Insiders Lead Energy Co.'s Upsized Private Placement

Jericho Energy Ventures Inc. (JEV:TSX.V; JROOF:OTC; JLM:FRA) announced it has closed an "insider-led" upsized private placement for more than CA$2.2 million.

"Certain insiders" purchased 3,364,500 units in the financing. The company said they were exempt from valuation and minority shareholder approval requirements because the participation did not exceed 25% of Jericho's market capitalization.

A total of 11,141,900 units at CA$0.20 per unit were in the financing, which the company said would be used for general corporate purposes.

After Jericho's reported Q3 financial results were in line with expectations, analysts Nicholas Cortellucci and Ben Pirie of Atrium Research wrote in a November research note that they maintained Atrium's original thesis on the company that it "can shift capital from the low multiple O&G production industry to the high multiple hydrogen services industry."

The analysts maintained Atrium's Buy rating on the stock with a CA$0.50 per share target price, a more than 100% increase over Thursday's price.

"We remain highly confident in Jericho as (subsidiary) Hydrogen Technologies continues to make advancements each month, and high commodity prices support the cash flow generation of its O&G JVs (joint ventures)," they wrote on November 23.

The analysts maintained Atrium's Buy rating on the stock with a CA$0.50 per share target price, a more than 100% increase over Thursday's price.

Jericho's private placement was originally announced in February for 10 million units for CA$2 million.

The Catalyst: 'Massive Upside' Possible

Jericho is in the process of pivoting toward green energy sources like hydrogen but still has important oil and gas holdings that are helping fund the transition.

Cortellucci and Pirie said they expected initial commercial orders for Jericho's hydrogen products in 2023 and potentially larger contracts in 2024 as the industry develops.

"Jericho's minority investments can solve critical issues in the hydrogen value chain and have massive upside in the event of a sale," the analysts wrote.

Hydrogen Technologies' Dynamic Combustion Chamber™ (DCC) boiler burns hydrogen and oxygen in a vacuum chamber to create high-temperature water and steam with no greenhouse gases or other pollutants.

Cortellucci and Pirie said they expected initial commercial orders for Jericho's hydrogen products in 2023 and potentially larger contracts in 2024 as the industry develops.

The only by-product is water, which is recycled. It's meant to replace existing boilers that burn coal, natural gas, diesel, or fuel oil.

Technical Analyst Clive Maund of CliveMaund.com has written for Streetwise Reports that hydrogen "is a fuel of the future" and that Jericho is "moving with the times."

Last year, two of JEV's associated hydrogen hubs, the Midwest Alliance for Clean Hydrogen (MachH2) and the Pacific Northwest Regional Hydrogen Hub (PNWH2), were selected for up to US$1 billion each from the U.S. Department of Energy's Regional Clean Hydrogen Hubs (H2Hubs) program.

It also announced in October that it had signed a memo of understanding (MOU) with Kansas-based Super Boiler to manufacture the DCC™ boiler.

"Hydrogen Technologies (100% owned) has developed a cutting-edge zero-emission hydrogen steam boiler system which is positioned to disrupt one of the largest carbon-emitting industries in the world, steam boilers," Cortellucci and Pirie wrote.

A 'Versatile Energy Carrier'

Another subsidiary, Supercritical Solutions Ltd., completed a green hydrogen demonstrator in Northeast England, JEV announced in December.

Jericho said it considered the event a "significant milestone" along its path to delivering zero-emission hydrogen into the mix for the clean energy economy and net-zero emissions worldwide.

It was part of the WhiskHy project, a partnership between Supercritical and Beam Suntory, a global leader in premium spirits, and the Manufacturing Technology Center.

The world will need more hydrogen technology and projects to meet a net-zero emissions scenario by 2050, according to the International Energy Agency.

"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.

It's also a "uniquely versatile energy carrier," according to a report by the Hydrogen Council. "It can be produced using different energy inputs and different production technologies. It can also be converted to different forms and distributed through different routes — from compressed gas hydrogen in pipelines through liquid hydrogen on ships, trains or trucks, to synthesized fuel routes."

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' latest research.

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

JEV's market cap is CA$59.55 million, and it trades in a 52-week range of CA$0.33 and CA$0.16. It has 248.14 million shares outstanding, 178.38 million floating.

Important Disclosures:

1. Jericho Energy Ventures Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Jericho Energy Ventures Inc.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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