Beetaloo Gas Pilot Progress And Long-Term Offtake Will Reshape Future Earnings Profile

Catalysts

About Tamboran Resources

Tamboran Resources is an oil and gas company focused on developing natural gas resources in Australia's Beetaloo Basin.

What are the underlying business or industry changes driving this perspective?

• Progress towards first gas from the Beetaloo Basin Pilot Area in the third quarter of calendar 2026, supported by an 88% complete compression facility and an APA owned pipeline in final commissioning, is expected to move Tamboran Resources from a pre revenue phase toward contracted gas sales. This is likely to affect revenue visibility and cash flow generation.
• A long term CPI escalated gas contract with the Northern Territory government for approximately 40 million cubic feet per day, once supplied by the initial five pilot wells, creates contracted offtake exposure that can help link Tamboran Resources volumes to domestic demand growth. This may support revenue and earnings stability over time.
• The entry of INPEX into the Beetaloo Basin, the Daly Waters farm out carry of up to US$28.5 million and joint marketing arrangements for gas from shared acreage increase third party validation and access to potential LNG and industrial outlets. These factors can influence future pricing outcomes and long term revenue potential.
• Planned stimulation and drilling activity across up to nine wells in 2026, including the Orion block, Daly Waters commitments and EP 161 with Santos, expands the production data set and resource definition across both western and eastern depot centers. This can affect long term production profiles, unit costs and margin structure.
• Testing local Beetaloo Basin sand as a proppant and potential adoption of drilling efficiencies such as oil based mud, if operationally successful, are expected to target completion savings of about US$4 million per 10,000 foot horizontal well and faster drill times. This would directly impact well level capital efficiency, operating costs and net margins.

Assumptions

How have these above catalysts been quantified?

• Tamboran Resources currently has no revenue. Analysts are forecasting revenue to reach $55.5 million by June 2029.
• Analysts are not forecasting that Tamboran Resources will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Tamboran Resources's profit margin will increase from 0.0% to the average AU Oil and Gas industry of 16.1% in 3 years.
• If Tamboran Resources's profit margin were to converge on the industry average, you could expect earnings to reach $8.9 million (and earnings per share of $0.0) by about June 2029, up from -$34.4 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 250.1x on those 2029 earnings, up from -34.1x today. This future PE is greater than the current PE for the AU Oil and Gas industry at 14.3x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.0%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Tamboran Resources remains pre revenue and is only now progressing toward first gas from the Beetaloo Basin Pilot Area. Any delays in completing the Sturt Plateau Compression Facility, commissioning the APA pipeline or stimulating the remaining wells could postpone gas sales to the Northern Territory government and push back expected revenue and cash flow.
• The company is relying heavily on capital markets and farm out carries, including the recent US$198 million equity raise and the Daly Waters Energy carry of up to US$28.5 million. If future equity or debt is more expensive or harder to access, funding larger development phases and long term drilling programs could pressure net margins and future earnings.
• Several key value drivers, such as a future joint venture partner, large diameter export pipelines and potential LNG or industrial contracts, are still unresolved. Slower than expected progress on partnerships or infrastructure could limit market access for Beetaloo gas and cap revenue growth relative to current expectations.
• The company is counting on operational improvements like using local Beetaloo sand and shifting to oil based mud to reduce well costs. If these initiatives underperform or encounter regulatory and waste handling constraints, well capital costs could stay higher than hoped and weigh on project level net margins.
• Increasing attention on Australian natural gas supply, including energy security considerations and multiple operators in the Beetaloo, may lead to competition for pipeline capacity and offtake contracts. If Tamboran Resources is slower than peers in securing long term outlets, pricing power and long run revenue and earnings potential could be weaker than investors expect.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of A$0.38 for Tamboran Resources based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $55.5 million, earnings will come to $8.9 million, and it would be trading on a PE ratio of 250.1x, assuming you use a discount rate of 7.0%.
• Given the current share price of A$0.24, the analyst price target of A$0.38 is 36.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.