |
$( |
|
Denominator: |
|||
Weighted average number of common stock outstanding, basic and diluted |
|||
Net loss per share, basic and diluted |
$( |
$( |
|
The Company’s potentially dilutive shares, which include outstanding milestone options and RSUs, have not been
included in the computation of diluted net loss per share for the three months ended September 30, 2024, and 2023 as the
From time to time, the Group may be subject to various claims, title matters and legal proceedings arising in the
ordinary course of business, including environmental contamination claims, personal injury and property damage claims,
claims related to joint interest billings and other matters under natural gas operating agreements and other contractual
disputes. The Group maintains general liability and other insurance to cover some of these potential liabilities. All known
liabilities are fully accrued based on the Group’s best estimate of the potential settlement amount. While the outcome and
impact on the Group cannot be predicted with certainty, the Group believes that its ultimate liability with respect to any
such matters will not have a significant impact or material adverse effect on its financial positions, results of operations or
cash flows. Results of operations and cash flows, however, could be significantly impacted in the reporting periods in
which such matters are resolved.
Capital Commitments
September 30,
2024
|
June 30,
2024
|
||
Committed at the reporting date but not recognized as liabilities, payable: |
|||
Sweetpea |
$ |
$ |
|
EP 161 |
|||
Beetaloo Joint Venture |
|||
Midstream |
Sweetpea
Sweetpea’s committed spend as of September 30, 2024, was $24,332,061 which was related to two licenses, EP 136
with total commitments of $14,709,994 and EP 143 with total commitments of $9,622,067 .
A renewal application for EP 136 was submitted to the Department of Mining and Energy (“DME”) (formerly the
Department of Industry, Tourism and Trade) in September 2023, and approved in July 2024, granting a five-year extension
for the period July 24, 2025 to July 23, 2030 with a minimum work program commitment of $14,709,994 .
19
Table of Contents
A variation application for EP 143 was submitted to DME in August 2024, and approved in October 2024. The total
minimum work program commitments remain the same at $9,622,067 with activity and associated spend being transferred
within the license term.
EP 161
For the McArthur working interest, we are obligated to contribute our share of expenses to uphold our stake in EP
161. Our commitment through March 2026 is expected to be $2,768,940 based on the minimum work requirements. There
are no minimum commitment requirements after March 2026.
Beetaloo Joint Venture
The terms of the Beetaloo Joint Venture necessitate specific minimum work obligations through May 2028. These
commitments include an expected spend of $65,463,797 related to drilling and multi-stage hydraulic fracturing of five
wells, 2D seismic survey, and subsurface studies, with expenditure across EP 76 of $22,264,007 , EP 98 of $20,935,782 and
EP 117 of $22,264,008 . An application was submitted to DME on September 26, 2024 to vary the year 2 and 3 work
program, and is currently pending resolution.
Midstream
Procurement of the long lead items for the SPCF compressor package and dehydration package were placed in June
2024 with progress payments of $1,902,385 required prior to the end of 2025.
Environmental
The Group’s operations are subject to risks normally associated with the drilling, completion and production of oil
and gas, including blowouts, fires, and environmental risks such as oil spills or gas leaks that could expose the Group to
liabilities associated with these risks.
In the Group’s acquisition of existing or previously drilled well bores, the Group may not be aware of prior
environmental safeguards, if any, that were taken at the time such wells were drilled or during such time the wells were
operated. The Group maintains comprehensive insurance coverage that it believes is adequate to mitigate the risk of any
adverse financial effects associated with these risks.
However, should it be determined that a liability exists with respect to any environmental cleanup or restoration, the
liability to cure such a violation could still fall upon the Group. No claim has been made, nor is the Group aware of any
liability which the Group may have, as it relates to any environmental cleanup, restoration, or the violation of any rules or
regulations relating thereto except for the matter discussed above.
Legal Proceedings
The Group is a party to legal proceedings encountered in the ordinary course of its business. While the ultimate
outcome and impact to the Group cannot be predicted with certainty, in the opinion of management, it is remote that these
legal proceedings will have a material adverse impact on the Group’s condensed consolidated financial condition, results of
The Group transacts with two shareholders identified as related parties, H&P and Mr. Bryan Sheffield. The
transactions during the three months ended September 30, 2024 are as follows.
H&P
During the year ended June 30, 2023, the Group entered into a strategic alliance with H&P and secured a
$15,000,000 equity investment from H&P (and as a consequence, a member of the H&P Executive Leadership Team was
appointed as a director of the Group). The strategic alliance resulted in H&P supporting the Group’s development plans in
NT Australia through their equity investment in the Company while at the same time executing on H&P’s strategy to gain
more international exposure through the use of drilling rigs in Australia.
20
Table of Contents
On July 1, 2023, the lease commenced with H&P for the use of the FlexRig® for a 25-month period (Refer to Note
4). During the three months ended September 30, 2024, the Group incurred cost of $3,951,666 , relating to a combination of
site mobilization, standby, drilling, labor and rig move costs, which remains unpaid as of September 30, 2024 in addition to
one open payable of $745,502 from June 2024.
Mr. Sheffield
During the three months ended September 30, 2024, the Group transacted with DWE, an entity controlled by
Mr. Sheffield who has been a shareholder in the Company since November 2021.
The Group and DWE maintain a 50/50 joint venture, TB1 (see Note 2 - Variable Interest Entities).
During the three months ended September 30, 2024, DWE's share of expenditure for which contributions were due
was $5,902,678 to fund their share of costs for the Beetaloo Joint Venture. As of September 30, 2024, the Group had
Rig 403 sale
In October 2024, the Group completed the disposal of the rig 403 at a price of $8,500,000 (of which the Group had
received $400,000 in advance during the three months ended September 30, 2024). The Group paid sales commission of
Research and Development ("R&D") tax claim
In October 2024, the Group lodged an amended income tax return for the year ended June 30, 2023 claiming eligible
R&D expenditure, which is expected to result in a cash refund of $6,839,963 . The amount has not been recorded as a
receivable as it is not virtually certain.
SPCF
In October 2024, the Group entered into a Unit Holders and Shareholders Deed with DWE for the establishment of a
trust to be owned 50 / 50 by the Group and DWE to own the SPCF.
Also in October 2024, the Group signed a contract with Enscope Pty Ltd ("Enscope"), an Australian engineering
consultancy to order long lead items costing $1,976,519 , required for the SPCF.
The Group has evaluated its subsequent events occurring after September 30, 2024, through November 12, 2024,
which represents the date these condensed consolidated financial statements were available to be issued. No further
subsequent events have been identified that would require disclosure in these condensed consolidated financial statements.
21
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of
future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future
of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future
conditions. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,”
“commit,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and
similar references to future periods.
It is possible that the future financial performance of Tamboran Resources Corporation (the “Company”) may
differ from expectations due to a variety of factors, including but not limited to: our early stage of development with no
material revenue expected until 2026 and our limited operating history; the substantial additional capital required for our
business plan, which we may be unable to raise on acceptable terms; our strategy to deliver natural gas to the Australian
East Coast and select Asian markets being contingent upon constructing additional pipeline capacity, which may not be
secured; the absence of proved reserves and the risk that our drilling may not yield natural gas in commercial quantities or
quality; the speculative nature of drilling activities, which involve significant costs and may not result in discoveries or
additions to our future production or reserves; the challenges associated with importing U.S. practices and technology to
the Northern Territory, which could affect our operations and growth due to limited local experience; the critical need for
timely access to appropriate equipment and infrastructure, which may impact our market access and business plan
execution; the operational complexities and inherent risks of drilling, completions, workover, and hydraulic fracturing
operations that could adversely affect our business; the volatility of natural gas prices and its potential adverse effect on our
financial condition and operations; the risks of construction delays, cost overruns, and negative effects on our financial and
operational performance associated with midstream projects; the potential fundamental impact on our business if our
assessments of the Beetaloo are materially inaccurate; the concentration of all our assets and operations in the Beetaloo,
making us susceptible to region-specific risks; the substantial doubt raised by our recurring operational losses, negative
cash flows, and cumulative net losses about our ability to continue as a going concern; complex laws and regulations that
could affect our operational costs and feasibility or lead to significant liabilities; community opposition that could result in
costly delays and impede our ability to obtain necessary government approvals; exploration and development activities in
the Beetaloo that may lead to legal disputes, operational disruptions, and reputational damage due to native title and
heritage issues; the requirement to produce natural gas on a Scope 1 net zero basis upon commencement of commercial
production, with internal goals for operational net zero, which may increase our production costs; the increased attention to
environmental, social and governance (“ESG”) matters and environmental conservation measures that could adversely
impact our business operations; risks related to our corporate structure; risks related to our common stock and CDIs; and
the other risk factors discussed in the this report and the Company’s filings with the Securities and Exchange Commission
(the “SEC”).
It is not possible to foresee or identify all such factors. Any forward-looking statements in this report are based on
certain assumptions and analyses made by the Company in light of its experience and perception of historical trends,
current conditions, expected future developments, and other factors it believes are appropriate in the circumstances.
Forward-looking statements are not a guarantee of future performance and actual results or developments may differ
materially from expectations. While the Company continually reviews trends and uncertainties affecting the Company’s
results of operations and financial condition, the Company does not assume any obligation to update or supplement any
particular forward-looking statements contained in this report, except as required by law.
Additionally, certain forward-looking and other statements in this report or other locations, such as the Company’s
corporate website, regarding ESG matters are informed by various ESG standards and frameworks (which may include
standards for the measurement of underlying data) and the interests of various stakeholders. Accordingly, such information
may not be, and should not be interpreted as necessarily being “material” under the federal securities laws for SEC
reporting purposes, even if the Company uses the word “material” or “materiality” in such discussions. ESG information is
also often reliant on third-party information or methodologies that are subject to evolving expectations and best practices,
and the Company’s approach to and discussion of these matters may continue to evolve as well. For example, the
Company’s disclosures may change due to revisions in framework requirements, availability of information, changes in its
business or applicable governmental policies, or other factors, some of which may be beyond its control.
22
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by,
our condensed consolidated financial statements, the accompanying notes to the condensed consolidated financial
statements and other financial information included in this report and in our Annual Report on Form 10-K for the
year ended June 30, 2024. For further information on items that could impact our financial condition and operating
performance, see the section entitled “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended
June 30, 2024, and “Cautionary Note Regarding Forward-Looking Statements” in this report.
The following tables present selected financial information for the periods presented (dollar amounts in
thousands):
Three months ended
September 30,
|
||
2024 |
2023 |
|
Revenue and other operating income |
$— |
$— |
Operating costs and expenses: |
||
Compensation and benefits, including stock-based compensation |
(2,219) |
(1,258) |
Consultancy, legal and professional fees |
(1,680) |
(1,381) |
Depreciation and amortization |
(31) |
(29) |
Loss on remeasurement of fair value of assets classified as held for sale |
(376) |
— |
Accretion of asset retirement obligations |
(258) |
(214) |
Exploration expense |
(1,010) |
(905) |
General and administrative |
(1,405) |
(529) |
Total operating costs and expenses |
(6,978) |
(4,316) |
Other income (expense): |
||
Interest income, net |
796 |
84 |
Foreign exchange (loss) gain, net |
(254) |
614 |
Other expenses, net |
(320) |
(134) |
Total other income (expense) |
223 |
564 |
Net loss |
(6,756) |
(3,752) |
Foreign currency translation |
12,148 |
(5,318) |
Total comprehensive income (loss) attributable to noncontrolling interest |
566 |
(1,402) |
Total comprehensive income (loss) attributable to Tamboran Resources
stockholders
|
4,826 |
(7,668) |
Quarters Ended September 30, 2024 and 2023
Revenue and other operating income. We have not yet commenced natural gas production, therefore, we
did not earn any revenue and other operating income during the three months ended September 30, 2024 and 2023,
respectively.
Compensation and benefits, including stock-based compensation. Compensation and benefits, including
stock based compensation, increased by $1.0 million during the three months ended September 30, 2024, as
compared to the three months ended September 30, 2023, due primarily to the restricted stock units granted during
the period and increased headcount as compared to the comparative period.
Consultancy, legal and professional fees. Consultancy, legal and professional fees increased by $0.3
million during the three months ended September 30, 2024, as compared to the three months ended September 30,
23
Table of Contents
2023, due to increased professional fees related to U.S. GAAP financial statements. This scope of work was not
commenced until subsequent to September 30, 2023 in the prior fiscal year.
Loss on remeasurement of fair value of assets classified as held for sale. The Group recognized a loss on
assets classified as held for sale amounting to $0.4 million during the three months ended September 30, 2024, due
to a write down of rig 403 to the fair value less costs to sell in the current period, which did not occur in the
comparative period.
Accretion of asset retirement obligations expense. For the three months ended September 30, 2024, an
expense for accretion of asset retirement obligations of $0.3 million was recognized. The recognition of such an
expense was due to the accretion of asset retirement obligation liabilities in relation to all EPs, inclusive of EPs 76,
98, 117, 136 and 161, as well as SPCF for the new well and related well pads drilled during the period.
Exploration expense. Exploration expense increased by $0.1 million during the three months ended
September 30, 2024, as compared to three months ended September 30, 2023, due to increased activity for
topographical, geographical and geophysical studies and other indirect expenditure.
General and administrative. General and administrative costs increased by $0.9 million during the three
months ended September 30, 2024, as compared to the three months ended September 30, 2023, as a result of
increased expenses related to travel, insurance, and office and administrative fees.
Interest income, net. Interest income, net increased by $0.7 million during the three months ended
September 30, 2024, as compared to the three months ended September 30, 2023, due to interest received from term
deposits during the period ended September 30, 2024.
Foreign currency translation. For the three months ended September 30, 2024, we recognized a foreign
currency translation gain of $12.1 million, primarily due to the strengthening of the Australian Dollar as of
September 30, 2024, as compared to July 1, 2024. In the three months ended September 30, 2023, we recognized a
foreign currency translation loss of $5.3 million, primarily due to the weakening of the Australian Dollar as of
September 30, 2023, as compared to July 1, 2023. Foreign exchange gains and losses resulting from the settlement
of foreign currency transactions and from the translation at fiscal year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized on our condensed consolidated statement of operations
and comprehensive loss.
Income tax expense. We have no income tax expense due to operating losses incurred for the three months
ended September 30, 2024, and 2023. We have provided a full valuation allowance on our net deferred tax asset
because management has determined that it is more likely than not that we will not earn income sufficient to realize
the deferred tax assets during a foreseeable future period. Management will continue to assess the potential for
realizing deferred tax assets based upon income forecast data and the feasibility of future tax planning strategies and
may record adjustments to the valuation allowance against deferred tax assets in future periods, as appropriate, that
could have a material impact on the condensed consolidated statement of operations and comprehensive loss.
Liquidity and Capital Resources
We are a development stage enterprise and will continue to be so until commencement of substantial
production from our natural gas properties. We do not expect to generate any revenue from production until 2026, at
the earliest, which will depend upon successful drilling results, additional and timely capital funding, and access to
suitable infrastructure. Until then our primary sources of liquidity are expected to be cash on hand, net proceeds
from our IPO, and funds from future private and public equity placements, debt funding and asset sales.
We expect to incur substantial expenses and generate significant operating losses as we continue to develop
our natural gas prospects and as we:
•complete our current appraisal drilling and testing program;
•develop and commercialize our assets, including development of pipelines, the proposed NT LNG
facility and other infrastructure;
24
Table of Contents
•opportunistically invest in additional natural gas assets adjacent to our current positions; and
•incur expenses related to operating as a public company and compliance with regulatory requirements.
Our future financial condition and liquidity will be impacted by, among other factors, the success of our
exploration and appraisal drilling program, the number of commercially viable natural gas discoveries made, the
quantities of natural gas discovered, the speed with which we can bring such discoveries to production, and the
actual cost of exploration, appraisal and development of our prospects.
For the remainder of fiscal year ended June 30, 2025, we estimate that we will need to invest approximately
$70.0 million to progress our development plans. We expect the additional proceeds from the rig 403 asset sale,
received in October 2024, together with our existing cash on hand, to be sufficient to fund our planned drilling and
flow testing of SS-2H and SS-3H. However, we may require significant additional funds earlier than we currently
expect in order to execute our strategy as planned. Additional funding may not be available to us on acceptable
terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our
stockholders. For example, if we raise additional funds by issuing additional equity securities, further dilution to our
existing stockholders will result. If we are unable to obtain funding on a timely basis, we may be required to
significantly curtail one or more of our planned activities. We also could be required to seek funds through
arrangements with collaborators or others that may require us to relinquish rights to some of our assets which we
would otherwise develop on our own, or with a majority working interest.
Cash and Cash Equivalents
The following table summarizes our key measures of liquidity for the periods indicated (in thousands).
September 30,
2024
|
June 30,
2024
|
|
Cash and cash equivalents |
$74,042 |
$74,746 |
As of September 30, 2024, we had $74.0 million of cash and cash equivalents. This balance represents a
decrease of $0.7 million from June 30, 2024, due to incoming funds of $5.3 million from the greenshoe option
exercised in July 2024, and cash calls received of $13.6 million offset primarily by spending on operations,
primarily the ongoing drilling of the SS-2H pilot well during the quarter ended September 30, 2024.
Capital Commitments
We had the following five-year capital commitments as of the periods indicated (in thousands), which are
not recognized as liabilities or payables on the condensed consolidated balance sheet:
September 30,
2024
|
June 30,
2024
|
|
Capital commitments: |
||
Sweetpea |
$24,332 |
$23,283 |
EP 161 |
$2,769 |
$2,650 |
Beetaloo Joint Venture |
$65,464 |
$62,642 |
Midstream |
$1,902 |
$1,972 |
Sweetpea
As of September 30, 2024, the Company’s wholly owned subsidiary, Sweetpea committed to spend $24.3
million related to two licenses, EP 136 with total commitments of $14.7 million and EP 143 with total commitments
of $9.6 million over the following five years.
A renewal application for EP 136 was submitted to the Department of Mining and Energy (“DME”)
(formerly the Department of Industry, Tourism and Trade) in September 2023, and approved in July 2024, granting
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a five-year extension for the period July 24, 2025 to July 23, 2030 with a minimum work program commitment of
$14.7 million.
A variation application for EP 143 was submitted to DME in August 2024, and approved in October 2024.
The total minimum work program commitments remain the same at $9.6 million with activity and associated spend
being transferred within the license term.
EP 161
For the McArthur working interest, we are obligated to contribute our share of expenses to uphold our stake in
EP 161. Our commitment through March 2026 is approximately $2.8 million based on the minimum work
requirements. There are no minimum commitment requirements after March 2026.
Beetaloo Joint Venture
The terms of the Beetaloo Joint Venture necessitate specific minimum work obligations through May 2028.
These commitments include an expected spend of $65.5 million related to drilling and multi-stage hydraulic
fracturing of five wells, 2D seismic survey, and subsurface studies, with expenditure across EP 76 of $22.3 million,
EP 98 of $20.9 million, and EP 117 of $22.3 million . An application was submitted to DME on September 26, 2024
to vary the year 2 and 3 work program, and is currently pending resolution.
Midstream
Procurement of the long lead items for the SPCF compressor package and dehydration package were placed in
June 2024 with progress payments of $1.9 million required prior to the end of 2025.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Three months ended
September 30,
|
||
2024 |
2023 |
|
Statement of Cash Flows: |
||
Net cash used in operating activities |
$(4,154) |
$(3,343) |
Net cash used in investing activities |
(14,496) |
(18,868) |
Net cash from financing activities |
16,744 |
34,398 |
Net Cash Used in Operating Activities
For the three months ended September 30, 2024, net cash used in operating activities was $4.2 million
during which we incurred a net loss of $6.8 million, compared to net cash used in operating activities for the three
months ended September 30, 2023, of $3.3 million, during which we incurred a net loss of $3.8 million The net loss
for the three months ended September 30, 2024, included the non-cash impacts of depreciation and amortization,
stock-based compensation, loss on remeasurement of assets classified as held for sale, accretion of asset retirement
obligations, and foreign exchange differences. Additionally, in the three months ended September 30, 2024, net
favorable changes in operating assets and liabilities totaled $0.6 million, primarily consisting of a $0.2 million
decrease in accounts payable and accrued expenses due to timing of our pay cycle during the fiscal period, a $0.9
million decrease in trade and other receivables, and a $0.2 million increase in prepaid expenses and other assets.
Net Cash Used in Investing Activities
For the three months ended September 30, 2024, net cash used in investing activities was $14.5 million
compared to $18.9 million for the three months ended September 30, 2023. In the period ended September 30, 2024,
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there was spend on exploration and evaluation activities of $12.2 million in connection with the drilling of the SS2-
H pilot well, expenditure of $2.7 million related to the detailed design of SPCF, offset by the non-refundable
advance payment of $0.4 million for rig 403.
Net Cash from Financing Activities
For the three months ended September 30, 2024, net cash received in financing activities was $16.7 million
compared to $34.4 million received for the three months ended September 30, 2023. This change was primarily due
to the receipt of $7.4million in gross proceeds from the greenshoe option exercised in July 2024, $11.5 million
attributable to contributions from noncontrolling interest holders in connection with investments by DWE, partially
offset by transaction costs of $2.1 million.
Critical Accounting Estimates
Management’s discussion and analysis of our financial condition and results of operations are based upon our
condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The
preparation of our financial statements in conformity with U.S. GAAP requires us to make estimates and
assumptions that affect the reported amounts of certain assets, liabilities and related disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. The following critical accounting policies relate to the more significant estimates and assumptions
used in preparing the consolidated financial statements.
The impact of, and any associated risks related to, estimates and assumptions are discussed within
Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as in the Notes to
the Condensed Consolidated Financial Statements, if applicable, where estimates and assumptions affect the
Company’s reported and expected financial results.
There have been no other material changes in critical accounting estimates at September 30, 2024 from those
described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of September 30, 2024, our principal executive officer and principal financial officer concluded that we
did not maintain effective internal control over financial reporting due to the material weakness that was disclosed in
our Annual Report on Form 10-K for the year ended June 30, 2024.
As discussed in Part II, Item 9A, “Controls and Procedures” in our Annual Report on Form 10-K for the
year ended June 30, 2024, we identified the following deficiencies in our internal control over financial reporting,
which in the aggregate, constituted a material weakness:
i) lack of sufficient evidence retained of the performance of internal controls,
ii) insufficient resources in key accounting and finance roles leading to inadequate segregation of duties,
iii) lack of manage access and manage change IT general controls over the cloud-based enterprise resource
planning system, and
iv) accounting for complex transactions in accordance with U.S. GAAP.
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Status of Remediation Efforts
In response to the material weakness identified and described above, our management, with the oversight of
the Audit & Risk Management Committee of our Board of Directors, will continue to dedicate significant efforts and
resources to further improve our control environment and to take steps to remediate this material weakness. As part
of our plan to address this material weakness, we are performing a full review, with the assistance of external
consultants, of our processes and internal controls. We have implemented, and plan to continue to implement, new
controls and processes. We will also provide training to control owners, supported by external consultants, as
appropriate, in support of an effective internal control framework, including how to sufficiently document and
evidence the operation of internal controls. We will also continue to hire accounting, finance and cyber security
personnel who possess the required technical knowledge to ensure reporting requirements are met and segregation of
duties are maintained. Finally, we have implemented a new enterprise resource planning system to better support our
financial reporting, including any related internal controls.
While we have begun implementing a plan to remediate this material weakness, we cannot predict the
success of such plan or the outcome of our assessment of this plan at this time. If our steps are insufficient to
successfully remediate the material weakness and otherwise establish and maintain an effective system of internal
control over financial reporting, the reliability of our financial reporting, investor confidence in us, and the value of
our common stock could be materially and adversely affected. We can give no assurance that this implementation
will remediate this deficiency in internal control or that additional material weaknesses in our internal control over
financial reporting will not be identified in the future. Our failure to implement and maintain effective internal
control over financial reporting could result in errors in our financial statements that could result in a restatement of
our financial statements, or cause us to fail to meet our periodic reporting obligations. For as long as we are an
“emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be
required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.
Changes in Internal Control Over Financial Reporting
Except for the implementation of our remediation plans in connection with our ineffective disclosure
controls and procedures described above, there were no changes in the Company’s internal control over financial
reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended
September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
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Part II - Other Information
Item 1. Legal Proceedings
Other than given as below, as of the date of this report, we are not a party to any material pending legal
proceedings, nor are we aware of any material civil proceeding or government authority contemplating any legal
proceeding, and to our knowledge, no such proceedings by or against us have been threatened. We anticipate that we and
our subsidiaries may from time to time in the future become subject to claims and legal proceedings arising in the ordinary
course of business. It is not feasible to predict the outcome of any such proceedings, and we cannot assure that their
ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows or results of
operations.
On July 4, 2024, the Environment Centre Northern Territory (“ECNT”) lodged an Originating Application in the
Northern Territory Civil and Administrative Appeals Tribunal (“NTCAT”) for a merits review of the Minister for
Environment, Climate Change and Water Security’s (“Minister’s”) approval of TB1 Operator’s Shenandoah South
Exploration & Appraisal Program EP98 and EP117 Environment Management Plan (“Shenandoah EMP”) (“NTCAT
Merits Review”). On August 20, 2024 the TB1 Operator was added as a respondent to the NTCAT Merits Review. The
NTCAT Merits Review commenced by ECNT under the Petroleum Act 1984 (NT) and the Petroleum (Environment)
Regulations 2016 (NT). ECNT are seeking an order that the Minister’s Original Decision is set aside and substituted with a
decision that the Tribunal Member is not satisfied the information provided in the Shenandoah EMP is sufficiently
compliant with the Petroleum (Environment) Regulations 2016 (NT), including in relation to: (a) risks of wastewater spills
and (b) risks in relation to inter-aquifer connectivity and an order that the Shenandoah EMP should be referred to the NT
EPA for an independent assessment or, in the alternative, an order that varies the Minister’s original decision and
establishes conditions in the Shenandoah EMP.
Item 1A. Risk Factors
There have been no material changes in risk factors for the quarterly period ended September 30, 2024 from those
described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There has been no material change in the planned use of proceeds from the description included on Form S-1 (File
No. 333-279119), as amended, declared effective by the SEC on June 26, 2024.
No shares of the Company’s common stock were repurchased during the three months ended September 30, 2024.
Item 5. Other Information
During the three months ended September 30, 2024, no director or officer of the Company adopted terminated
“Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of
Regulation S-K.
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Item 6. Exhibits
The following documents are filed as exhibits hereto:
Exhibit
number
|
Description |
3.1 |
Certificate of Incorporation of Tamboran Resources Corporation (filed as Exhibit 3.1 to the Company’s
Registration Statement on Form S-1 dated May 3, 2024, File No. 333-279119, and incorporated herein by
reference).
|
3.2 |
Amended and Restated Bylaws of Tamboran Resources Corporation (filed as Exhibit 3.2 to the Company’s
Registration Statement on Form S-1 dated June 17, 2024, File No. 333-279119, and incorporated herein by
reference).
|
31.1 |
|
31.2 |
|
32.1* |
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 (furnished herewith).
|
32.2* |
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (furnished herewith).
|
101 |
Financial statements from the Quarterly Report on Form 10-Q of Tamboran Resources Corporation for the quarter
ended September 30, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the
Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations and
Comprehensive Loss, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed
Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.
|
104 |
Cover Page Interactive Data file (formatted as iXBRL and contained in Exhibit 101). |
*This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by
reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such
filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
Tamboran Resources Corporation
Date: November 12, 2024
/s/ Eric Dyer
Eric Dyer
Chief Financial Officer