NG Energy International Corp.
(“
NGE” or the “
Company”) (TSXV:
GASX) (OTCQX:
GASXF) is pleased
to announce, as operator of the Joint Operating Agreement signed
with its partners Clean Energy Resources, Desarrolladora Oleum and
First Global (the “
JOA Partners”), that it has
entered into a non-binding Memorandum of Understanding (the
“
MOU”) with its infrastructure partner, INFRAES,
for the completion of up to an additional 76 MMcf/d of pipeline
capacity from Sinu-9 to be constructed in two stages, over the
course of 15 months, following the execution of a definitive
agreement.
Sinu-9 Accelerated Infrastructure
Development
In accordance with the MOU, the next stage of
the Company’s Sinu-9 infrastructure development is expected to be
contracted under a Build, Own, Operate and Maintain
(“BOOM”) agreement, whereby INFRAES intends to
build two pipelines each with up to 38 MMcf/d of capacity and cover
100% of the project cost. The first 38 MMcf/d pipeline will have a
construction timetable of nine months following the signed
definitive agreement, expected to be signed in Q4 2024. The second
pipeline will be a twin pipeline and have a 6-month timetable
following the completion of the first stage and the necessary
development drilling at Sinu-9, expected to occur throughout
2025.
INFRAES has received permits and easements for
60% of the 16.9 km pipeline route to the receiving station at
Recolectora Norte. Over the coming months, the Company, its JOA
Partners and INFRAES will evaluate the most optimal location for
its second Central Processing Facility (the “CPF”)
and finalize plans for the logistics of the pipeline
infrastructure.
Accelerated Development Drilling and 3D
Seismic at Sinu-9
As part of the next phase of development of
Sinu-9, the Company is expected to drill the Hechicero-1 well in Q1
2025, at the latest, and, subsequently, management believes that
eight additional exploration and development targets in the area
north of Magico-1 need to be drilled in order to fill this
infrastructure capacity. This drilling program is anticipated to
take up to 24 months to complete, once commenced. The Company is
expected to also complete 185 km2 of 3D seismic to enhance and
de-risk its development of the southeast portion of the block and
its exploration drilling up to Hechizo, while the Company and its
partners continue to advance through the exploration phases of its
E&P contract with the ANH. The private consultation of 3D
seismic is expected to begin in Q4 2024 and should take roughly 12
months to complete.
Don Sewell, President and Director of NGE
commented. “As we commence natural gas sales imminently and
complete the first stage of infrastructure projects at Sinu-9, we
are taking proactive steps to expedite the exploration and
development of the block at this pressing time in Colombia as the
natural gas shortage in the country is upon us. We are grateful for
the swiftness of our JOA Partners in getting this first step done
and are thrilled to again work with INFRAES through the planning
and execution of the next phase of infrastructure projects at
Sinu-9, which, once complete, will enable a production capacity of
up to 116 MMcf/d, bringing total gross production capacity for the
Company to 136 MMcf/d or roughly 14% of the country’s current daily
demand, making NG Energy one of the top independent natural gas
producers in Colombia.”
Brokered Private Placement
In conjunction with the acceleration of the
Phase II development plan, the Company is pleased to announce that
it has entered into an agreement with Eight Capital and Clarus
Securities Inc., as co-lead agents and joint bookrunners, on behalf
of a syndicate of agents (together, the “Co-Lead
Agents”) pursuant to which the Company has
launched a proposed private placement, on a “best efforts” basis,
of up to 28,572,000 common shares of the Company (the
“Offered Shares”), at an offering price of C$1.05
per Offered Share (the “Offer Price”), for gross
proceeds of up to C$30,000,600 (the “Offering”) to
qualified accredited investors.
The Company has granted the Co-Lead Agents the
option, exercisable in whole or in part at any time until 48 hours
prior to the closing of the Offering, to offer for sale an
additional 15% of the Offered Shares in the Offering, at the Offer
Price (the “Co-Lead Agents
Option”).
Upon closing of the Offering, the Company will
pay to the Co-Lead Agents a cash commission equal to 6% (3% for
president’s list orders) of the gross proceeds of the Offering
(including any exercise of the Co-Lead Agents Option), all payable
in cash.
The net proceeds of the Offering will be
primarily used for the Company’s next phase of drilling and 3D
seismic at Sinu-9, flowlines connecting wells to the first and
second CPFs at Sinu-9, drilling of Aruchara-4 at Maria Conchita,
completion of reservoir studies at both Sinu-9 and Maria Conchita,
and any remaining balance will be used for working capital and
general corporate purposes.
The Company expects to receive participation
from several premier Canadian and international institutions.
Additionally, the Company expects that insiders and current
stakeholders will participate in the Offering and, to date, has
received interest from potential investors for the balance of the
Offered Shares in the Offering.
The securities being offered have not, nor will
they be registered under the United States Securities Act of 1933,
as amended, and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons in the
absence of U.S. registration or an applicable exemption from the
U.S. registration requirements. This release does not constitute an
offer for sale of securities in the United States.
The Offering is scheduled to close on or about
September 18, 2024, or such other date as the Company and the
Co-Lead Agents may agree and is subject to certain conditions
including, but not limited to, the execution of an agency agreement
and the receipt of all necessary regulatory and other approvals
including that of the TSX Venture Exchange. The Offered Shares
shall be subject to a four-month plus one day hold period
commencing on the day of the closing of the Offering, under
applicable Canadian securities laws.
Brian Paes Braga, CEO of NGE commented, “We are
very pleased to announce our brokered private placement and the
strong investor interest received; the Offering is expected to
bring tier-1 global and premier Canadian institutions on board as
shareholders, as well as existing strategic partners and insiders.
This timely investment coincides with Colombia's urgent need for
reliable domestic natural gas supply as the country faces a rapidly
approaching gas shortage. We are confident that our accelerated
development of Sinu-9, which has already demonstrated significant
resource growth in its initial stages, will play a vital role in
bridging this supply gap. As we enter the next phase of
development, we are well-positioned to drive production growth,
deliver conversion of our large resource base into reserves, and
create value for all stakeholders as we continue to execute on our
strategic plan. I would like to extend my sincere gratitude to all
parties involved for their tireless efforts, as we strive to make a
meaningful impact on Colombia's energy landscape.”
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
About NG Energy International
Corp.
NG Energy International Corp. is a
growth-oriented natural gas exploration and production company
focused on delivering long-term shareholder and stakeholder value
through the discovery, delineation and development of large-scale
natural gas fields in developing countries, supporting energy
transition and economic growth. NGE’s team has extensive technical
and capital markets expertise with a proven track record of
building companies and creating significant value in South America.
In Colombia, the Company is executing on this mission with a
rapidly growing production base and an industry-leading growth
trajectory, delivering natural gas into the premium-priced
Colombian marketplace (~US$8/MMBtu) with projected triple digit
production growth over the next 2-3 years towards a production goal
of 200 MMcf/d. The Company produces conventional natural gas
expects to achieve >150% increase in production in 2024 and has
seen a 551% year-over-year increase in 3P reserves, 314%
year-over-year increase in 2P reserves and 241% increase in 1P
reserves. To date, over US$100 million has been invested in the
exploration and development of Sinu-9 and Maria Conchita with
significant contributions from insiders who currently own
approximately 34% of the Company. Recently, Macquarie Group
provided financing of up to US$100 million, including initial
committed funding of US$50 million, resulting in a fully-funded
2024/2025 development plan and aligning NGE with a global financial
institution. For more information, please visit SEDAR+
(www.sedarplus.ca) and the Company’s website
(www.ngenergyintl.com).
On Behalf of the Board of
Directors
Brian Paes-Braga, Chairman & CEO+1 (604)
404-4335investors@ngenergyintl.com
Cautionary Statement Regarding
Forward-Looking Information
This news release contains “forward-looking
information” and “forward-looking statements” (collectively,
“forward-looking statements”) within the meaning of the applicable
Canadian securities legislation. All statements, other than
statements of historical fact, are forward-looking statements and
are based on expectations, estimates and projections as at the date
of this news release, including, without limitation, the
information contained in this news release regarding the timetables
for completing either of the two pipelines, the expected
contracting for the two pipelines, the timing of the finalization
of the optimal location of the CPF, the timing of the development
drilling and seismic at Sinu-9 (including the commencement of drill
of Hechicero-1 and the need for eight additional exploration or
development wells and the duration of the drilling program once
commenced), , the percentage of Colombia’s gas production that NGE
will produce upon completion of both stages at Sinu-9, the
Company’s ability to drive production growth, deliver conversion of
its large resource base into reserves and create value for all
stakeholders, reserves growth, the use of proceeds of the Offering,
strong investor interest in the Offering (and the make-up of the
investors), and the completion of the Offering. Any statement that
involves discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions, future events
or performance (often but not always using phrases such as
“expects”, or “does not expect”, “is expected”, “anticipates” or
“does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”,
“estimates”, “believes” or “intends” or variations of such words
and phrases or stating that certain actions, events or results
“may” or “could”, “would”, “might” or “will” be taken to occur or
be achieved) are not statements of historical fact and may be
forward-looking statements.
Forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Factors that could cause actual results to differ
materially from those anticipated in these forward-looking
statements are described under the caption “Risk Factors” in the
Company's most recent Management Discussion and Analysis and its
Annual Information Form dated April 26, 2024, which are available
for view on SEDAR+ at www.sedarplus.ca. These risks include but are
not limited to, the risks associated with the oil and natural gas
industry, such as exploration, production and general operational
risks, the volatility of pricing for oil and natural gas, the
inability to market natural gas production and changes in natural
gas sale prices, changing investor sentiment about the oil and
natural gas industry, any delays in production, marketing and
transportation of natural gas, drilling costs and availability of
equipment, regulatory approval risks and environmental, health and
safety risks. Forward-looking statements contained herein are made
as of the date of this news release, and the Company disclaims,
other than as required by law, any obligation to update any
forward-looking statements whether as a result of new information,
results, future events, circumstances, or if management's estimates
or opinions should change, or otherwise. Although management
believes that these forward-looking statements have a reasonable
basis, there can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, the reader is cautioned not to place undue reliance on
forward-looking statements.
Abbreviations
The abbreviations set forth below have the
following meanings:
|
Natural
Gas |
|
|
MMcf/d |
million cubic feet per day |
|
|
MMBtu |
one million British thermal
units |
|
|
Other |
|
|
3P
reserves |
Proved + Probable + Possible reserves |
|
|
2P reserves |
Proved + Probable reserves |
|
|
1P reserves |
Proved reserves |
|
|
Information Regarding the Preparation of Reserves and
Resource Information
Sproule International Limited (“Sproule”), an
independent qualified reserves and resources evaluator, has
conducted the reserves and resource evaluation for the Maria
Conchita Block and the Sinú-9 Block in accordance with the Canadian
Oil and Gas Evaluation Handbook (the “COGE Handbook”). It adheres
in all material aspects to the principles and definitions
established by the Calgary Chapter of the Society of Petroleum
Evaluation Engineers regarding annual reserve and resource reports
that are being released in the public domain. The COGE Handbook is
incorporated by reference in National Instrument 51-101 - Standards
of Disclosure for Oil and Gas Activities.
The Company’s Form 51-101F1 – Statement of
Reserves Data and Other Oil and Gas Information for the fiscal year
ended December 31, 2023, prepared by Sproule in accordance with the
COGE Handbook with an effective date of December 31, 2023 (the
“2023 51-101F1”) was filed on SEDAR+ on April 26, 2024. As per the
requirements of Form 51-101F1, since the Maria Conchita Block and
the Sinú-9 Block are both located in Colombia, the Company has
disclosed its reserves in the 2023 51-101F1 on an aggregated basis.
The reserves in the 2023 51-101F1, which are attributed to the
Sinú-9 Block are based on the Sinú-9 Report (as defined below) and
the reserves in the 2023 51-101F1, which are attributed to the
Maria Conchita Block are based on the Maria Conchita Report (as
defined below). The Company uses natural gas liquids and
conventional natural gas as the two product types to report the
Company’s reserves.
The report entitled “Evaluation of the P&NG
Reserves and Resources of NG Energy International in the Sinú-9
Block, Colombia” (the “Sinú-9 Report”) was prepared by Sproule with
an effective date of December 31, 2023 and a preparation date of
December 21, 2023. The Sinú-9 Block is located in the Department of
Córdoba, Colombia. The Company’s working interest in the Sinú-9
Block is 72%, subject to payment of ANH sliding scale royalties.
Reserves and resources attributed to the Hechizo, Brujo, Magico,
Mago, Hechicero, Encanto, Milagroso, Porquero, Embrujo, Ensalmo and
Sortilegio zones have been included in the Sinú-9 Report.
Contingent Resources for the Sinú-9 Block are petroleum and natural
gas classified as “development pending” and are attributed a chance
of development of 80%. The Prospective Resources assigned to the
Brujo-Porquero, Hechicero-Porquero and Milagroso fields are
subclassified as “prospects” and are attributed a chance of
discovery of 58-60% and a chance of development of 66%. The
Prospective Resources assigned to the Embrujo, Ensalmo and
Sortilegio fields are subclassified as “lead” and are attributed a
chance of discovery of 25-30% and a chance of development of 66%.
The product type reasonably expected from the Contingent Resources
and Prospective Resources is conventional natural gas.
The report entitled “Evaluation of the P&NG
Reserves and Resources of NG Energy International in the Maria
Conchita Block, Colombia” (the “Maria Conchita Report”) was
prepared by Sproule with an effective date of December 31, 2023 and
a preparation date of December 20, 2023. The Company holds an 80%
working interest in the Maria Conchita Block, which is located in
the Department of La Guajira, Colombia. Reserves and resources
attributed to the H1, H1A, H1A1, H1B, H2, H2B, H3, H4 and LM2 zones
have been included in the Maria Conchita Report. Contingent
Resources for the Maria Conchita Block are petroleum and natural
gas classified as “development pending” and are attributed a chance
of development of 0.73. The Prospective Resources for the Maria
Conchita Block are subclassified as “prospect” and are attributed a
chance of discovery of 0.41 and chance of development of 0.73. The
product type reasonably expected from the Contingent Resources and
Prospective Resources is conventional natural gas.
For additional information regarding
the Sinú-9 Report, the Maria
Conchita Report and the reserves and resources information
contained in this news release please see the 2023 51-101F1 filed
on SEDAR+ on April 26, 2024, and the Company’s news release dated
December 27, 2023 entitled “NG Energy Announces 551% YOY Increase
to 3P Reserves”.
Caution Respecting Reserves Information
The determination of oil and natural gas
reserves involves the preparation of estimates that have an
inherent degree of associated uncertainty. Categories of Proved,
Probable and Possible reserves have been established to reflect the
level of these uncertainties and to provide an indication of the
probability of recovery. The estimation and classification of
reserves requires the application of professional judgement
combined with geological and engineering knowledge to assess
whether or not specific reserves classification criteria have been
satisfied. Knowledge of concepts including uncertainty and risk,
probability and statistics, and deterministic and probabilistic
estimation methods is required to properly use and apply reserves
definitions.
The recovery and reserve estimates of
natural gas liquids and natural gas reserves provided herein are
estimates only. Actual reserves may be greater than or less than
the estimates provided herein. The estimated future net revenue
from the production of the disclosed natural gas reserves,
whether calculated without discount or using a
discount rate, does not represent the fair market
value of these reserves. Estimates of reserves and
future net revenue for individual properties may not reflect the
same confidence level as estimates of reserves and future net
revenue for all properties, due to the effects of
aggregation.
Information Regarding
Reserves
Reserves are estimated remaining quantities of
commercially recoverable oil, natural gas and related substances
anticipated to be recoverable from known accumulations, as of a
given date, based on the analysis of drilling, geological,
geophysical and engineering data; the use of established
technology; and specified economic conditions, which are generally
accepted as being reasonable. Reserves are further classified
according to the level of certainty associated with the estimates
and may be subclassified based on development and production
status.
“Proved reserves” are those
reserves that can be estimated with a high degree of certainty to
be recoverable. It is likely that the actual remaining quantities
recovered will exceed the estimated Proved reserves.
“Probable reserves” are those
additional reserves that are less certain to be recovered than
Proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated Proved plus Probable reserves.
“Possible reserves” are those
additional reserves that are less certain to be recovered than
Probable reserves. It is unlikely that the actual remaining
quantities recovered will exceed the sum of the estimated Proved
plus Probable plus Possible reserves. There is a 10% probability
that the quantities actually recovered will equal or exceed the sum
of Proved plus Probable plus Possible reserves.
The qualitative certainty levels referred to in
the definitions above are applicable to “individual reserves
entities” (which refers to the lowest level at which reserves
calculations are performed) and to “reported reserves” (which
refers to the highest-level sum of individual entity estimates for
which reserves estimates are presented). Reported reserves should
target the following levels of certainty under a specific set of
economic conditions:
- at least a 90% probability that the
quantities actually recovered will equal or exceed the estimated
Proved reserves; and
- at least a 50% probability that the
quantities actually recovered will equal or exceed the sum of
estimated Proved plus Probable reserves.
A qualitative measure of the certainty levels
pertaining to estimates prepared for the various reserves
categories is desirable to provide a clearer understanding of the
associated risks and uncertainties. However, the majority of
reserves estimates will be prepared using deterministic methods
that do not provide a mathematically derived quantitative measure
of probability. In principle, there should be no difference between
estimates prepared using probabilistic or deterministic
methods.
Each of the reserve categories (Proved and
Probable) may be divided into developed and undeveloped categories
as follows:
“Developed Producing
reserves” are those reserves that are expected to
be recovered from completion intervals open at the time of the
estimate. These reserves may be currently producing or, if shut-in,
they must have previously been on production, and the date of
resumption of production must be known with reasonable
certainty.
“Developed Non-Producing
reserves” are those reserves that either have not been on
production, or have previously been on production, but are shut-in,
and the date of resumption of production is unknown.
“Undeveloped reserves” are
those reserves expected to be recovered from known accumulations
where a significant expenditure (e.g., when compared to the cost of
drilling a well) is required to render them capable of production.
They must fully meet the requirements of the reserves
classification (Proved, Probable and Possible) to which they are
assigned and expected to be developed within a limited time.
In multi-well pools it may be appropriate to
allocate total pool reserves between the developed and undeveloped
subclasses or to subdivide the developed reserves for the pool
between developed producing and developed nonproducing. This
allocation should be based on the estimator’s assessment as to the
reserves that will be recovered from specific wells, facilities and
completion intervals in the pool and their respective development
and production status.
Information Regarding Contingent
Resources
“Contingent Resources” are
those quantities of oil or natural gas estimated, as of a given
date, to be potentially recoverable from known accumulations using
established technology or technology under development but which
are not currently considered to be commercially recoverable due to
one or more contingencies.
Contingent Resources are further categorised
according to the level of certainty associated with the estimates
and may be sub-classified based on a project maturity and
characterised by their economic status. There are three
classifications of Contingent Resources: low estimate, best
estimate and high estimate. Best estimate is a classification of
estimated resources described in the COGE Handbook as the best
estimate of the quantity that will be actually recovered; it is
equally likely that the actual remaining quantities recovered will
be greater or less than the best estimate. If probabilistic methods
are used, there should be at least a 50% probability that the
quantities actually recovered will equal or exceed the best
estimate.
The project maturity subclasses include
development pending, development on hold, development unclarified
and development not viable. All of the Contingent Resources
disclosed in this news release are classified as development
pending. Development pending is defined as a contingent resource
where resolution of the final conditions of development is being
actively pursued. Chance of development is the likelihood that an
accumulation will be commercially developed.
Conversion of the development pending Contingent
Resources to reserves is dependent upon a final investment decision
for the natural gas development of the Maria Conchita Block and the
Sinú-9 Block.
There is no certainty that any portion
of the Contingent Resources will be discovered. If discovered,
there is no certainty that it will be commercially viable to
produce any portion of the Contingent Resources.
Information Regarding Prospective
Resources
This news release discloses estimates of
the Company's Prospective Resources. There is no certainty that it
will be commercially viable to produce any portion of such
Prospective Resources. Estimates of Prospective Resources involve
additional risks over estimates of reserves. The accuracy of any
resources estimate is a function of the quality and quantity of
available data and of engineering interpretation and judgment.
While resources presented herein are considered reasonable, the
estimates should be accepted with the understanding that reservoir
performance subsequent to the date of the estimate may justify
revision, either upward or downward.
“Prospective Resources” are
defined in the COGE Handbook as those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective Resources have both an associated chance of
discovery and a chance of development. The chance that an
exploration project will result in the discovery of petroleum is
referred to as the chance of discovery. The chance that an
accumulation will be commercially developed is referred to as the
chance of development
Prospective Resources are further subdivided in
accordance with the level of certainty associated with recoverable
estimates assuming their discovery:
- Low
Estimate: This is considered to be a conservative estimate
of the quantity that will actually be recovered. It is likely that
the actual remaining quantities recovered will exceed the low
estimate. If probabilistic methods are used, there should be at
least a 90% probability (P90) that the quantities actually
recovered will equal or exceed the low estimate.
- Best
Estimate: This is considered to be the best estimate of
the quantity that will actually be recovered. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the best estimate. If probabilistic methods are used,
there should be at least a 50% probability (P50) that the
quantities actually recovered will equal or exceed the best
estimate.
- High
Estimate: This is considered to be an optimistic estimate
of the quantity that will actually be recovered. It is unlikely
that the actual remaining quantities recovered will exceed the high
estimate. If probabilistic methods are used, there should be at
least a 10% probability (P10) that the quantities actually
recovered will equal or exceed the high estimate.
Prospective Resources are not, and should not be
confused with, reserves or Contingent Resources. "Prospective
Resources" are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects.
Prospective Resources have both an associated chance of discovery
and a chance of development.
There is no certainty that any portion
of the Prospective Resources will be discovered. If discovered,
there is no certainty that it will be commercially viable to
produce any portion of the Prospective Resources or that the
Company will produce any portion of the volumes currently
classified as Prospective Resources.
The estimates of Prospective Resources involve
implied assessment, based on certain estimates and assumptions,
that the resources described exists in the quantities predicted or
estimated, as at a given date, and that the resources can be
profitably produced in the future. Actual Prospective Resources
(and any volumes that may be reclassified as reserves) and future
production therefrom may be greater than or less than the estimates
provided herein.
Information Regarding
Condensate
“Condensate”, also called “gas
condensate”, or “natural gas liquids”, is a low-density mixture of
hydrocarbon liquids that are present as gaseous components in the
raw natural gas produced from many natural gas fields. Some natural
gas species within the raw natural gas will condensate to a liquid
state if the temperature is reduced to below the hydrocarbon dew
point temperature at a set pressure. Raw natural gas may come from
any one of three types of natural gas wells:
(a) Crude Oil Wells: Raw
natural gas that comes from crude oil wells is called “associated
gas”. This natural gas can exist separate from crude oil in the
underground formation or be dissolved in the crude oil. Condensate
produced from oil wells is often referred to as “lease
condensate”;
(b) Dry Gas Wells: These wells
typically produce only raw natural gas that contains no hydrocarbon
liquids. Such natural gas is called “non-associated gas”.
Condensate from dry natural gas is extracted at natural gas
processing plants and is often called “plant condensate”; and
(c) Condensate Wells: These
wells produce raw natural gas along with natural gas liquids. Such
natural gas is also called “associated gas” and is often
referred to as “wet gas”.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/9c416267-127a-46c4-9da2-9979eea84194
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