Energy Co. Gains Raised Target Price After Announcement
Research Report

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Disclosures for Beacon Securities, NG Energy International Corp., January 21, 2025

Disclosure Requirements Does Beacon, or its affiliates or analysts collectively, beneficially own 1% or more of any class of the issuer's equity securities? ☐ Yes ☒ No Does the analyst who prepared this research report have a position, either long or short, in any of the issuer’s securities? ☐ Yes ☒ No Has any director, partner, or officer of Beacon Securities, or the analyst involved in the preparation of the research report, received remuneration for any services provided to the securities issuer during the preceding 12 months? ☐ Yes ☒ No Has Beacon Securities performed investment banking services in the past 12 months and received compensation for investment banking services for this issuer in the past 12 months? ☒ Yes ☐ No Was the analyst who prepared this research report compensated from revenues generated solely by the Beacon Securities Investment Banking Department? ☐ Yes ☒ No Does any director, officer, or employee of Beacon Securities serve as a director, officer, or in any advisory capacity to the issuer? ☐ Yes ☒ No Are there any material conflicts of interest with Beacon Securities or the analyst who prepared the report and the issuer? ☐ Yes ☒ No Is Beacon Securities a market maker in the equity of the issuer? ☐ Yes ☒ No Has the analyst visited the issuer’s material operation (s)? ☒ Yes ☐ No Did the issuer pay for or reimburse the analyst for the travel expenses? ☐ Yes ☒ No All information contained herein has been collected and compiled by Beacon Securities Limited, an independently owned and operated member of the Canadian Investment Regulatory Organization (CIRO). All facts and statistical data have been obtained or ascertained from sources, which we believe to be reliable, but are not warranted as accurate or complete. All projections and estimates are the expressed opinion of Beacon Securities Limited, and are subject to change without notice. Beacon Securities Limited takes no responsibility for any errors or omissions contained herein, and accepts no legal responsibility from any losses resulting from investment decisions based on the content of this report. This report is provided for informational purposes only and does not constitute an offer or solicitation to buy or sell securities discussed herein. Based on their volatility, income structure, or eligibility for sale, the securities mentioned herein may not be suitable or available for all investors in all countries.

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In a January 21, 2025 research note, Beacon Securities analyst Kirk Wilson maintained a Buy rating on NG Energy International Corp. (GASX:TSX.V; GASXF:OTC; 56P:FRA) while raising his target price to CA$2.00, following the announcement of a US$150 million sale of a 40% working interest in its Sinu-9 Block to Maurel & Prom (M&P).

The deal, expected to close in June/July 2025 with an effective date of February 1, 2025, allows the company to maintain a 32% working interest for future value. M&P joins Macquarie Group as a strategic partner, bringing technical expertise in developing greenfield natural gas fields.

The transaction metrics indicate M&P is paying CA$64,500 per boe/d and a 4.2x multiple of annualized operating income, based on Sinu-9 reaching 50 mmcf/d gross capacity in early Q2 2025. These metrics suggest M&P sees future upside potential.

With M&P taking over Sinu-9 operations, the company is expected to focus on its Maria Conchita Block, where infrastructure expansion should increase capacity to 25-30 mmcf/d gross. Additional capacity could be possible depending on results from the Aruchara-4 well, which is scheduled to spud later this quarter.

The analyst has revised forecasts, pushing Phase 2 infrastructure at Sinu-9 to early 2026 from Q4 2025. While growth is lower than previously modeled, production is expected to more than double this year with another near doubling in 2026. The US$150 million cash injection should provide a large surplus throughout the forecast period.

The revised CA$2.00 target price is derived from a 3.0x EV/DACF multiple of 2026 forecasts. The analyst notes that the transaction has lowered the company's risk profile while maintaining considerable growth potential, with multiple options for the cash surplus including acquisitions, dividends, or share buybacks.