NG Energy: Beacon Reiterates C$2.80 Price Target
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.
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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