arch 19, 2021 Kirk Wilson, CFA (403) 819-5280 kwilson@beaconsecurities.ca
Event: GASX released its NI 51-101 compliant YE’20 resource report as prepared by Petrotech Engineering Ltd. that shows considerably more upside than was previously outlined by the company.
According to the report, the potential at both the Maria Conchita Block and the Sinu-9 Block (1.3 tcf net to GASX’ WI) is larger than our previous estimates in our Risked Exploration
NAV:
•Maria Conchita: the 34.6 bcf (gross) of 2P reserves is unchanged, but the 195 bcf (gross) of prospective resources are larger than our previous estimate of 165 bcf.
• Sinu-9: the total resource potential is estimated at 1.5 tcf (gross) relative to our previous assumption of 1.0 tcf (gross). At GASX’ 72% WI, the potential is 1.1 tcf. The resource potential is broken down into 3 categories that we outline later in this report.
2P reserves and Contingent Resources underpin GASX’ value. These two categories are the highest confidence and, therefore, are most likely to be realized through the company’s E&D efforts. By applying the same $/mcf value to the contingent resources at Sinu-9 as Petrotech assigns to the Maria Conchita reserves results in potential value of C$143 million compared to the EV for GASX of C$158 million.
Conclusion & Recommendation: With the new resource report we have updated our risked exploration NAV, which drives an increase in our target price to
$3.00. We maintain a Buy rating.
https://cdn-ceo-ca.s3.amazonaws.com/1g59pbp-GASX-2021-03-19.pdf