Renergen: South African LNG And Helium Play
Edison | Mar 13, 2018 07:05AM ET
RENERGEN Ltd (JO:RENJ) represents a unique opportunity for investors. The company holds the first, and currently only, onshore petroleum production right in South Africa. While it is already producing and selling gas, production is set to accelerate in the next 18 months as it moves to liquefied natural gas (LNG) production, primarily serving the growing domestic heavy duty truck market. The move to LNG also unlocks the potential to extract and sell helium, adding material upside to economics (c 35% upside to NAV). With gross 2P reserves of 142 bcf of methane and c 2.2% of additional helium (Renergen 90% WI), our risked core NAV on a fully diluted basis is ZAR19.0/share. We estimate additional funding of c ZAR240m is required to become self-funding, in addition to a secured ZAR218m of term loan.
In production, permits in place, major helium upside
Renergen’s Virginia Project in the Free State of South Africa is the first and still only approved petroleum production right onshore in the country. EIA approvals are in place and early stage production is already underway; this will ramp up in 2019 when LNG production commences, targeting the growing domestic heavy duty truck market. With LNG comes the ability to isolate a highly lucrative 2.2% helium stream for which Renergen already has offtake agreements in place, adding c 35% to project economics. Edison’s recently published Macro View on helium indicates a potentially tightening market that could further improve these margins.
To read the entire report Please click on the pdf File Below:
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.