Have a $1.50 target. GLTA
LOGAN ENERGY CORP.
Cash Flow Miss
Our Conclusion
Logan posted a weak update after a pipeline failure at Pouce Coupe reduced
quarterly average production by 990 Boe/d. We estimate that absent the
outage, production and cash flow would have been slightly ahead of Street
estimates. The company increased its oil and condensate weighting in its
2024 guidance and updated its cost assumptions, while maintaining total
production and capital spending for 2024. As a result, we have reduced our
2024 cash flow estimate by ~7% to $61MM from $66MM prior while cash
flow per share is unchanged at $0.12/sh.
Key Points
Production and cash flow miss as a result of an unplanned outage at
Pouce Coupe. Production of 7,017 Boe/d (29% oil and condensate) missed
our estimate of 8,370 (31% oil and condensate) and Street at 7,869 Boe/d
(29% oil and condensate) while capital spending of $35MM was below our
estimate of $40MM and in line with Street at $36MM. Cash flow of $9.8MM
missed our estimate of $14.1MM and Street at $12.3MM. The production
miss is attributed to an unplanned outage at Pouce Coupe during March,
which reduced quarterly production by 990 Boe/d. Absent the outage,
production would have been 8,007 Boe/d and we estimate cash flow would
have been ~$13.7MM using the Q1/24 cash netback of $18.79/Boe.
Updated guidance sees higher oil & condensate weighting, with total
production and capital spending unchanged. The company maintained its
8,700 Boe/d full-year production guidance but increased the total liquids
weighting to 33% from 31% prior, driven by higher oil and condensate
volumes from strong well performance. There was no change to full-year
spending guidance of $120MM. Full-year operating costs were guided
higher, to $12.62/Boe, due to increased expenditures relating to the outage
at Pouce Coupe. Transportation costs were guided lower as a result of crude
oil marketing arrangements that shifted some transportation costs into
realized pricing. After incorporating these changes, our 2024E cash flow
estimate decreases to $61MM from $66MM prior, while CFPS is unchanged
at $0.12/sh.
Primary focus was on drilling during the quarter in advance of a major
completions campaign on the horizon this summer. The company drilled
three wells during the quarter but brought none onstream. Logan now has
three wells awaiting tie-in at Pouce Coupe, one well undergoing completion
at Lator, and three wells awaiting completion at Simonette in Q3/24.