And raised their target to $1.50. GLTA
Logan Energy Corp.
(LGN-V) C$0.77
Strong Q4/23 Results Set the Stage for Growthy 2024
Event
Q4/23 Results and YE Reserves
Impact: POSITIVE
Strong Q4/23 Results; Volumes & CF Beat TD/Street: Q4/23 production of 7.5
mBOE/d was well ahead of our estimate (6.6 mBOE/d) and consensus (6.7 mBOE/
d). The beat appears to be outperforming base production more than the contribution
of three new wells at Pouce brought on stream in late November. Stronger-than-
anticipated production resulted in Q4/23 CF of $0.03/share, ahead of TD/consensus
of $0.02. Financially, the company has $42mm in net cash, an upsized $50mm bank
credit facility, and has recently entered some oil and gas hedges. The 2024 guidance
is unchanged.
New Well Results Formally Released (Previously Available in Public Datasets):
Logan provided incremental results for three new wells at Pouce. The wells posted
an average IP90 rate of 902 BOE/d (including 506 bbls/d of oil).
Our View: Although there was less technical risk in Pouce's well performance
than Logan's Simonette block to the south, the tweaked frac design demonstrated
a company-stated 8% improvement relative to prior wells on the same pad that
pre-date Logan.
Next Milestones
3-well Pad in South Simonette: This has been drilled and is awaiting completion
post-breakup. Success at this pad should reinforce the strong well results Logan
previously posted in the area (initial rate of 1,598 BOE/d, 36% liquids). We will be
watching for indicators of cost improvements relative to the initial well costs of ~
$12mm to enhance the economic competitiveness.
Lator Singleton Well: Success here would de-risk a 14-section block west of its
original three core areas (Pouce, Simonette, and Flatrock).
Flatrock: Two wells to be drilled in 2024, with one completion (and potential test
rate).
TD Investment Conclusion
Logan's capital program and valuation are defensive to near-term commodity prices
as its equity upside resides in its ability to demonstrate repeatable performance, drive
down capital costs, and de-risk the asset for a future inventory-seeking acquirer.