10-K: Tamboran 10-K: Beetaloo Progress, Funding, and Governance

Tamboran Resources Corporation's latest 10-K details significant operational progress in the Beetaloo Basin, alongside substantial financial losses and ongoing capital requirements, raising going concern doubts.

Summary

• Tamboran Resources Corporation is an early-stage natural gas exploration and production company focused on the Beetaloo Basin in Australia's Northern Territory.
• The company holds approximately 1.9 million net prospective acres, making it the largest acreage holder in the Beetaloo Basin.
• Fiscal year 2025 saw significant milestones, including drilling SS-2H ST1 and SS-3H wells, executing a stimulation program, and achieving record IP30, IP60, and IP90 flow rate tests on SS-2H ST1.
• Native Title Holder consent and Northern Territory Government (NT Government) approval were received to sell gas under Beneficial Use of Gas (BUG) legislation, allowing gas sales during the appraisal period.
• The company plans to achieve ~40 MMcf/d (gross) plateau production from the Shenandoah South Pilot Project by 2H 2026, subject to weather and approvals.
• Tamboran is partnering with APA Group for a 23-mile Sturt Plateau Pipeline (SPP) to connect to the Amadeus Gas Pipeline (AGP) by mid-2026.
• Construction of the Sturt Plateau Compression Facility (SPCF) has commenced, with long-lead items delivered and earthworks underway.
• The long-term plan includes a high-capacity pipeline to Australia's East Coast domestic gas market and a proposed Northern Territory LNG export facility (NTLNG) for South and East Asian markets.
• Non-binding letters of intent for 875 MMcf/d of natural gas have been secured from six Australian energy retailers for 10-15 years.
• Memoranda of understanding with bp and Shell contemplate 20-year LNG purchase contracts for 4.4 MTPA from the proposed NTLNG development.
• The company reported a net loss of $39.6 million for fiscal year 2025, compared to $23.9 million in fiscal year 2024.
• Net cash used in operating activities was $29.6 million in fiscal year 2025, up from $11.4 million in fiscal year 2024.
• Cash and cash equivalents decreased to $39.4 million as of June 30, 2025, from $74.7 million as of June 30, 2024.
• Capital commitments for the next five years total $110.1 million, including $23.1 million for Sweetpea Petroleum, $2.3 million for EP 161, $75.6 million for Beetaloo Joint Venture, and $9.1 million for Midstream projects.
• A material weakness in internal control over financial reporting was identified for fiscal years 2024 and 2025.

Sentiment

Score: 3

Explanation: The company is in an early development stage with no revenue, significant and increasing losses, negative cash flow, and a 'going concern' warning from auditors. While operational progress and strategic partnerships are positive, the financial instability and high capital requirements present substantial risks.

Positives

• Achieved significant operational milestones in fiscal year 2025, including drilling SS-2H ST1 and SS-3H with long horizontals (5,500 and 10,000 feet respectively).
• Successfully executed a stimulation program and completed record Beetaloo Basin IP30, IP60, and IP90 flow rate tests on SS-2H ST1.
• Received Native Title Holder consent and NT Government approval to sell appraisal gas under the Beneficial Use of Gas (BUG) legislation, enabling gas sales from exploration permits.
• Progressed towards commercial gas sales from the Beetaloo Basin, on track for mid-calendar year 2026, with a goal of ~40 MMcf/d (gross) plateau production from the Shenandoah South Pilot Project.
• Entered a binding development agreement with APA Group for the 23-mile Sturt Plateau Pipeline (SPP), expected to be available by mid-2026.
• Commenced construction of the Sturt Plateau Compression Facility (SPCF), with long-lead items delivered and earthworks initiated.
• Secured non-binding letters of intent from six of Australia's largest energy retailers for an aggregate volume of 875 MMcf/d for 10-15 years.
• Completed Pre-FEED studies for the proposed Northern Territory LNG export facility (NTLNG) with Bechtel, affirming feasibility for commissioning the first LNG train in the early 2030s.
• Awarded exclusive use of a 420-acre site at the Middle Arm Precinct (MAP) near Darwin for the NTLNG project until December 31, 2027, with extension options.
• Signed non-binding memoranda of understanding with bp and Shell for 20-year LNG purchase contracts, each for up to 2.2 MTPA from the proposed NTLNG development.
• Maintains a leading acreage position in the high-quality Beetaloo Basin, covering approximately 1.9 million net prospective acres.
• Committed to achieving net zero equity Scope 1 and 2 GHG emissions upon commencement of commercial production, aligning with Australian government regulations.
• Has high-caliber and experienced management and technical teams with extensive industry experience.
• Secured strategic partnerships with industry leaders like H&P (drilling services), Liberty Energy (frac fleets), and APA Group (gas infrastructure).

Negatives

• Incurred significant operating losses of $39.3 million in fiscal year 2025 and $20.5 million in fiscal year 2024.
• Experienced negative cash flows from operating activities, with $29.6 million used in fiscal year 2025 and $11.4 million in fiscal year 2024.
• Accumulated a substantial deficit of $167.3 million as of June 30, 2025, and $130.4 million as of June 30, 2024.
• The independent registered public accounting firm included an explanatory paragraph in its report, raising substantial doubt about the company's ability to continue as a going concern.
• Identified a material weakness in internal control over financial reporting for fiscal years 2024 and 2025, including insufficient evidence of control performance, inadequate segregation of duties, and lack of IT general controls.
• No material revenue from natural gas production has been generated since inception, with revenue not expected until mid-calendar year 2026 at the earliest.
• Requires substantial additional capital to fund its business plan, with no current commitments for future external funding.
• Experienced a downhole mechanical issue in SS-2H, leading to sidetracking (SS-2H-ST1), and completion operations for SS2-4H were paused due to detected casing stress.
• Natural gas prices are volatile, and a sustained decline could adversely affect financial condition and ability to raise capital.
• The ability to deliver natural gas to markets depends on the construction of additional pipeline capacity, which may not be secured on time or at all.
• The company has no proved reserves at this time, and drilling may not yield commercial quantities or quality of natural gas.
• Faces substantial uncertainties in estimating property characteristics, and actual results may differ materially from estimates.
• The long-term business plan for an additional LNG export terminal (NTLNG) is dependent on attracting a third-party partner and securing necessary permits, with non-binding MOUs not guaranteeing definitive agreements.
• Experienced supply chain constraints and inflationary pressures on costs throughout fiscal years 2024 and 2025, including for steel, chemicals, transportation, fuel, and wages.

Risks

• Early stage of development with no material revenue expected until mid-calendar year 2026 and a limited operating history, making future performance uncertain.
• Substantial additional capital is required for the business plan, which may be difficult to raise on acceptable terms, or at all, potentially limiting execution.
• Delivery of natural gas to Australian East Coast and Asian markets is contingent upon constructing additional pipeline capacity, which may not be secured.
• Absence of proved reserves and the risk that drilling may not yield natural gas in commercial quantities or quality.
• Substantial uncertainties in estimating the characteristics of properties, leading to potential inaccuracies in production volumes and ultimate recoveries.
• Speculative nature of drilling activities, involving significant costs that may exceed estimates and may not result in discoveries or additions to production/reserves.
• Challenges associated with importing U.S. practices and technology to the Northern Territory due to limited local experience and difficulty in attracting/training a qualified workforce.
• Inability to access appropriate equipment and infrastructure in a timely manner may hinder market access and delay business plan execution.
• Operational complexities and inherent risks of drilling, completions, workover, and hydraulic fracturing operations could adversely affect the business.
• Volatility of natural gas prices and its potential adverse effect on financial condition and operations, impacting capital raising ability.
• Difficulty in effectively managing future growth, which could impede the execution of the business strategy, including securing necessary commercial contracts for gas delivery.
• Construction of midstream projects (pipelines, LNG terminal) subjects the company to risks of delays, cost overruns, and negative effects on financial performance.
• Material inaccuracies in assessments of the Beetaloo Basin or estimates of proved/probable reserves could fundamentally impact the business.
• Dependence on certain members of management and the technical team, with loss or departure being detrimental to future success.
• Limited control over properties operated by others or through joint ventures, potentially leading to unexpected costs or changes in operations.
• Concentration of all assets and operations in the Beetaloo Basin, making the company vulnerable to region-specific risks.
• Inability to make accretive acquisitions or successfully integrate acquired businesses or assets.
• Operating hazards inherent to natural gas exploration and production that could result in substantial losses or liabilities not adequately covered by insurance.
• Identified drilling locations are scheduled over several years, susceptible to uncertainties like availability and cost of rigs, equipment, supplies, personnel, and services.
• Recurring losses from operations, negative cash flows, and substantial cumulative net losses raise substantial doubt about the ability to continue as a going concern.
• Ability to develop an additional LNG export terminal on Australia's northern coast is dependent on attracting a third-party partner and securing necessary permits.
• Events outside of control, such as financial crises, epidemics, geopolitical instability, or terrorist attacks, could have a material adverse effect.
• Negative impact from security threats and disruptions, including electronic, cybersecurity, or physical security threats.
• Potential involvement in legal proceedings that could result in substantial liabilities.
• Risks related to corporate social responsibility, including potential claims of 'greenwashing' or failure to meet ESG expectations.
• Subject to complex federal, local, and other laws and regulations that could adversely affect costs, operations, or expose to significant liabilities.
• Community opposition to Beetaloo development and related operations, potentially causing significant costs, delays, and impeding government approvals.
• Native title and heritage risks in the Beetaloo, potentially leading to legal disputes, operational disruptions, and reputational damage.
• Requirement by the Australian government to produce natural gas on a Scope 1 net zero basis upon commercial production, which may increase costs and be challenging to meet.
• Increased attention to ESG matters and environmental conservation measures may adversely impact the business, including increased costs and reduced demand.
• Restrictions and delays from federal and local initiatives relating to hydraulic fracturing.
• Reduced demand for natural gas or increased compliance costs due to climate change risks.
• Limitations on business strategies if costs are incurred due to non-compliance with environmental, health, or safety regulations.
• Potential future regulation by the Northern Territory of Australia.
• Unanticipated water and waste disposal costs due to increased water-related laws and regulations.
• Restrictions on drilling, completion, production, or related activities to protect wildlife.
• Increased costs of compliance with evolving data privacy laws.
• As a holding company, dependence on distributions from TR Ltd. to cover expenses.
• Requirements of being a public company (ASX and Exchange Act) may strain resources, increase costs, and distract management.
• Changes in foreign currency exchange rates could materially adversely affect business, results of operations, or financial condition.
• Transactions with affiliates may not always be in the best interests of the company or stockholders.
• Material weakness in internal control over financial reporting may cause failure to timely and accurately report financial results or lead to material misstatements.
• Different characteristics of capital markets in Australia and the United States may negatively affect trading prices and limit certain actions.
• Ability to raise additional capital may be significantly limited by ASX listing rules restricting share issuances without stockholder approval.
• Market price of common stock may be adversely affected by arbitrage activities between NYSE and ASX.

Future Outlook

The company's business plan involves three phases: first, achieving ~40 MMcf/d (gross) plateau production from the Shenandoah South Pilot Project by mid-calendar year 2026, supported by the Sturt Plateau Pipeline and Compression Facility. The second phase focuses on constructing a new high-capacity pipeline to access the Australian East Coast domestic gas market and existing LNG export facilities. The third phase aims to supply natural gas for export through existing LNG plants near Darwin and a proposed Northern Territory LNG export facility (NTLNG), with commissioning of the first NTLNG train projected for the early 2030s. The company intends to fund these plans through cash on hand, private placements, debt, and strategic partnerships.

Management Comments

• Richard Stoneburner, Interim Chief Executive Officer, stated, "We believe natural gas will play a significant role in the transition to cleaner energy and are committed to supporting the global energy transition by developing commercial production of natural gas in the Beetaloo Basin with net zero equity Scope 1 and 2 emissions."
• Management believes that importing U.S. unconventional drilling and completion techniques, best practices, and technology, together with the right personnel, will reduce the incremental cost to drill and complete each subsequent well.
• Management targets long-term development well costs of $16 million per well with horizontal sections of more than 10,000 feet with 60 stages, leveraging economies of scale and infrastructure development.

Industry Context

The announcement relates to the broader industry trend of natural gas playing a significant role in the transition to cleaner energy, particularly in supporting emissions reduction targets through coal-to-gas power plant conversions. It highlights increasing global demand for LNG and forecast gas shortfalls on Australia's East Coast in the late 2020s, providing a market opportunity for Beetaloo Basin gas. The company's strategy to apply U.S. drilling and completion technology aims to gain a competitive advantage in meeting Australia's stringent GHG regulations and achieving net zero Scope 1 and 2 emissions, positioning Beetaloo gas as an attractive alternative for domestic and Asian economies seeking to reduce reliance on coal.

Comparison to Industry Standards

• The geological properties of the Middle Velkerri section in the Beetaloo Basin are considered analogous to the Marcellus Shale of the Appalachian Basin in the northeastern United States, having similar rock and fluid properties, reservoir conditions, and drive mechanisms. However, the Marcellus is at a more advanced stage of development.
• The company's application of U.S. drilling and completion technology is intended to provide a competitive advantage and achieve natural gas production in compliance with Australian GHG regulations, aiming for lower carbon dioxide content compared to natural gas produced elsewhere in Northern Australia and major fields supplying Australia's East Coast gas market.
• The company's targeted long-term development well costs of $16 million per well for 10,000+ foot laterals with 60 stages are an internal benchmark for efficiency gains through economies of scale and resource maturation, rather than a direct comparison to specific competitor project results.

Management Changes

Corporate Governance

Legal Proceedings

• On July 4, 2024, the Environment Centre Northern Territory (ECNT) lodged an Originating Application in the NTCAT for a merits review of the Minister's approval of TB1 Operator's Shenandoah South Exploration & Appraisal Program EP98 and EP117 Environment Management Plan (Shenandoah EMP). ECNT sought to set aside the approval or impose additional conditions related to wastewater spills and inter-aquifer connectivity risks. The NTCAT granted leave for ECNT to withdraw the substantive proceedings on August 25, 2025, following dismissals of ECNT's stay application and application to admit further expert reports.
• On December 6, 2024, Lock the Gate Alliance Ltd lodged an Originating Application in the Federal Court of Australia seeking an injunction to restrain TB1 Operator from conducting the Shenandoah South Pilot Project and a declaration that the project is an unconventional gas development likely to have a significant impact on a water resource. The application was heard from June 23-26 and August 14, 2025, with judgment reserved.

Related Party Transactions

• Daly Waters Energy, LP (DWE), controlled by Bryan Sheffield (largest shareholder), is a 50/50 joint venture partner in TB1, which holds interests in EPs 76, 98, and 117. DWE's share of expenditure for the Beetaloo Joint Venture was $55,138,543 in FY2025, with a $7,051,172 receivable from DWE.
• The company issued 312,500 shares of common stock to DWE in November 2024 to satisfy a $7,500,000 Checkerboard fee obligation.
• Daly Waters Infrastructure, LP (DWI), also controlled by Bryan Sheffield, is a 50/50 joint venture partner in the SPCF Sub Trust. DWI's share of expenditure for SPCF was $3,631,456 in FY2025, with $450,239 in advance contributions received from DWI.
• Helmerich & Payne International Holdings, LLC (H&P) is a strategic alliance partner and equity investor. The company incurred $13,895,871 in costs related to H&P's drilling services in FY2025, with $1,691,653 remaining unpaid.
• Bryan Sheffield, through Daly Waters Royalty, holds a 2.34358% overriding royalty interest (ORRI) over all Beetaloo assets.
• Jeffrey J Rooney as trustee of the Siegel Dynasty Trust (beneficiaries are children of director David N. Siegel) holds an undivided 1% ORRI in Sweetpea Assets.
• The Bayless Group (including Tom Dugan Family Limited Partnership, Territory Oil & Gas LLC, and Malcolm John Gerrard) holds a 0.775% ORRI over EPs 76, 98, and 117, as detailed in the Origin Fourth Amended and Restated Royalty Deed.

Stakeholder Impact

• **Shareholders:** Face significant risk due to recurring losses, negative cash flows, and substantial doubt about the company's ability to continue as a going concern. Potential for dilution from future capital raises and no expected dividends in the foreseeable future. Trading prices may be affected by differences between ASX and NYSE markets.
• **Employees:** The company is hiring additional accounting and finance personnel and a VP of IT to address internal control weaknesses. Competitive compensation and benefits packages are offered to attract and retain talent. Safety and training are prioritized.
• **Customers (NT Government, Australian energy retailers, bp, Shell):** Gas sales agreements and MOUs are in place, but commercial production and delivery are subject to successful development, infrastructure construction, and regulatory approvals. Delays or failures could impact supply commitments.
• **Suppliers (H&P, Liberty Energy, APA Group):** Strategic partnerships are crucial for drilling, completion, and infrastructure development. Delays in projects or financial constraints could impact these relationships.
• **Local Communities and Traditional Owners:** Operations are subject to native title and heritage risks, requiring consultation and agreements. Community opposition could lead to delays and increased costs. The company emphasizes partnering with local communities and prioritizing local hiring.
• **Creditors:** The company's ability to continue as a going concern and meet financial commitments is uncertain, potentially impacting creditors.

Next Steps

• Drilling of three additional Shenandoah South wells (SS-4H, SS-5H, and SS-6H) in the Shenandoah South Pilot Project during fiscal year 2026.
• Stimulation of the SS-4H well in 2025 and the SS-3H, SS-5H, and SS-6H wells in 2026.
• Completing construction activities and commissioning of the Sturt Plateau Compression Facility (SPCF).
• Achieving ~40 MMcf/d (gross) plateau production commencing in 2H 2026 from the Shenandoah South Pilot Project.
• APA Group to continue work on the Sturt Plateau Pipeline (SPP), expected to be available to receive gas from mid-2026.
• Applying for a production license for certain permit areas by mid-October 2025 (extended deadline).
• Transferring certain permits to Tamboran and DWE by December 31, 2025.
• Applying for retention licenses over the Dev A++ and Dev B areas by March 31, 2026, with grants and transfers by September 30, 2026.
• Commencing a formal farm-down of the Phase 2 Development Area following the IP30 flow test from the Shenandoah South 2H sidetrack (SS-2H-ST1) well.
• Seeking additional strategic partners for the financing and development of infrastructure projects, including the NTLNG project.
• Continuing to evaluate the future impact of The One Big Beautiful Bill Act (OBBBA) tax law changes on consolidated financial statements.
• Implementing a new enterprise resource planning system and hiring additional accounting and finance personnel to remediate material weakness in internal controls.

Key Dates

Keywords

Natural Gas, Beetaloo Basin, Exploration, Production, LNG, Australia, Northern Territory, Unconventional Gas, Shale Gas, Energy Transition, ESG, Carbon Capture, Pipeline, Hydraulic Fracturing, SEC Filing, 10-K, Tamboran Resources