According to National Bank Financial analyst Dan Payne, Logan Energy Corp.’s (
) recently completed $50-million equity financing should “support accelerated development and new play development in support of a greater depth of shareholder value as reflected by outsized growth.”
He resumed coverage of the Calgary-based exploration and production company, which is a spin-out of Spartan Delta Corp., with an “outperform” rating, seeing it positioned for “accelerating and deepening value capture for shareholders.”
“First, we highlight plans towards its accelerated development plan at Pouce Coupe, where the forthcoming investment in a 40 million cubic feet per day gas plant and associated infrastructure (at a cost of $32-million), should facilitate a step-change in production (2 times from 3.5 mboe/d [thousand barrels of oil equivalent per day] to 7 mboe/d) through mid-25 upon commissioning and ultimately towards its critical mass of 10 mboe/d.”
“Second, the company unveiled a newly aggregated Duvernay position throughout the greater-Kaybob region, with 140 prospective drilling locations identified across more than 150 sections of land.”
Mr. Payne also emphasized Logan increased its budget relative to his forecast by $20-million in both 2024 and 2025, including a goal of higher-than-anticipated infrastructure spending, in association with its financing and accelerated development plan.
“That program is intended to set the stage for its program, supporting 30-per-cent PPS growth and 80-per-cent CFPS growth (at company assessed price deck), as contribution to the long-range plan targeting outsized and compounding 30-per-cent PPS and 50-60-per-cent CFPS CAGR [compound annual growth rate] towards its critical mass at 20-25 mboe/d through 2028,” he said. “The program should continue to yield strong operating momentum and catalysts to come, where next updates on its Lator test and Simonette three-well pad should continue to validate its geologic and development model in support of its long-term depth of value. Recall, liquids and costs should continue to be augmented through the outlook (costs expected to be cut in half through the long-range outlook; expected down 35 per cent in H2/24). Funding of this program remains well-supported through its noted equity raise in addition to a newly minted $125-million credit facility (including $50-milllion in term debt).”
Mr. Payne has a $1.50 target for Logan shares. The current average on the Street is $1.61.
Elsewhere, other analysts resuming coverage include:
* Eight Capital’s Phil Skolnick with a “buy” rating and $1.85 target, rising from $1.70.
“LGN screens at the top on absolute production and production per share growth. It also screens amongst the top on a RLI and capital cost efficiency basis, which justify its premium EV/DACF multiple,” he said.
* TD Cowen’s Aaron Bilkoski with a “buy” rating and $1.50 target.
“Logan revealed a significant land position in the Duvneray,” he said. “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.”
“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 assets for a future inventory-seeking acquirer.”