坦博兰资源 (TBN) 2026财年第四季度业绩电话会议：首次比塔卢天然气销售lg...

核心要点

• Tamboran Resources已向北领地市场交付了比塔鲁盆地（Beetaloo Basin）的首批销售天然气。在业绩电话会议举行时，天然气已持续流动20天，受季节性需求限制，指定提气量（nominations）被限制在每天25太焦耳。
• 试运行完成后，天然气销售协议预计将进入每天40太焦耳的照付不议（take-or-pay）供应期。在试运行期间，由于供应具有可中断性，Tamboran获得合同气价的75%。
• SS-2压裂增产施工在30,000英尺的水平井段中完成了178个压裂段，其中包括单日压裂12段的盆地纪录。其中有10个段使用了本地采购的比塔鲁红砂（Beetaloo Red Sand）。
• 管理层估计，与进口砂相比，采用本地砂可使10,000英尺水平井段单井的完井成本减少400万美元。更广泛的应用仍取决于更长期的生产数据。
• Tamboran在季度末拥有2.25亿美元现金和3100万美元未提取债务额度。若计入来自Daly Waters Energy的1500万美元条件性未到账资金，备考现金总额为2.40亿美元。
• Sturt Plateau压缩机设施按期完工，且比预估预算低约900万美元。调试和设备优化工作仍在进行中。

关键财务数据

Tamboran表示，在接下来两个季度继续试运行期间，根据美国通用会计准则（U.S. GAAP），试点项目的部分收入和成本可能会被资本化。因此，近期利润表结果可能无法反映相关的现金变动。

业务与运营表现

首批天然气销售标志着比塔鲁盆地试点项目正式转向商业化供应。当前的供应量受制于北领地政府的指定提气量，而非既定的井口产能。Tamboran正优先推进两口井，以建立连续生产和递减率历史记录，同时按需轮换其他井，以回收返排水并满足指定提气量需求。

SS-2井场的压裂增产计划采用了Liberty Energy的机组设备，在30,000英尺的水平井段中完成了178段压裂。拉链式压裂（zipper-frac）作业方式支持了长达20小时的连续作业，并创下了单日12段压裂的盆地纪录。Tamboran还与Liberty签署了一份无约束力的谅解备忘录，涉及延长压裂及电缆测井服务。Liberty计划从2027年起开始引入更低排放的泵送设备。

SS2-5H井有10个段使用了比塔鲁红砂。管理层表示，这对泵送压力或裂缝起裂未产生不利影响，而示踪剂结果显示其表现与相邻压裂段一致。Tamboran计划在SS-1井场开展进一步的单井部分段测试，然后再考虑全井使用。

在SS-1井场，三口井钻井计划中的前两口井已完钻，第三口井仍在钻进中。改进的钻头设计、减震工具和钻机改装支持了穿过Moroak地层的创纪录钻井速度，并在水平段实现了更高的平均进尺速率。管理层认为将钻井周期控制在25天或更短是切实可行的，并指出Tamboran此前曾用24天钻完一口井。

在东部沉积中心，Santos启动了EP 161区块上的Jibera South 1H和Newcastle South 1H评价井的钻探。Tamboran持有25%的工作权益。B页岩层仍是主要目标层，同时在其他层位也发现了额外的重叠有效储层潜力。

管理层展望

管理层预计，随着雨季期间气温和用电需求上升，北领地的天然气指定提气量将有所增加。Tamboran表示，到本日历年年底，指定提气量可能会接近每天40太焦耳的合同水平，但具体时间取决于客户需求。季节性限制可能会在次年重现，并需要将部分新增井关井停产。

一旦试运行和生产测试完成，Tamboran预计天然气供应将进入每天40太焦耳的照付不议阶段。承购方未提取的天然气将被存入气库，以备未来潜在交付。

该公司预计将在11月发布的2027财年第一季度业绩中披露其首个季度天然气销售额和收入。公司计划将其2027和2028财年的工作重点放在比塔鲁两个沉积中心的资源圈定上，包括在未来18个月内与Daly Waters Energy、INPEX和Santos共同推进至少六口扩探井。

更广泛的资本开支计划将部分取决于战略合作伙伴的选择以及就相关工作计划达成一致。管理层表示讨论正在推进中，但未提供具体的交易时间表。

风险与关注领域

• Tamboran旗下任何单井的生产历史均不足90天，这限制了对长期产量递减率和采收率的预判能力。
• 比塔鲁红砂在早期泵送和示踪剂测试中的表现符合预期，但其在动态储层应力下的耐久性仍需更长的生产历史验证。
• 在照付不议供应阶段开启前，当前销售量依赖于北领地政府的指定提气量，并面临季节性需求变化的风险。
• Sturt Plateau压缩机设施的扩建取决于对周边第三方管道基础设施能够将增量天然气输送到更多市场的信心。
• 未来资本开支的时间安排和规模仍与战略合作伙伴谈判以及在开发优先级上的协调挂钩。
• 签署具有约束力的东海岸天然气销售协议，预计需要更明确的资源定义以及进一步的地下去风险化。

分析师问答环节要点

分析师主要关注钻井效率、单井递减数据、本地砂的可扩展性、资本开支以及管道建设。

管理层将钻井表现的提升归因于重新设计的钻头、减震工具、修改后的定向钻井方案以及更好的钻机温度控制。重复性作业、稳定的施工队伍以及全盆地范围内更高强度的开发活动，被认为是迈向更低成本页岩开发的主要前提。

在产量方面，管理层表示优先关注的两口井表现符合预期，且压力数据令人满意。目前剩下的核心问题是产量随时间递减的情况。随着指定提气量增加，其他井也可能做出贡献，但预计只有这两口井会被优先用于建立持续的长期表现历史。

在取得充分的生产证据之前，Tamboran不打算在整口井中全面使用本地砂。公司将评估随着储层压力下降，使用红砂的段能否保持其相对贡献。管理层表示，如果表现相当，本地砂最终可能基本上可以替代该盆地使用的所有支撑剂。

在东海岸基础设施方面，管理层表示APA正在推进许可和通行权审批工作。然而，签署具有约束力的商业承诺，预计将需要在获得更多生产数据和评估结果以确立更明确的资源基础之后。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Greetings, and welcome to the Tamboran Resources Fourth Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Todd Abbott, Chief Executive Officer. Todd, please go ahead.

Todd Abbott

Hello, everyone, and welcome to Tamboran Resources Financial Year 2026 Fourth Quarter Earnings Presentation. My name is Todd Abbott, and I'm the Chief Executive Officer of Tamboran Resources. I'm joined here today by Chief Financial Officer, Eric Dyer; and VP, Investor Relations and Corporate Development, Chris Morbey.

I'll start by reviewing delivery against the commitments we made 12-months ago, then cover production and commissioning as we build towards plateau rates and contracted supply. I will also discuss what our latest well results and operating improvements mean for our performance and cost as we continue to derisk our asset. I will then review our funding position and close with the next development milestones before we take your questions.

Moving to Slide 2, you can see our disclaimer, which relates to forward-looking statements within the presentation. I encourage you to review those at your convenience.

On Slide 3. The last few months have been a pivotal period for Tamboran and the Betaloo Basin as we have delivered on a key commitment and provided the next step in derisking the basin. We have delivered First Gas Sales from the Betaloo to the Northern Territory Gas market. Homes and businesses in Darwin are now being powered by a local onshore resource. These gas sales also bring royalties to the Northern Territory Government and native title holders alongside job opportunities for Territorians. Tamboran already employs a significant local workforce, which we expect to grow as activity increases over the coming years.

Moving to Slide 4. Gas has now been flowing into the market for 20 days. Volumes are currently limited by market demand with the Northern Territory Government nominating 25 terajoule per day as the territory comes out of its lower demand season. We expect demand and therefore, nominations to keep growing through the Northern Territory's peak demand period. We are currently in the commissioning period of the Gas Sales Agreement. Once the agreement moves into the supply period, take-or-pay provisions will apply to the 40-terajoule per day contract quantity, and we will be getting revenue based on that 40-terajoules per day. Any gas the offtaker does not take will be banked for future potential delivery. This gives us downside protection in the event of lower nominations during the contracted period.

Regarding our flowback strategy, we will prioritize 2 wells to ensure that we're generating long-term production and well performance data to further derisk the basin. The remaining wells will be managed as needed to recover flowback water and to close any gap to the allowable nominations. In achieving this first gas milestone, our operations team have been working deliberately across multiple work streams. They successfully completed the stimulation campaign on the SS-2 pad in the Betaloo Basin. The program utilized the Liberty Energy stimulation fleet that was imported into the basin in 2023. During the program, we completed 178 stages across 30,000 lateral feet. It was the largest stimulation campaign conducted in the basin. And the Zipper-frac approach allowed us to achieve 20 hours of operations and the Betaloo Basin record 12 stages completed in a day. This gives us and the market early evidence that we can execute completions more efficiently.

The next measure of success is sustaining an improved pace across a full campaign, reducing downtime and bringing down completion cost per well.

We have also entered into a nonbinding memorandum of understanding with Liberty Energy, setting out the intent to extend the hydraulic fracture stimulation and wireline services agreement covering Tamboran's operations in the Betaloo Basin. Liberty intends to begin phasing lower emissions pumping equipment into the Betaloo fleet from 2027. Importantly, the campaign included 10 stages using the locally supplied Betaloo Red Sand across various locations in the SS2-5H well. The pumping and placement of the local sand was an identified risk going into the program. However, given we experienced no impact to pump pressures or fracture initiation during these stages, we are confident on our ability to place local sand in future campaigns. Tracers across the horizontal length have shown that the stages are producing in line with offset wells, but these are still early days, and the true test will be the longer-term flow rates and recoveries. We plan to further test our Betaloo Red Sand during the upcoming stimulation program planned on the SS-1 pad. Success of that local sand is a key step in delivering near-term cost reduction for well completions. It is expected that, that sand could save USD 4 million per well with a 10,000-foot horizontal section compared to the sand imported from overseas. Those long-term flow rates and recoveries from those stages will help us assess how widely we can apply those savings.

In conjunction with the upstream activity, the operations team successfully completed construction of the Sturt Plateau compression facility, on time and approximately USD 9 million below the forecasted budget. This allowed us to meet our commitment to the supply of the Northern Territory gas market during the quarter. The commissioning of the facility remains ongoing as we fine-tune control systems and refine equipment settings. During the commissioning period, we will be receiving 75% of the gas price. This is due to the interruptible nature of the supply. Once commissioning and production testing requirements are complete, we will commence delivery into the take-or-pay contract with the Northern Territory Government.

During the quarter, the operations team also commenced drilling the 3-well campaign on the SS-1 pad with the H&P Flex 3 Rig. Drilling of the first 2 wells has been completed with the third well currently drilling ahead. We continue to incorporate lessons from previous campaigns. This program includes first wells drilled with our improved drill bit design and anti-vibration tools. This resulted in record speeds through the Moroak formation. Modifications to the rig have resulted in reduced mud temps, allowing increased average ROP in the lateral sections. We continue to work with our contract partners to improve efficiencies and reduce downtime, especially within the lateral section, and we believe these are addressable as we ramp up activity.

In the East, drilling of the 2-well appraisal program with Santos on EP 161 has also commenced with the Jibera South 1H and Newcastle South 1H wells in that depocenter. During the quarter, we significantly strengthened our balance sheet. In April, we raised USD 186 million net of fees via an underwritten public offer and an institutional and retail entitlement. The funds from the raise solidify the balance sheet and provide us financial flexibility.

At the end of the quarter, Tamboran had USD 225 million in cash and USD 31 million in undrawn debt for funding of the SPCF, including the USD 15 million that we expect to receive from Daly Waters Energy, the pro forma cash position is USD 240 million. Receipt of that $15 million remains subject to certain conditions precedent. Over the next 2 quarters, we expect that under U.S. GAAP, some revenue and costs related to the Pilot Project will be capitalized to the balance sheet during commissioning, rather than flowing through the income statement. This is to avoid reporting volatility and means that the income statement will not reflect cash movements during the period. We expect to announce first quarterly gas sales and revenue in our 1Q fiscal '27 earnings in November.

The next phase of our development plan is to further delineate our gas resources across both depocenters in the Betaloo Basin. This will be the focus of our '27 and '28 campaigns. We are working with our joint venture partners, Daly Waters Energy and INPEX in the West and Santos in the East to drill and stimulate at least 6 step-out wells over the next 18 months. We are progressing discussions with multiple parties to bring in a strategic partner. These strategic discussions and the upcoming appraisal work, aims to align on resource delineation and commercialization pathways that will support a large-scale development and underpin new pipeline infrastructure. That infrastructure is expected to connect the Betaloo Basin to multiple high-value markets.

To close, we have delivered the First Gas Sales that we committed to 12 months ago and completed the compression facility on time and below the forecasted budget. Our latest drilling and stimulation work is showing where we can improve efficiency, while local sand offers a potential source of completion cost savings. The equity raise has strengthened our balance sheet for the next phase of development. The priority now is to turn those achievements into sustained operating performance. That means completing commissioning and production testing, building towards plateau production and contracted supply and demonstrating that the gains in well delivered can be repeated. Those are the measures, I will use to judge our progress as we advance our development plans and partner discussions.

As we close, I want to thank all Tamboran employees for their commitment, their performance and their support for one another as we continue to grow, evolve and deliver for our customers and shareholders. Thank you.

Operator

[Operator Instructions our first question today is coming from Scott Hanold from RBC Capital Markets.

分析师问答

Scott Hanold

Congrats on all the milestones that you guys have achieved and plenty ahead. I want to start maybe focusing on the SS1-6H well. It sounds like it was a pretty successful drill and -- could you give us a sense of what specifically you're changing in your drilling operations to see that success? And what other knobs and dials are you looking forward to doing? And I'm sorry, I'm going to layer on one more thing on this. What kind of cost -- what is that kind of pro forma cost on that now that you've seen some good improvement?

Todd Abbott

Yes, Scott, good to hear from you. Good question. On the 6H and maybe even more broadly kind of on the total drilling program, like the recent changes you'll see there, and I referenced it in the remarks there, the bit design on some of the kind of upper level zones there that we were going through. The vibration damper was actually a pretty big change for us. So that's helped us quite a bit.

I'll also add like one of the things that isn't really a tool change, but the directional plans on those wells and that the way we attack that Moroak Sandstone, which is just a really hard zone, just hard rock to get through. So that's been one of the areas where we saw the biggest opportunities. And in that last well, we got through it with one bit, which was a big win for us. Earlier wells, initial wells on this had many more bits trying to get through that zone. So that's been a key improvement for us. When we look at the kind of opportunities going ahead, we think improving time on our downhole tools is going to help us a lot. We do see opportunities eventually to go to a synthetic oil-based system, which will help our drilling times as well, the ROPs.

And then there's going to be a lot of little things. I mean, I think you've heard me say this before, ultimately, to really get the drilling times and those costs down where we need them to be, we need two things. We need repeatability. So just doing the same thing, same crews, doing it again and again and again. And then the other is scale across the basin. So this is all operators, but having enough critical mass of activity in the basin so that service companies have their center of operations that can be efficient in the way they set up their operations, so that we have readily available tools, readily available people, skill sets, logistics all work better. Everything we've seen in these large shale plays in the U.S. will eventually happen here. But those are the two things that really get it down into those kind of U.S. level cost structures.

Scott Hanold

Good to hear that. My follow-up question is -- and correct me if I'm wrong, it sounds like there's two of the wells that are producing online at this point in time. And could you give us a sense of what you've seen? I know it's still early, but what have you seen on the pressure data on those wells? And are those wells kind of -- have you opened the choke up fully on those? Or are they still choke back here at this point?

Todd Abbott

Yes. I'll say it's been variable on that. The wells look good. They're in line with our expectations. What we're really interested to see on those are the long-term decline rates, and won't know that for a bit. And we haven't produced a well out here for more than 90 days. So specifically, we're working under that 25-terajoule a day nomination limitation. So we're prioritizing 2 wells so that we can develop the production histories and the well performance data to show what the wells can do. But aside from those 2, we've had the other wells cycling on and off kind of as needed, if we need to close the gap to the denomination or as we need to manage getting water off of those wells, kind of helping clean those up. With regard to pressure data, I mean, the pressure data looks good. But again, it's kind of all in line with our expectations. We just need to watch that over time.

Operator

Next question is coming from Leo Mariani from ROTH.

Leo Mariani

I was hoping you maybe talk to what you think CapEx is going to be in the rest of the calendar year. So I guess it would be calendar 3Q and 4Q? Just trying to get a sense of that would be helpful.

Todd Abbott

Yes. And we'll get Chris to kind of go through the specific numbers on it. But I'll tell you, at a high level, we've got 4 wells in the Pilot Area that you'll see 3 this year, 1 next year. We've got the 2 Santos wells over EP 161 with our 25% working interest drill this year, stimulating next year. And then we've got the 4 wells in the BCDA with Daly Waters. It's about a 10% working interest there. So I mean, overall, you can expect our capital to be focused on derisking.

And frankly, the full capital program isn't going to be fully locked-in until we finalize who our partner is and align those, what I would call, collective strategic priorities, kind of where we're going to be in both basins. As you can imagine, each potential partner has a little bit different focus, either one depocenter or the other or for some both. So as those conversations evolve, we'll lock the rest in.

Leo Mariani

Okay. And can you provide a little bit more color on kind of where you are in the process of securing a partner? Do you think that's likely to happen kind of in the next handful of months, which will let you kind of give a better picture of what that kind of '27 calendar year budget would be?

Todd Abbott

Yes, it's certainly moving forward. Look, we continue to see strong outside interest. We're having the right conversations with the right potential partners. I mean, at the end of the day, we're looking for the right capabilities to fit with the strategy and the right time frame with the operation. So I can sympathize with the kind of desire for certainty on the time line, but just please bear with us. It's all in play. And I'm sure everyone appreciates that deals like these take time and need to be carried-out thoughtfully. So we're working through that process. It will -- wherever we land on that, whichever partner we ultimately land with, it will be with a defined work program. And going back to your first question, that will update that capital program.

Operator

Next question is coming from Jeff Grampp from Northland Capital Markets.

Jeffrey Grampp

I was curious with respect to additional in-basin sand testing, I think you said the upcoming fracs will include at least 1 well. I just wanted to clarify, is that something you guys are comfortable doing across the whole wellbore? Will this be another partial test? And then maybe just taking a step back, what do you guys view as kind of the scalability of in-basin supply to the extent you have more confidence there? How meaningful of a portion of the program could that be longer term?

Todd Abbott

Yes. So first, I'll just kind of talk about the early performance. And I mentioned in the remarks, too, we had no problems pumping the sand, which -- that was something we were watching for. We started the fracs, like initiated the fracs well with it. So we're highly confident in our ability to pump it. When we look at the tracers coming back from those stages, they look identical to the other stages and the other wells. So early results are positive. But just like with the production, we won't know the full answer until we get some production history on this and see how all that holds up. So yes, we're optimistic on what it can do.

With regard to these next wells, we won't move to a full Red Sand program until we are confident in it. So we need some of that history. Each well we drill out here is pretty important to help derisk the basin. So we're not going to kind of take outsized risk on any one of them. So we'll do some additional stages on these next completions, but we won't do full wells at this point, Jeff. Going forward, like once we get history on it, once we're comfortable that the Betaloo Red Sand does what we expect and hope it will do, I can see us going to a 100% full program of Red Sand or effectively 100%. There could be some supplements here and there. But I think the end goal is to use in-basin sand in the Betaloo. And from a well cost perspective, it's going to be the obvious right thing to do.

Jeffrey Grampp

Yes. Understood. That makes sense. And for my follow-up, with respect to the potential to expand the SPCF, I think you talked about maybe making an investment decision next year. What are the milestones or key, I guess, check boxes, if you will, to get comfortable making that decision? Is that more on comfortability around your own internal producibility volumes, offtake, financing, all the above? Just any kind of, I guess, kind of milestones to keep an eye out to track that project?

Todd Abbott

Yes. I think all the things you're mentioning are important inputs on it, although I feel pretty good about all the ones you mentioned. The one that we really have to look at, and this is probably the key uncertainty on whether we expand it or not, is making sure that the surrounding infrastructure network will allow us to move the incremental volumes to the incremental markets, right? Just having high confidence that we can get that.

We don't own the pipelines all around us and understanding how the gases are going to flows and how those are going to be upgraded or modified over time will help us make the decision. So we're working through that now, kind of getting a better understanding each day on it. But that's something we just need certainty on before we make that kind of investment. We need confidence that we will be able to...

Operator

Next question is coming from Charles Meade from Johnson Rice.

Charles Meade

Good morning Todd to you, and Eric and Chris and the rest of the Tamboran team. Todd, I want to go back to the -- your decision to flow these -- or really, I guess, prioritize these 2 wells in the initial 25 million cubic feet a day. It seems like getting more production history on more wells is the -- one of the key near-term things that you're looking for. So I'm curious, can you give us an idea when that 25 million cubic feet a day will go to up to the 40 million cubic feet? I mean, I think you said it's contingent on the full commissioning of the SPCF. Can you just give us a time line on when you're going to be able to start to build more of that production history?

Todd Abbott

Yes. Charles, just to make sure I understand your question. You're asking when can we get like -- it's about 25 terajoules now, but when can we get up to the 40 terajoules take-or-pay?

Charles Meade

Yes. And presumably, if you're doing it from 2 wells now, then when you get to 40 terajoules, then you're doing 3 or perhaps even 4 wells. And I guess I didn't do a good job asking the question, but it seems like the data that everyone wants to see are these decline curves. And so when are you going to be able to start building not 2 decline curves, but 3 or 4?

Todd Abbott

Yes. Okay. I understand your question. So yes, on the nominations, right? So the NTG, the Northern Territory Government nominates the gas that they need, right? So right now, because of just where they are seasonally, those needs are not high. So they've limited us to 25 terajoules a day for most days. That will continue kind of in the near term as they move into the wet season, as temperatures rise, you're going to see that load increase, their power generation load increase and thus their gas demand increase.

But just to be clear, I think I said this clearly earlier in the remarks, but not exactly your question, Charles, but for everyone else's benefit, the 25 terajoules a day is a Northern Territory Government limitation, not a well [indiscernible]. So we're meeting that now. We prioritized the 2 wells. Exactly what you're saying, our priority is on generating well history and performance data for these wells long term. So we prioritized the 2 wells. We expect as we move through towards the end of this year, that nomination is going to go up. We're going to get more wells under that.

But to start with, we're prioritizing those 2 wells. And the wells we're prioritizing are both full 10,000-foot lateral and then the well with Betaloo Red sand so that we can get clarity on that data. I think probably by the end of the year, we'll see up with that -- I'm kind of predicting a little bit what they're going to nominate that 40 terajoule a day target. So we'll be able to get more wells in there, Charles, but it's hard to say exactly.

But then later, as we go into next year, we should expect the seasonal restrictions to kind of come back in, and we'll have to pull some of those incremental wells offline. So you won't get the full kind of 12-month history on the other wells, but we are going to prioritize at least 2 wells, so that we can really see the long-term history of what the wells do. Am I answering your question? I feel like I muddled through that.

Charles Meade

No, no, no, you did. That's a great elaboration. And you understood what I was asking even if I didn't make it very clear on my part. But -- and then separately, going in a different direction about the derisking more of the basin. These 2 wells that -- these 2 Santos-operated wells off to the East, can you remind us, I mean, you've shown these logs on Page 12, and it looks thicker over there. You've got multiple landing guards. Can you remind us where -- which of these shale zones you have the laterals targeted-in? And also, can you remind us which of these zones did you test vertically way back in 2021 with that Tanumbirini?

Todd Abbott

Yes. So on the east side, just like the West side, the primary target is the B shale. And if you look on those logs, yes, you can see they vary a little bit, but what you'll see common in both logs is the B shale is the primary target to most people when they will look at it, and both areas have multiple stack pay outside of the B shale, right? So whether you're looking at the A or the C or some of the other things in there. Going back to the history, I'll have to go back and look at the log to see exactly what that well test was. You're predating me a little bit, so I need to go back and check on that. Chris or Eric may hand in on whatever on top of mind...

Eric Dyer

Yes. I mean the -- so there was a vertical frac done by Santos, I want to say, 2019 that hit most of the zones and there was -- one of the lower zones was a bit tight. But look, there's a lot of prospectivity there. The B shale is by far the primary target. But there is some downhole potential and there is some opportunity. But really, that's all off of one vertical frac from 7 years ago. So I think capital is precious, and we've got to be very careful with what we're doing. We're working very closely with Santos to evaluate where we're looking at in that side of the basin. But I do think that, that's one of those things where, in time, there is potential.

Operator

Next question is coming from Paul Diamond from Citi.

Paul Diamond

Circling back to local sand. I guess I know you guys have run the tracer data and talked about 12-month curves being ideal. But I guess can you dig down a little bit there? What are you looking for in that data? I guess what's the hurdle rate on kind of the go or no go for using 100% sand on maybe the 6 wells in the next 18 months or if it's a longer-term narrative?

Todd Abbott

Yes. I mean I would say the real impact of the Red Sand is really in development mode, right, where your capital intensity is higher. We have more wells going in. So we certainly want to have that answer before we get into a development mode. We want to use increasing test as we go forward. What we're specifically looking for in this, is to make sure that the zones where we place that Red Sand hold up on a relative contribution basis over time. Right?

So you can see situations where as the reservoir drawdowns and as those stresses change downhole a bit, the crush pressure for that, that's not a technical term, but can kind of increase over time. We want to make sure that this sand holds up the way the other zones hold up. So that's what we're looking for. We're looking for relative contribution across those different zones and make sure they're comparable. And as long as they are, the cost differences are dramatic, we'll stay with the local sand.

Paul Diamond

Got it. And then switching to Slide 11. You guys show your kind of target of 25 days or less than 25 days. Just trying to get an understanding of, I guess, how -- I guess we're all trying to triangulate CapEx over the long term. But how do you -- how much lower do you think you can get over the course of the next, call it, the 6 delineation wells over the next 18 months? Is 25 days kind of the right number? Or is there a target below that?

Todd Abbott

I think 25 days is a very realistic number for us, and we've actually beat that on other wells, right? We've had a 24-day well. And if you look at our performance in the individual sections of those wells, you add all those up, they're well under the 25 days. On each one, there's kind of been little things here and there that have kept us from doing that, but we're starting to see exactly how we de-bottleneck those processes. So I think you'll see us continuing to improve those. Longer term, I think you could -- especially in the development mode, you should see us setting more ambitious targets than 25 days. But for where we are right now, I think 25 days, is a good target.

Operator

Next question is coming from Anish Kapadia from Hannam.

Anish Kapadia

Just had a question, first of all, in terms of -- I just want to see what needs to happen before the non-binding LOIs that you have for the pipeline get converted into binding GSAs? And when do you realistically expect that conversion to begin? And kind of related to that, what are the remaining commercial regulatory financing milestones for the East Coast pipeline? And what's the kind of current timetable for that binding pipeline development agreement and FID?

Todd Abbott

Yes. So your question is specifically East Coast?

Anish Kapadia

Yes.

Todd Abbott

Okay. Yes. Look, I think APA has been out there pretty actively talking about their work on the East Coast pipeline. They've done a lot of work on both the permitting side and the right-of-way acquisition or [ reason-in ] acquisition to get that and are fairly well progressed. So high confidence that's moving to their credit. They're not really waiting. They're charging ahead on it. From a sequencing standpoint, the way I see that developing is this.

You'll see additional work, like the production data that we're putting on the board from the Pilot Area is probably the biggest piece of information to derisk the subsurface. That's what everybody and kind of everyone on this call and everyone within Tamboran are waiting to see. But that will demonstrate the well decline and the longer-term nature of these wells. Then you've got the other wells that are going in this year.

So the 2 wells over EP 161 are going to be important. The other wells in the West will also correlate. Then over time, and kind of referencing this with our JV process again, there will be other work programs that come out and delineate additional resource. But ultimately, what the industry has to do, and I say that meaning broader than just Tamboran is collectively our work will derisk the resource to merit that infrastructure investment. And that can happen fairly quickly. The resource out here is such that it doesn't take a lot of wells to identify pretty large resource and to merit that large infrastructure investment. So that East Coast pipeline with APA doing their work and with us doing the upstream work, it really derisk the investment.

And we all know that the LNG for this on the East Coast and the new both in the domestic market and in the LNG facilities over there. So GSAs, early conversations are already happening, but there's nothing binding that's going to happen until you have a very clear resource. So I hope that's helpful. That's kind of where the sequence is. It's a little bit hard to say exactly what the timing looks like, but that's the way the sequence will work.

Operator

We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Todd Abbott

Listen, guys, we always appreciate the conversations. We're excited about where we're going. We are fully focused on strategically de-risking this play. That's the most important work ahead of us. So the production data is going to go a long ways towards that and then some further delineation work in '27. And I think it's going to be a big year for the basin. So thank you for your engagement, and we'll keep moving on.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation.

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