TBN

Tamboran Resources Corp. 10-Q Summary

Business Context and Reporting Period

Company: Tamboran Resources Corporation (TBN)

Reporting Period: Quarterly period ended December 31, 2024 (Six months ended December 31, 2024)

Business Stage: Early-stage exploration and appraisal natural gas company focused on the Beetaloo sub-basin in Australia's Northern Territory. The company has not yet commenced natural gas production or generated operating revenue.

Going Concern: Management has raised substantial doubt regarding the company's ability to continue as a going concern for the next 12 months due to recurring losses and the need for additional capital to fund exploration and development.

Key Financial Metrics

Cash Flow Highlights (Six Months Ended Dec 31, 2024):

• Operating Cash Flow: Net cash used of $8.9 million.
• Investing Cash Flow: Net cash used of $35.8 million, primarily for exploration ($42.1M) and assets under construction ($6.6M), partially offset by rig sale proceeds ($8.0M) and R&D tax credits ($6.2M).
• Financing Cash Flow: Net cash provided of $31.4 million, driven by contributions from noncontrolling interest holders ($30.3M) and greenshoe option proceeds ($7.4M).

Material Changes vs. Prior Period

• Increased Net Loss: Net loss attributable to stockholders more than doubled from $9.2 million to $20.1 million year-over-year.
• Unusual Expenses:
  • Checkerboard Fee: Recognized a $5.95 million non-cash expense related to the issuance of 312,500 shares to satisfy a joint venture obligation to Daly Waters Energy (DWE).
  • LNG Feasibility Study: Incurred $3.2 million in expenses for studies related to a proposed Northern Territory LNG facility.
• Foreign Exchange Impact: Significant foreign currency translation loss of $17.0 million (six months) due to the weakening of the Australian Dollar against the US Dollar, compared to a gain of $8.3 million in the prior year.
• Asset Disposal: Completed the sale of rig 403 for $8.5 million, recognizing a $376,000 loss on remeasurement during the period.
• Capital Raise: Exercised greenshoe option in July 2024, raising $7.4 million net of costs.

Guidance, Outlook, Risks, and Contingencies

Outlook and Capital Needs:

• Management estimates a need for approximately $50.0 million to progress development plans for the remainder of the fiscal year ending June 30, 2025.
• Revenue is not expected until 2026 at the earliest, contingent on successful drilling and infrastructure access.
• Liquidity is dependent on existing cash, future equity/debt placements, and asset sales.

Risks and Contingencies:

• Legal Proceedings: Facing challenges from the Environment Centre Northern Territory (ECNT) and Lock the Gate Alliance regarding the Shenandoah South Exploration & Appraisal Program Environment Management Plan. ECNT seeks a merits review of the Minister's approval; Lock the Gate seeks an injunction in Federal Court.
• Capital Commitments: Significant future spending obligations totaling approximately $96 million, including $70.4 million for the Beetaloo Joint Venture and $21.9 million for Sweetpea licenses.
• Internal Controls: The company disclosed a material weakness in internal control over financial reporting related to insufficient evidence of control performance, segregation of duties, and IT general controls. Remediation efforts are underway.
• Debt Facility: Entered a $25 million performance bond facility with Macquarie Bank (Facility A) in December 2024. Additional facilities (B and C) are contingent on raising further capital ($62.5M and $75M respectively).

Investor Verification Checklist

• Capital Sufficiency: Verify the timeline and certainty of raising the estimated $50 million needed for the remainder of FY2025 given the "substantial doubt" on going concern status.
• Legal Outcomes: Monitor the status of the NTCAT merits review and Federal Court injunction proceedings regarding the Shenandoah South project, as delays could impact the development timeline.
• Joint Venture Obligations: Confirm the status of the "Checkerboard Strategy" implementation with Daly Waters Energy and any future cash or equity obligations.
• Internal Control Remediation: Review progress on remediation of the material weakness in internal controls to ensure future financial reporting reliability.
• Exploration Results: Track the results of the SS-2H, SS-2H ST1, and SS-3H pilot wells to assess the commercial viability of the Beetaloo assets.