Q2 GENERALLY AS EXPECTED; THESIS UNCHANGED
THE TD COWEN INSIGHT
Logan continues to execute its drilling plans as we had anticipated. Although quarterly production through H1 was modesty softer than we had expected, this doesn't change our thesis. In our view, Logan is utilizing new completions to unlock and de-risk its relatively large liquids-rich Montney land position. We expect peer-leading growth through 2026 and the potential for it to be acquired.
Event: Reports Q2 Results Impact: NEUTRAL
Q2 Generally As Expected: Q2 production averaged 7.3 mBOE/d (36% liquids). This was generally in-line with TD (7.6 mBOE/d) and Consensus (7.4 mBOE/d). Production in Q2 was affected by ~0.4 mBOE/d due to a turnaround at the Simonette gas plant. Despite this, production increased q/q by 4%. Recall that Q1 was affected by unexpected downtime due to a field hiccup at Pouce that, as expected, appears to have been resolved during the quarter. CFPS of $0.02 was in-line with TD and Consensus (both $0.02).
Our View: Although H1/24 volumes have trended modestly below our original expectations, this was due to minor facility hiccups or facility turnarounds. Looking ahead, Logan remains on track to meet FY-2024 guidance and see volumes achieve a TD- estimated 11.1 mBOE/d in Q4/24 (52% higher than Q2A).
Active Q2 Program: Logan spent $46 million in Q2 (38% of the 2024 budget). We estimate that only 32% of the FY budget remains in H2.
Pouce: As expected, Logan did provide the well results for the latest pad at Pouce: The three well pad (7-12) was brought on mid-quarter and posted an IP60 rate of 685 BOE/d (422 bbls/d oil). The previously released pad at Pouce posted a stronger IP90 rate of 902 BOE/d (including 506 bbls/d of oil).
Lator: The single well at Lator (13-34) began flowing back late July. We had previously stated we could see results for this well with the Q2 release, but it appears it was brought on slightly later than planned (July vs. June).
Simonette: The three well pad (4-10) was brought on mid-July, but it remains too early to provide well results. We hadn't anticipated results for this pad with the Q2 release.
Credit Facility Increased: Logan's credit facility was increased to $75 million (from $50 million prior).
Our View: We had anticipated that with incremental results and PDP lending value, the credit facility would be increased with time. We previously estimated the company's net debt at YE-2025 would exceed the capacity of the prior line. Although anticipated, it's an encouraging sign that the company's lenders have confidence in the results and business.