In Brief: Beetaloo Energy, Omega Oil & Gas, IODM

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This story features BEETALOO ENERGY AUSTRALIA LIMITED, and other companies.
For more info SHARE ANALYSIS: BTL
The company is included in ALL-ORDS

This week's In Brief focuses on the burgeoning oil and gas plays in Australia as the war in the Middle East starts to change the narrative around energy security

• Beetaloo Energy fully funded post capital raising
• Omega Oil and Gas in Queensland sweet spot
• IODM poised post two major deals

By Danielle Ecuyer

This week’s quote comes from Oxford Economics:

“The number of jobs advanced economies need to create to keep their labor markets healthy has sharply fallen, and the old benchmarks are obsolete.

Demographics are now a more crucial factor. A prime-age employment-to-population (EPOP) framework shows that labor markets are in better shape than the unemployment rate would suggest.“

Fully funded Beetaloo ready to rock ‘n’ roll

Having successfully raised $66m in a capital raising at 28c per share, with a further $5.4m subject to shareholder approvals from directors and a share purchase plan, Research as a Service (RaaS) highlights the not completely unexpected raising, as well as the recent Inpex Corp-Formentera Partners farm-in transaction, supports Beetaloo Energy Australia ((BTL)) as a “large scale LNG” opportunity.

Beetaloo, gas developer in the Northern Territory with the largest tenement position in the Greater McArthur Basin, has been highlighted before in prior editions of In Brief.

Post raising, including a larger infrastructure debt facility of $45m from $30m, RaaS highlights the company is now positioned to work towards the delivery of first gas with sufficient funding.

Traditional owner consent and all regulatory approvals have been locked in, with 100% ownership of licences a positive in the future for securing financing operations via partnering.

Notably, the Beetaloo gas play is expressed as “massive”. To emphasise the significance of the fund raising for Beetaloo Energy, the analyst points to only a few other projects which could come on stream by the end of the year, but they are not yet self-funding.

Because of the scarcity factor of limited players, any upside to reserves can boost valuations, not just when production starts.

On the final investment decision, RaaS has upgraded the net asset value at the margin for the removal of financing risks, offset by the share issue dilution, by 5% to a range of $0.86-$1.21, with the mid-point of $0.94, a 5% lift on the previous $0.81-$0.89.

While no rating is ascribed, the analyst, who holds shares, highlights the share price should discount a higher degree of the underlying value of gas nearing commercialisation.

As first sales and results start to emerge, the Net Asset Value (NAV) range is expected to be upgraded.

Queensland favours new oil and gas developments

The war in the Middle East is already reshaping the narrative around oil and gas development in Australia, with Queensland Premier David Crisafulli’s visit to the Taroom Trough and post-press announcements about speeding up the permitting process seen by Canaccord Genuity as a turning point, with onshore oil and gas plays largely controlled by the Qld state government.

Shell started its extended well test in the Taroom Trough some seven weeks ago and has suggested the well is still flowing 200bbl/d of condensate. No update was offered on gas rates, but the analyst infers potential for a very economic flow rate for around a 1,000m lateral well using the observed liquid flows.

The Premier’s comments of enthusiasm are not viewed as occurring in isolation and it is unlikely his opinions are not shared.

Based on the upbeat takeaway, Canaccord points to Omega Oil and Gas ((OMA)), which has a circa 19.4% stake in Elixir Energy ((EXR)), the operator of Lorelle-3H, which is circa 10km from Shell’s Dunk #1.

The drilling results from Lorelle-3H, which are due to be fracked and flowed in the June quarter, have beaten expectations.

Canaccord details a long horizontal well has been drilled, the longest in the Taroom Trough so far. The well passed through a thick section of rock containing gas and liquid hydrocarbons, and the quality of this rock looks good, meaning it should be able to store and release these resources effectively.

The next step is to fracture the rock and run a 30-day production test to see how much can be produced. If those results are strong, it would confirm the “Dunk” sands and the western region have real commercial potential and could be developed into a viable energy project.

The broker believes Australia’s energy security will and should be a key focus for the stability of the country, with better capital allocation to oil and gas projects.

Post Inpex buying in at 3,000 acres in the Beetaloo Basin, an increase of 17 times against the last transaction, the analyst believes those types of multiples will soon be applicable to Taroom.

Omega is rated a Speculative Buy with a fresh $1.30 target, up from $0.85.

New deals poise IODM

Microcap IODM ((IOD)) –Market cap circa $105m– announced a partnership with TransferMate in the US.

TransferMate is described by Shaw and Partners as one of the largest commerce/credential management partners in the US market, facilitating the Connect platform to 283 shared university customers.

Also, a recent successful contract renewal with the UK’s Convera brought forth a rise in existing customer revenue by around 20% as well as removing exclusivity, a further positive for IODM.

The TransferMate deal offers a massive step up in US growth potential, targeting five-plus universities a month, or some 60 a year.

While commending the potential 60-plus universities per year, the analyst views student volume as key. The overall student market is circa 80% of 1.1m international students at universities, but more importantly, wallet size potential is what matters.

Shaw sees success for IODM will be via consolidating payment volume via one provider (TransferMate) and the speed at which universities adopt its product, Connect, across potential volumes.

TransferMate’s historical success of working in partnerships lends support to the deal, which the analyst would normally be more cautious about.

Positively, the Connect platform is developed and being applied at scale in the UK, with the integration of TransferMate confirmed in 1H26 as complete.

The investment is not viewed as too onerous, with an additional -$500k in total cash assumed for FY27, with the potential to advance growth in the UK with partner exclusivity now removed.

Shaw re-iterates its Buy rating, with a 26% higher target price of 29c from 23c.

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