The Australia shale explorer is debt-free, has US$11.5mln of cash and most of its project costs will be covered by partner Origin Energy
(LON:FOG, ) has highlighted a strong financial position, debt-free and US$11.5mln of cash in the bank, as it filed its interim statement for the three months ended March 31, 2020.
The company noted that it has continued to focus on strict cost management and efficient operation of its portfolio. G&A expenses were US$400,000 which represents a 12% reduction quarter-on-quarter.
In April, the company’s financial position was bolstered as it sold a further 7.5% holding in the Beetaloo project to joint venture partner Origin Energy in return for A$150mln worth of additional project spending cover.
Previously, Origin was committed to spend up to A$65.3mln gross in Stage 2 of the joint venture, and up to A$48mln in Stage 3, but now the aggregate gross cost cap rises to A$263.8mln.
Spending above A$263.8mln will be borne proportionally by the partners.
Falcon retains a 22.5% interest in the Beetaloo project following the latest farm-out, with Origin owning the other 77.5%.
The transaction received plaudits from broker Cenkos which a month ago repeated a ‘buy’ recommendation and a 40p price target on Falcon shares.
“We believe Falcon is now fully funded through one of the greatest periods of uncertainty in the oil and gas industry, eliminating all equity and dilution risk for shareholders,” Cenkos analyst James McCormack said in a note to clients.