Logan Energy (TSXV: LGN) has monetized certain of its assets in the Alberta Montney region, announcing this morning that it has sold a newly created 2.5% gross overriding royalty to Topaz Energy (TSX: TPZ) as well as a partial interest in a 40 MMcf/d natural gas processing facility.
The royalty will apply to Logan’s lands in the Pouce Coupe area, which was sold to Topaz in exchange for $17 million in cash consideration. The figure is said to represent a multiple of 7x the estimated 12 month cash flow on recent strip pricing.
The other portion of the transaction has seen the sale of a 35% non-operating working interest in the Pouce Coupe 04-19 gas plant, compressor station and oil battery that are currently under construction. The facility is currently expected to be operational in Q2, and at capacity in the second half of the year. The interest was sold for cash proceeds of $26 million, which is estimated to be 8x estimated cash flow for the first twelve months.
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As part of the transaction, Logan has committed to spend $50 million to drill and complete wells on the GORR lands prior to December 31, 2026, which is expected to be satisfied with the existing 2025 capital expenditure budget. Logan is also expected to enter into a fifteen year take or pay commitment with Topaz for their working interest capacity at the processing facility to maintain priority access to the full capacity of the facility.
The combined proceeds of $43 million are said to be earmarked for the reduction of bank debt along with general working capital.
Logan Energy last traded at $0.69 on the TSX Venture.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
