On October 7, NG Energy’s (TSXV: GASX) announced that they secured a $7 million, non-brokered private placement. The company will sell 7 million units at C$1 per unit. Each unit consists of 1 share and 1 warrant that can be exchanged for 1 additional share at a price of C$1.20 for 24 months.
The company says the use of proceeds will help fast track the companies exploration at SINU-9 by funding upfront infrastructure buildout of roads and pads.
Off the back of the news, Beacon Securities reiterated their C$2.80 price target and buy rating, saying, “The injection of equity capital at this time allows GASX to expedite activities in Colombia and de-risks the financing question.” They say that the dilution this equity issuance did is offset by the lower risk the company now has.
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Beacon says that the financing will enable the company to develop drilling pads and roads “concurrently rather than consecutively,” at a price tag of $0.75 million per pad, enabling the firm to save several weeks in construction per well at Sinu-9. With four wells planned at the Sinu-9 block currently, Beacon anticipates 15-20 mmcf/d gross from each of the four wells, with one located at Hechizo notably having the potential for even more.
Drilling at Magico-1X, the first well to be drilled at Sinu-9, is anticipated to begin in the next few weeks.
Additionally, the company said they will install a submersible pump system to deal with the downhole water at Istanbul-1, “This should allow initial production of 4 mmcf/d from this well to begin by initially trucking the natural gas to one end user at US$5/mcf net,” says Beacon.
Finally, Beacon comments that “production from the Maria Conchita Block should be pipeline connected in the next 6-8 weeks as GASX is dealing with final environmental approvals,” with Beacon expecting the Istanbul-1 and Aruchara-1 wells on the block to produce 15-20 mmcf/d on a gross basis.
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