Tamboran Resources Corp: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, our

condensed consolidated financial statements, the accompanying notes to the condensed consolidated financial statements

and other financial information included in this report and in our Annual Report on Form 10-K for the year ended June 30,

2025. For further information on items that could impact our financial condition and operating performance, see the section

entitled “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and “Cautionary Note

Regarding Forward-Looking Statements” in this report.

The following tables present selected financial information for the periods presented (dollar amounts in

thousands):

Certain amounts in the Company's consolidated financial statements may not add up or recalculate due to

rounding.

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Results of Operations for the Three Months Ended September 30, 2025 and 2024

Revenue and other operating income. We have not yet commenced natural gas production; therefore, we did not earn

any revenue and other operating income during the three months ended September 30, 2025 and 2024, respectively.

Compensation and benefits, including stock-based compensation. Compensation and benefits, including stock-based

compensation, decreased by $0.2 million during the three months ended September 30, 2025, as compared to the three

months ended September 30, 2024, primarily as a result of the forfeiture of stock-based compensation awards during the

period for individuals who left the business and increased capitalized internal labor costs.

Consultancy, legal and professional fees. Consultancy, legal and professional fees remained fairly consistent as

compared to the three months ended September 30, 2024, increasing by just $0.1 million during the three months ended

September 30, 2025.

Accretion of asset retirement obligations expense. For the three months ended September 30, 2025, an expense for

accretion of asset retirement obligations of $0.3 million was recognized. The recognition of such an expense was due to the

accretion of asset retirement obligation liabilities in relation to all EPs, inclusive of EPs 76, 98, 117, 136 and 161, as well

as the SPCF pad.

Exploration expense. For the three months ended September 30, 2025, the exploration expense decreased by $0.3

million as compared to the three months ended September 30, 2024 as the current period was heavily focused on the

drilling of SS-4H, SS-5H, and SS-6H, resulting in a larger portion of costs capitalized and less costs incurred related to

topographical, geographical and geophysical studies.

Camp expense recoveries, net. For the three months ended September 30, 2025, expenses for the newly established

field camp of $1.6 million were recognized primarily related to mobilization expenses of the modular buildings and related

equipment to the site. These costs are offset by recoveries from external parties who utilize the camp.

LNG feasibility study expense. During the three months ended September 30, 2025, the Group incurred expenses of

$0.2 million related to certain studies and pre-front-end engineering and design services related to the proposed NT LNG

facility.

General and administrative. General and administrative costs increased by $0.2 million during the three months

ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily as a result of increased

expenses related to headcount.

Interest income (expense), net. Interest income, net decreased by $1.1 million during the three months ended

September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to lower cash balances and

lower interest rates for the period ended September 30, 2025 and an increase in interest expense related to the Facility

Agreement with Macquarie Bank Limited entered into in December 2024.

Foreign currency translation. For the three months ended September 30, 2025, we recognized a foreign currency

translation gain of $1.7 million, primarily due to the slight strengthening of the Australian Dollar as of September 30, 2025,

as compared to June 30, 2025. In the three months ended September 30, 2024, we recognized a foreign currency translation

gain of $12.1 million, primarily due to the significant strengthening of the Australian Dollar as of September 30, 2024, as

compared to June 30, 2024. Foreign exchange gains and losses resulting from the settlement of foreign currency

transactions and from the translation at fiscal year-end exchange rates of monetary assets and liabilities denominated in

foreign currencies are recognized on our condensed consolidated statement of operations and comprehensive loss.

Income tax expense. We have no income tax expense due to operating losses incurred for the three months ended

September 30, 2025, and 2024. We have provided a full valuation allowance on our net deferred tax asset because

management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax

assets during a foreseeable future period. Management will continue to assess the potential for realizing deferred tax assets

based upon income forecast data and the feasibility of future tax planning strategies and may record adjustments to the

valuation allowance against deferred tax assets in future periods, as appropriate, that could have a material impact on the

condensed consolidated statement of operations and comprehensive loss.

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Liquidity and Capital Resources

We are a development stage enterprise and will continue to be so until commencement of substantial production from

our natural gas properties. We do not expect to generate any revenue from production until late 2026, at the earliest, which

will depend upon successful drilling results, additional and timely capital funding, negotiation of certain commercial

agreements and access to suitable infrastructure. Until then, our primary sources of liquidity are expected to be cash on

hand and funds from future private and public equity placements, debt funding and asset sales.

We expect to incur substantial expenses and generate significant operating losses as we continue to develop our

natural gas prospects and as we:

• complete our current appraisal drilling and testing program;
• develop and commercialize our assets, including the SPCF, the proposed NT LNG facility and other

infrastructure;

• opportunistically invest in additional natural gas assets adjacent to our current positions; and
• incur expenses related to operating as a public company and compliance with regulatory requirements.

Our future financial condition and liquidity will be impacted by, among other factors, the success of our exploration

and appraisal drilling program, the number of commercially viable natural gas discoveries made, the quantities of natural

gas discovered, the speed with which we can bring such discoveries to production, and the actual cost of exploration,

appraisal and development of our prospects.

For the remainder of the fiscal year ending June 30, 2026, we estimate that we will need to invest approximately

$43.4 million to progress our development plans. We expect the proceeds from the public offering received in October

2025, together with our existing cash on hand, to be sufficient to fund remaining drilling costs of SS-4H, SS-5H and SS-6H

and to carry out stimulation activities and flow testing of SS-5H. However, we may require significant additional funds

earlier than we currently expect in order to execute our strategy as planned. Additional funding may not be available to us

on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our

stockholders. For example, if we raise additional funds by issuing additional equity securities, further dilution to our

existing stockholders will result. If we are unable to obtain funding on a timely basis, we may be required to significantly

curtail one or more of our planned activities. We also could be required to seek funds through arrangements with

collaborators or others that may require us to relinquish rights to some of our assets which we would otherwise develop on

our own, or with a majority working interest.

Cash and Cash Equivalents

The following table summarizes our key measures of liquidity for the periods indicated (in thousands).

As of September 30, 2025, we had $39.6 million of cash and cash equivalents. This balance represents an increase of

$0.1 million from June 30, 2025. Cash calls received throughout the period and proceeds from our subscription agreements

to institutional investors received in July 2025 were primarily offset by spending from operations on the SS-4H, SS-5H and

SS-6H pilot wells, construction of the SPCF facility and other corporate expenditure in the fiscal period.

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Capital Commitments

We had the following five-year capital commitments as of the periods indicated (in thousands), which are not

recognized as liabilities or payables on the condensed consolidated balance sheet:

Sweetpea

As of September 30, 2025, the Company’s wholly owned subsidiary, Sweetpea committed to spend $23.1 million

related to two licenses, EP 136 with total commitments of $13.9 million and EP 143 with total commitments of $9.2

million over the following five years.

A renewal application for EP 136 was submitted to the Department of Mining and Energy (“DME”) (formerly the

Department of Industry, Tourism and Trade) in September 2023, and approved in July 2024, granting a five-year extension

for the period July 24, 2025 to July 23, 2030 with a minimum work program commitment of $13.9 million.

A variation application for EP 143 was submitted to DME in August 2024 and approved in October 2024. The total

minimum work program commitments remain the same at $9.2 million with activity and associated spend being transferred

within the license term.

EP 161

For the EP 161 working interest, we are obligated to contribute our share of expenses to uphold our stake in this

permit, for which Santos Limited is the operator. Our commitment through March 2026 is approximately $2.3 million

based on the minimum work requirements. There are no minimum commitment requirements after March 2026.

Beetaloo Joint Venture

The terms of the Beetaloo Joint Venture necessitate specific minimum work obligations through May 2028. These

commitments include an expected spend of $75.8 million related to drilling and multi-stage hydraulic fracturing of four

wells, 2D seismic survey, and subsurface studies, with expenditure across EP 76 of $10.6 million, EP 98 of $53.6 million

and EP 117 of $11.5 million. An application was submitted to DME on September 26, 2024 to vary the year 2 and 3 work

program, and is currently pending resolution.

Midstream

Committed spend for the SPCF project as of September 30, 2025, was $12.0 million which was related to the

remaining procurement, and construction management for the detailed design, engineering, planning, construction, testing,

inspection and commissioning of the facility.

Other Commitments and Contingencies

On December 19, 2024, TR Ltd., as guarantor, entered into the Facility Agreement with TR West, as borrower, each

a wholly owned subsidiary of the Company, as obligors, and Macquarie, as lender. The Facility Agreement provides TR

West with Facility A amounting to A$25.0 million in availability for performance bonds and includes potential additional

Facility B and Facility C each amounting to A$5.0 million. Availability under the Facility B and Facility C is subject,

among other conditions, to the Company raising additional capital in the amounts of at least A$62.5 million and A$75.0

million, respectively. All Facilities terminate on December 19, 2027. The obligations under the Facility Agreement are

unconditionally guaranteed on a senior secured basis by TR Ltd.

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As of September 30, 2025, there was A$23.3 million of letters of credits issued under the Facility Agreement. As of

September 30, 2025 there was A$1.7 million of unused credit under Facility A and A$10.0 million of unused credit under

Facility B and Facility C.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):

Net Cash Used in Operating Activities

For the three months ended September 30, 2025, net cash used in operating activities was $13.8 million during which

we incurred a net loss of $9.1 million compared to net cash used in operating activities for the three months ended

September 30, 2024 of $4.2 million, during which we incurred a net loss of $6.8 million. The net loss for the three months

ended September 30, 2025, included the non-cash impacts of depreciation and amortization, stock-based compensation,

performance bond facility fees, accretion of asset retirement obligations, interest expense, and foreign exchange

differences. Additionally, in the three months ended September 30, 2025, net unfavorable changes in operating assets and

liabilities totaled $6.4 million, primarily consisting of a $1.2 million decrease in accounts payable and accrued expenses

due to timing of our pay cycle during the fiscal period, a $4.5 million increase in trade and other receivables and a $0.7

million increase in prepaid expenses and other assets.

Net Cash Used in Investing Activities

For the three months ended September 30, 2025, net cash used in investing activities was $28.4 million compared to

$14.5 million for the three months ended September 30, 2024. In the period ended September 30, 2025, there was spend on

exploration and evaluation activities of $19.9 million in connection with the drilling of the SS-4H, SS-5H and SS-6H pilot

wells, expenditure of $7.6 million of spend related to SPCF and $0.9 million related to interest on financing lease

liabilities.

Net Cash from Financing Activities

For the three months ended September 30, 2025, net cash received in financing activities was $37.9 million

compared to $16.7 million received for the three months ended September 30, 2024. The increase was primarily due

proceeds from the issuance of common stock of $11.0 million that occurred in the current period compared to $7.4 million

in gross proceeds from the greenshoe option exercised in July 2024, $29.0 million attributable to contributions from

noncontrolling interest holders to fund their share of cash calls, $1.9 million of advance contributions received from

noncontrolling interest holders, partially offset by common stock issuance transaction costs of $0.6 million, repayments of

finance lease liabilities of $3.1 million and $0.3 million related to the payment of performance bond facility establishment

fees.

Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations are based upon our

condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of

our financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the

reported amounts of certain assets, liabilities and related disclosure of contingent assets and liabilities at the date of the

financial statements and the reported amounts of revenues and expenses during the reporting period. The following critical

accounting policies relate to the more significant estimates and assumptions used in preparing the consolidated financial

statements.

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The impact of, and any associated risks related to, estimates and assumptions are discussed within Management’s

Discussion and Analysis of Financial Condition and Results of Operations, as well as in the Notes to the Condensed

Consolidated Financial Statements, if applicable, where estimates and assumptions affect the Company’s reported and

expected financial results.

There have been no other material changes in critical accounting estimates at September 30, 2025 from those

described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025.

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Evaluation of Disclosure Controls and Procedures

As of September 30, 2025, our principal executive officer and principal financial officer concluded that we did

not maintain effective internal control over financial reporting due to the material weakness that was disclosed in our

Annual Report on Form 10-K for the years ended June 30, 2025 and June 30, 2024

As discussed in Part II, Item 9A, “Controls and Procedures” in our Annual Report on Form 10-K for the year

ended June 30, 2025 and June 30, 2024, we identified the following deficiencies in our internal control over

financial reporting, which in the aggregate, constituted a material weakness:

i) lack of sufficient evidence retained of the performance of internal controls,

ii) insufficient resources in key accounting and finance roles leading to inadequate segregation of duties,

iii) lack of manage access and manage change IT general controls over the cloud-based enterprise resource

planning system, and

iv) accounting for complex transactions in accordance with U.S. GAAP, which in the aggregate constitute a

material weakness

Status of Remediation Efforts

In response to the material weakness identified and described above, our management, with the oversight of

the Audit & Risk Management Committee of our Board of Directors, will continue to dedicate significant efforts and

resources to further improve our control environment and to take steps to remediate this material weakness. As part

of our plan to address this material weakness, a remediation plan has been initiated and the Company has engaged an

internal audit firm to assist with the documentation of our processes and internal controls and we will also provide

training to control owners, supported by external consultants, as appropriate, in support of an effective internal

control framework, including how to sufficiently document and evidence the operation of internal controls. We have

also hired a Vice President of Information Technology and a Financial Reporting Manager with extensive

knowledge in their respective fields to assist in the remediation of the above control deficiencies. We will continue

to hire accounting and finance personnel, or engage technical specialists, who possess the required technical

knowledge to ensure reporting requirements are met and segregation of duties are maintained. The material

weakness cannot be considered remediated until the newly designed control activity operates for a sufficient period

of time and management has concluded, through testing, that the control is operating effectively.

While we have begun implementing a plan to remediate this material weakness, we cannot predict the success

of such plan or the outcome of our assessment of this plan at this time. If our steps are insufficient to successfully

remediate the material weakness and otherwise establish and maintain an effective system of internal control over

financial reporting, the reliability of our financial reporting, investor confidence in us, and the value of our common

stock could be materially and adversely affected. We can give no assurance that the implementation of this plan will

remediate this deficiency in internal control or that additional material weaknesses in our internal control over

financial reporting will not be identified in the future. Our failure to implement and maintain effective internal

control over financial reporting could result in errors in our financial statements that could result in a restatement of

our financial statements or cause us to fail to meet our periodic reporting obligations. For as long as we are an

“emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be

required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.

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Changes in Internal Control Over Financial Reporting

Except for the implementation of our remediation plans in connection with our ineffective disclosure controls

and procedures described above, there were no changes in the Company’s internal control over financial reporting

(as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended September 30,

2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial

reporting.

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There have been no material changes in risk factors for the quarterly period ended September 30, 2025 from those

described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025.

Risks Related to the Pending Falcon Acquisition

The market price for our common stock and CDIs following the closing of the Falcon Acquisition may be affected by

factors different from those that historically have affected or currently affect our common stock and CDIs.

Our financial position may differ from our financial position before the completion of the Falcon Acquisition, and the

results of operations of the combined company may be affected by some factors that are different from those currently

affecting our results of operations. Accordingly, the market price and performance of our common stock and CDIs is likely

to be different from the performance of our common stock and CDIs in the absence of the Falcon Acquisition. In addition,

general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, our common

stock and CDIs, regardless of our actual operating performance.

Our existing stockholders will have reduced ownership in the combined company following consummation of the

Falcon Acquisition.

Immediately following consummation of the Falcon Acquisition, based on the number of shares of common stock

outstanding as of the date of the Arrangement Agreement and the issuance of the Stock Consideration as contemplated by

the Arrangement Agreement, our existing stockholders would own approximately 73% of the outstanding shares of the

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combined company and Falcon’s existing stockholders would own approximately 27% of the outstanding shares of the

combined company. As a result, our current stockholders will have less influence on the policies of the combined company

than they currently have on our policies.

We may not consummate the Falcon Acquisition.

We may not consummate the Falcon Acquisition, which is subject to the satisfaction of closing conditions. These

conditions include, but are not limited to, (a) the approval of the Falcon Acquisition by at least 66 2⁄3% of the votes cast by

Falcon shareholders and, if required by applicable Canadian securities laws, a simple majority of the votes cast by Falcon

shareholders, excluding Falcon common shares held by persons required to be excluded under such laws, at a meeting of

Falcon shareholders, (b) the approval of the issuance of the Stock Consideration by a majority of the votes cast by our

stockholders at a meeting of our stockholders, (c) the approval of the Falcon Acquisition by the Supreme Court of British

Columbia on terms consistent with the Arrangement Agreement and otherwise reasonably satisfactory to the parties, (d) the

authorization for listing of the Stock Consideration on the NYSE and (e) the absence of any law or order enjoining,

restricting or prohibiting the consummation of the transactions contemplated by the Falcon Acquisition. Neither we nor

Falcon can predict when, or if, these conditions will be satisfied. If any of these conditions are not satisfied or waived prior

to the outside date, it is possible that the Falcon Acquisition may be terminated. Although we have agreed with Falcon to

use reasonable best efforts, subject to certain limitations, to promptly complete the Falcon Acquisition, these and other

conditions to the completion of the Falcon Acquisition may fail to be satisfied. In addition, satisfying the conditions to and

completion of the Falcon Acquisition may take longer, and could cost more, and require additional borrowings, than we

currently expect. There can be no assurance that such conditions will be satisfied or that the Falcon Acquisition will be

consummated on the terms currently contemplated or at all. If additional borrowings are required to consummate the

Falcon Acquisition, our total debt and leverage will be greater than currently anticipated.

Failure to complete the Falcon Acquisition could negatively impact our stock price and have a material adverse effect

on our results of operations, cash flows and financial position.

If the Falcon Acquisition is not completed for any reason, including as a result of failure to obtain all requisite

regulatory approvals or Falcon’s stockholders fail to approve the applicable requisite proposals, we may be materially and

adversely affected and, without realizing any of the benefits of having completed the Falcon Acquisition, we would be

subject to a number of risks, including the following:

• we may experience negative reactions from the financial markets, including negative impacts on our stock price;
• we may experience negative reactions from our customers, distributors, suppliers, vendors, landlords, joint venture

partners and other business partners;

• we will still be required to pay certain significant costs relating to the Falcon Acquisition, such as legal,

accounting, financial advisor and printing fees;

• Falcon may be entitled to receive a termination fee of $3,750,000 pursuant to the Arrangement Agreement;
• the Arrangement Agreement places certain restrictions on our conduct pursuant to the terms thereof, which may

delay or prevent us from undertaking business opportunities that, absent the Arrangement Agreement, may have

been pursued;

• matters relating to the Falcon Acquisition (including integration planning) require substantial commitments of

time and resources by our management, which may have resulted in the distraction of our management from

ongoing business operations and pursuing other opportunities that could have been beneficial to us; and

• litigation related to any failure to complete the Falcon Acquisition or related to any enforcement proceeding

commenced against us to perform our obligations pursuant to the Arrangement Agreement.

If the Falcon Acquisition is not completed, the risks described above may materialize and they may have a material

adverse effect on our results of operations, cash flows, financial position and stock price.

The combined company following the Falcon Acquisition may be unable to integrate the business of the Company and

Falcon successfully or realize the anticipated benefits of the Falcon Acquisition.

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The Falcon Acquisition involves the combination of two companies that currently operate as independent companies.

The combination of two independent businesses is complex, costly and time consuming, and we will be required to devote

significant management attention and resources to integrating the business practices and operations of Falcon into ours.

Potential difficulties that we may encounter as part of the integration process include the following:

• the inability to successfully combine our business and Falcon’s in a manner that permits the combined company to

achieve, on a timely basis, or at all, the enhanced revenue opportunities and cost savings and other benefits

anticipated to result from the Falcon Acquisition;

• complexities associated with managing the combined businesses, including difficulty addressing possible

differences in operational philosophies and the challenge of integrating complex systems, technology, networks

and other assets of each of the companies in a seamless manner that minimizes any adverse impact on customers,

suppliers, employees and other constituencies;

• the inability to retain the service of key management and other key personnel;
• the assumption of contractual obligations with less favorable or more restrictive terms; and
• potential unknown liabilities and unforeseen increased expenses or delays associated with the Falcon Acquisition.

In addition, we and Falcon have operated and, until the completion of the Falcon Acquisition, will continue to

operate, independently. It is possible that the integration process could result in:

• diversion of the attention of each company’s management; and
• the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards,

controls, procedures and policies.

Any of these issues could adversely affect each company’s ability to maintain relationships with customers, suppliers,

employees and other constituencies or achieve the anticipated benefits of the Falcon Acquisition or could reduce each

company’s earnings or otherwise adversely affect the business and financial results of the combined company following

the Falcon Acquisition.

Securities class action and derivative lawsuits may be brought against us in connection with the Falcon Acquisition,

which could result in substantial costs.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered

into acquisition, merger or other business combination agreements. Even if such a lawsuit is without merit, defending

against these claims can result in substantial costs and divert management time and resources. An adverse judgment could

result in monetary damages, which could have a negative impact on our liquidity and financial condition.

The synergies attributable to the Falcon Acquisition may vary from expectations.

The combined company may fail to realize the anticipated benefits and synergies expected from the Falcon

Acquisition, which could adversely affect the combined company’s business, financial condition and results of operations.

The success of the Falcon Acquisition will depend, in significant part, on the combined company’s ability to successfully

integrate the acquired business, grow the revenue of the combined company and realize the anticipated strategic benefits

and synergies from the combination. We believe that the combination of the companies will provide operational and

financial scale, and enhancing the combined company’s corporate rate of return. However, achieving these goals requires,

among other things, realization of the targeted cost synergies expected from the Falcon Acquisition. This growth and the

anticipated benefits of the transaction may not be realized fully or at all, or may take longer to realize than expected. Actual

operating, technological, strategic and revenue opportunities, if achieved at all, may be less significant than expected or

may take longer to achieve than anticipated. If the combined company is not able to achieve these objectives and realize the

anticipated benefits and synergies expected from the Falcon Acquisition within the anticipated timing or at all, the

combined company’s business, financial condition and results of operations may be adversely affected.