NG ENERGY PROVIDES CORPORATE AND OPERATIONAL UPDATE
CALGARY, AB, March 27, 2025 /CNW/ - NG Energy International Corp. ("NGE" or the "Company") (TSXV: GASX) (OTCQX: GASXF) is pleased to provide an update on its recent operational activities, as well as its previously announced transaction with Etablissements Maurel & Prom S.A. ("M&P").
Operational Update
Sinu-9 Block
At Sinu-9, the Company is pleased to announce the commissioning of the mobile plant on its Brujo-1X platform. The mobile plant is now successfully installed, commissioning is advancing and the Company has received the necessary approvals from Promigas S.A. E.S.P. to begin selling gas. It has total current processing and dew-point handling capacity of 12 MMcf/d, with room for expansion. Additionally, the Company continues to work through the mobilization and construction of the additional dew-point handling equipment at its Central Processing Facility 1 (the "CPF-1") with commissioning scheduled during Q2 of 2025. The dew-point handling equipment will have total capacity of 50 MMcf/d; however, the CPF-1 will be limited by compression and transportation capacity to 30 MMcf/d in the near term. Following installation of the dew-point handling equipment at the CPF-1, and including the operating mobile plant, the Company expects to reach total processing and compression capacity of 42 MMcf/d, with room for expansion.
For video footage of the CPF-1 and mobile plant at Sinu-9, please see: https://youtu.be/FPJseVaAVaA
Maria Conchita
At Maria Conchita, the Company is pleased to announce that it continues to transition its compression system and has begun the civil work for the expansion of its processing and compression equipment to increase total production capacity to 28 MMcf/d. As previously indicated in the Company's news release dated November 26, 2024, production at Maria Conchita has been lower than expected in recent months due to compressor challenges and more recently, downhole obstruction issues from a well servicing tool lodged and blocking the lower zone (H1) in Aruchara-3 as the Company undertook a normal-course workover to optimize flow from the well. As a result, gross natural gas sales at Maria Conchita averaged 10.4 MMcf/d for the first two months of 2025. In response to these challenges, the Company has initiated the following activities:
- the transition of the Company's compressor system operating and maintenance contract from a third party to the facility owner, which has subsequently acquired a 10 MMcf/d compressor model of the type that has a strong operating history at Maria Conchita;
- the transfer, installation and commissioning of two compressors with capacities of 10 MMcf/d and 6 MMcf/d, respectively;
- various other expansion activities, including the procurement of another 10 MMcf/d compressor, TEG electrical pumps with variable frequencies and control valves for higher production rates; and
- a workover campaign of the Aruchara-1 and Aruchara-3 wells to enhance the flow of natural gas from the H1 and H2 zones.
The Company is also pleased to announce that it has acquired the necessary land for the flow-line right-of-way and new platform at Maria Conchita, which will allow the Company to drill its next target, the Aruchara-4 well, and the Company is in the process of completing the environmental and civil work with the expectation that it will spud the well in late Q2 2025. The Company anticipates reaching production volumes greater than 25 MMcf/d at Maria Conchita upon tie-in of the Aruchara-4 well, completion of the workover campaign on the producing wells and the completion of the facility expansion in Q3 2025.
Colombia continues to experience rising prices for natural gas as the country becomes increasingly dependent on natural gas imports. Since 2016, liquefied natural gas has been imported to Colombia to fuel power plants along the Caribbean coast; however, given that Colombia is now experiencing a growing structural shortage, gas distributors are being forced to fulfil demand from liquefied natural gas. The Gestor del Mercado de Gas Natural de Colombia's daily posted natural gas spot prices have been greater than US$15/MMBtu since the beginning of February 2025.1
Transaction Update
Further to the Company's news release dated February 10, 2025, the Company is pleased to announce that it has received the initial payment of US$20 million from M&P for the sale of a 40% operating working interest in Sinu-9 for total cash consideration of US$150 million. The remaining US$130 million will be paid to the Company upon completion, which remains subject to the satisfaction of all conditions precedent outlined in the definitive asset purchase agreement for the transaction. The application for M&P to become operator on the block has been submitted to the Agencia Nacional de Hidrocarburos and the transaction is expected to close during Q2 2025.
"We are pleased with the progress made towards not only closing this transformational transaction with M&P, but the setup of the joint venture and continued work by both organizations on the development and execution plan to be carried out following the close of the transaction," said Brian Paes-Braga, Chief Executive Officer and Chairman. "Our business continues to be unaffected by Brent crude price weakness or any of the ongoing international trade tensions as we supply a cleaner fuel domestically for Colombia through long term take or pays. Although we too have been disappointed with some of our operational challenges this past year, we are confident that the worst of our start up challenges are behind us and that 2025 will be a foundational year for our Company as we successfully and safely ramp up production at both Maria Conchita and Sinu-9."
Normal Course Issuer Bid
The Company is pleased to announce that it has filed with the TSX Venture Exchange (the "TSXV") a notice of intention to make a normal course issuer bid ("NCIB") to purchase for cancellation up to 17,545,859 common shares of the Company (the "Common Shares"), which represents up to 10% of the Company's Public Float, over a twelve-month period. As of the date of this news release, the Company has 257,774,340 Common Shares issued and outstanding.
The Company expects the NCIB to commence on June 1, 2025, subject to acceptance by the TSXV, and as such, the NCIB will terminate on May 31, 2026, or such earlier date on which purchases under the NCIB have been completed (the "Bid Term"). Purchases of Common Shares under the NCIB will be made through the facilities of the TSXV in accordance with TSXV requirements. During the past twelve (12) months, the Company has not purchased any Common Shares under a normal course issuer bid through the facilities of the TSXV.
Common Shares acquired by the Company under the NCIB will be purchased at the market price at the time of purchase and will be purchased on behalf of the Company by Haywood Securities Inc., the Company's broker in connection with the NCIB. During the Bid Term, the aggregate total of all purchases made by the Company in the preceding thirty (30) days will not exceed 2% of the total issued and outstanding Common Shares at the time the purchases are made.
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The Company is pursuing the NCIB as it believes that, from time to time, its Common Shares may trade in price ranges that do not fully reflect their value; therefore, the Company's board of directors has determined that acquiring such Common Shares would be an attractive and desirable use of the Company's available funds in light of the potential benefits to remaining shareholders.
About NG Energy International Corp.
NG Energy International Corp. is a growth-orientated 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, structurally short Colombian marketplace (>US$15/MMBtu spot price in March 2025). The Company is pursuing triple digit gross production growth over the next 2-3 years towards a gross production goal of 200 MMcf/d 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 32% of the Company. On February 10, 2025, the Company announced the sale of a 40% operating working interest in Sinu-9 to Establissements Maurel & Prom S.A. for US$150 million. For more information, please visit SEDAR+ (www.sedarplus.ca) and the Company's website (www.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 timeline for completion of construction and commissioning of dew-handling equipment at Sinu-9, the timeline for bringing on additional processing and compression capacity at Sinu-9, the timeline for the completion of the transition and expansion plan at Maria Conchita, the timeline for the tie-in of the Aruchara-4 well, the Company's intention to purchase Common Shares pursuant to the NCIB, the commencement date of the NCIB, the receipt of TSXV approval for the NCIB, the Company's belief that the Common Shares may be undervalued from time to time and that purchases of Common Shares under the NCIB will provide benefits to shareholders. 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 risk that completion of the asset sale with M&P may not occur, 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. 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.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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 Maria Conchita and Sinú-9 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 and has 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 Maria Conchita and Sinú-9 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 Sinú-9 are based on the Sinú-9 Report (as defined below) and the reserves in the 2023 51-101F1, which are attributed to Maria Conchita 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. Sinú-9 is located in the Department of Córdoba, Colombia. The Company's working interest in Sinú-9 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.
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 Maria Conchita, 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.
For additional information regarding the Sinú-9 Report, the Maria Conchita Report and the reserves 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 does not represent the fair market value of these reserves.
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.
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. Additionally, all estimates of future net revenue, whether calculated without discount or using a discount rate, do not represent fair market value.
For further information:
NG Energy International Corp.
Brian Paes-Braga, Chairman & CEO
Jorge Fonseca, CFO
Tel: +44 7498 236338
SOURCE NG Energy International Corp.
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