Energy Co. Focusing on Clean Tech Reports Oil, Gas Revenues

Jericho Energy Ventures Inc. (JEV:TSX.V; JROOF:OTC; JLM:FSE) missed estimates for revenue from its oil and gas joint ventures in the second quarter vs. the same period last year but is making big strides with its clean energy portfolio, an analyst noted.

Its Oklahoma O&G joint venture reported revenue of CA$2 million for the quarter, a 39% decline YoY due to lower commodity prices, analyst Nicholas Cortellucci of Atrium Research wrote on Monday.

The joint venture's adjusted EBITDA was CA$248,000, compared to his estimate of CA$500,000.

"Most of the upside and stock movement is coming from its hydrogen investments which have been performing exceptionally well," wrote Cortellucci, who has a Buy rating on the stock with an unchanged price target of CA$0.50 per share. "Jericho's minority investments can solve critical issues in the hydrogen value chain and have massive upside in the event of a sale."

Cortellucci noted that the oil and gas joint venture produced 267 barrels per day (bbl/d) of crude oil, 512 million cubic feet per day (MMcf/d) of natural gas, and 66 bbls/d of natural gas liquids, compared to his estimates of 290 bbl/d of crude, 680 MMcf/d of natural gas, and 90 bbl/d of natural gas liquids.

"While missing our estimates, the production numbers were objectively solid with crude oil production up 6% YoY," he wrote.

Jericho started as an oil company but is pivoting toward green energy, using the money from oil and gas assets to help fund investments in zero-emission hydrogen technologies.

Cortellucci said the company plans to start drilling more this quarter.

"As for its clean energy portfolio," he wrote, "JEV plans to continue evaluating and consolidating innovative technologies with the objective of offering a complete industrial lower emissions solution."

The Catalyst: Pivoting Toward Green Energy

Jericho is not alone as an energy company with oil and gas interests pivoting toward clean energy, Deloitte said in a recent report on the outlook for the oil and gas industry.

"The oil and gas (O&G) industry earned record profits in 2022, providing ample cash flow to fund their strategies in 2023," Deloitte noted. "And while O&G companies recognize geopolitical and macroeconomic uncertainty in the year ahead, they've also been given a clear mandate to secure supply in the short term while transitioning to cleaner energy in the long term."

The oil and gas industry entered this year with a healthy balance sheet, the report said, which could help companies "overcome the energy underinvestment of recent years and help enable an accelerated energy transition."

The U.S. Department of Energy recently announced grant funding of up to 80% for businesses interested in deploying hydrogen boilers like those developed by Jericho's subsidiary Hydrogen Technologies to decarbonize their operations.

Company's 'Exciting Updates'

Cortellucci noted that Jericho subsidiary Hydrogen Technologies "has posted various exciting updates over the last month."

The company recently announced its first sale of a hydrogen Dynamic Combustion Chamber™, or DCC, boiler system to a prominent anonymous university.

"This . . . positions JEV as a key industry leader and a first mover in its category," Cortellucci wrote.

The company is also collaborating with a leading global alcoholic beverage company to study using the boilers at production facilities in four countries and is partnering with two other companies to manufacture, implement, and service a new DCC™ boiler-based hydrogen steam plant called the HSP3000 that will come pre-assembled in container-sized units and eliminate the CO2 equivalent of about 5,000 cars.

"The HSP3000 can also eliminate all NOx, CO2, and other GHG emissions from industrial steam and district heating applications, potentially allowing clients to harvest carbon credits," Cortellucci wrote.

An analysis by independent Norwegian research house Rystad Energy predicted that the HALO Hydrogen Hub, which includes Jericho's Hydrogen Technologies, will be among the top ten hydrogen hubs in the running for billions in government funding.

The U.S. Department of Energy's Regional Clean Hydrogen Hubs program, or H2Hubs, is expected to reveal the winners of the money to establish six to 10 hydrogen hubs across the country this fall.

The H2Hubs program includes up to US$7 billion to establish six to ten regional clean hydrogen hubs across the United States.

Potential for Near-Zero Emissions

The world needs more hydrogen technology and projects to meet net-zero emissions scenarios, the International Energy Agency wrote.

"Faster action is required on creating demand for low-emission hydrogen and unlocking investment that can accelerate production scale-up and deployment of infrastructure," the agency wrote.

The DOE said the hydrogen market has the "potential for near-zero greenhouse gas emissions."

"Hydrogen generates electrical power in a fuel cell, emitting only water vapor and warm air," the agency wrote. "It holds promise for growth in both the stationary and transportation energy sectors."

Ownership and Share Structure

Around 35% of Jericho's shares are held by management, insiders, and insider institutional investors, the company said. They include CEO Brian Williamson, who owns 1.25% or about 3.1 million shares; founder Allen William Wilson, who owns 0.79% or about 1.97 million shares; and board member Nicholas Baxter, who owns 0.46%, or about 1.14 million shares, according to Reuters.

Around 10% of shares are held by non-insider institutions, and 65% are in retail, the company said. 

JEV's market cap is CA$58.73 million, and it trades in a 52-week range of CA$0.44 and CA$0.22. It has 248.14 million shares outstanding, 178.38 million of them floating.

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3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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