RESUMING COVERAGE
UNVEILS DUVERNAY POSITION. ACCELERATES POUCE
THE TD COWEN INSIGHT
Logan revealed a significant land position in the Duvneray. This is in-line with its strategy of amassing a sizable position in underappreciated areas then proving up the resource. While its early days, this asset has the potential to bring significant volume growth. LGN also announced full-field development at Pouce and has greenlit an owned/operated gas plant in the area.
Event: TD Resuming Coverage Post Equity Financing
Impact: SLIGHTLY POSITIVE
Equity Financing and New Credit Facility: On September 12, LGN announced an equity financing and issued 68.5mm shares at $0.73/sh for total gross proceeds of $50mm. In addition, the company announced new total credit facilities of $125mm (up from $75mm prior).
Incremental Cash Directed Towards New Infrastructure & Duvernay: Funding will be used to accelerate development at Pouce Coupe, including building a new 40 mmcf/d gas plant (commissioning expected mid-2025) and for initial drilling on the newly disclosed Duvernay lands.
New Duvernay Position: LGN announced it has assembled 152 net sections (~97,000 acres) in the Duvernay comprised of 56 net sections with 50 locations in Simonette and 96 net sections with 90 locations in Ante Creek (Figure 1). Logan has already drilled its first Duvernay well at Ante Creek (completed in 2025). The company will also bring one Duvernay well on-stream in Simonette in 2025.
Our View:
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Simonette Duvernay: There has been some legacy drilling activity (Figure 1). The use of longer laterals has the potential to increase economics versus most recent analogue being a shorter well completed in 2015 (13-01-064-26W5). The company can utilize existing infrastructure in the area.
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Ante Creek Duvernay: There has been no legacy Duvernay activity in the area; however, Logan believes this area could provide similar results to Kaybob which is just to the southwest. Initial LGN well results will be key to value attribution on this acreage.
Accelerated 2024 Program; Preliminary 2025 Budget: Logan increased its 2024 capex budget to $140mm (from $120mm) to provide for the new Pouce gas plant and the drilling two more Montney wells at Pouce. The 2025 guidance contemplates a $170mm capital budget and average volumes of 12.8 mBOE/d (14.5 mBOE/d in H2).
Our View:
While spending is higher than we had previously modeled on similar volumes, much of this will be used for new infrastructure which will drive a meaningful increase to liquids contribution next year (37% of total vol) given higher NGL recoveries at Pouce.