On October 20, NG Energy (TSXV: GASX) announced that it had been successful drilling the Brujo-1x well at their Sinu-9 block in Colombia, under an agreement with CleanEnergy Resources.
The company said it drilled the well to a final depth of 8,019 feet in the Lower Magdalena Basin, hitting 680 feet of net gas bearing zone in the Cienaga de Oro formation and 103 feet in the Porquero formation, for a total of 783 feet of net gas pay.
As a result, the company said it would start testing seven zones within the Brujo-1x well starting on October 24th. The company’s CEO, Serafino Iacono, commented, “We are very excited by the potential magnitude of these results. This will allow the Company to redefine the expectations of the full block potential. The Company looks forward to providing further updates on well testing as this work progresses.”
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NG Energy currently has two analysts covering the stock with an average 12-month price target of C$2, or an upside of 145%. The street-high price target currently sits at C$2.60 from Beacon Securities and represents an upside of 218%.
In Canaccord Genuity Capital Markets’ note on the news, they reiterate their speculative buy rating and C$1.40 12-month price target, saying that they are impressed with the results.
They believe that these results would indicate that Brujo-1X is “one of the largest onshore discoveries from the last few years.” They compare this to Aguas Vivas 1, a well drilled next door by Canacol Energy, which was Canacol’s thickest encounter in their history and only had a net pay of 412 feet, producing 35.5 MMSCFPD.
Lastly, Canaccord adds that last week’s news of a three year sale agreement is expected to add roughly US$3 million in EBITDA a quarter through 2026 as they expect gross production from the Maria Conchita of ~20MMcf/d.
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