In today’s briefing:
- DRX: Q3 Financials Smash Expectations; Increasing Target Price
- ADX Energy (ASX: ADX): Narrowing uncertainty and resources range at Anshof
- ADX Energy (ASX: ADX): Adding further exploration prospects with MND to the FY24 programme
- Chariot Limited (AIM: CHAR): Like-minded farm-in partner to unlock Anchois
- Coterra Energy Inc.: Initiation of Coverage – Business Strategy
- Criterium Energy Ltd (TSX-V: CEQ): Sale of Bulu unlocks value and transforms the company’s balance sheet
- Criterium Energy Ltd (TSX-V: CEQ): Further improvements on Mont d’Or transaction terms
- Devon Energy Corporation: Reinvestment Strategy Paying Off – A Deep Dive Into Their Approach! – Major Drivers
- Eastman Chemical Company: Tackling Market Instabilities – A Strategy for Success! – Major Drivers
- DRX: New Contracts Announced; Increasing Target Price (Again)
DRX: Q3 Financials Smash Expectations; Increasing Target Price
- What you need to know: • ADF reported stellar Q3 financials that largely beat our estimates. • Revenue came in at $82.1M (+26% YoY) vs. our estimate of $73.0M and EBITDA came in at $17.8M (+146% YoY) vs. our estimate of $7.7M.
- This morning, ADF Group (DRX:TSX, ADFJF:OTC) reported Q3/24 financial results that largely beat our estimates across the board.
ADX Energy (ASX: ADX): Narrowing uncertainty and resources range at Anshof
- • The Anshof-2 well encountered high quality Eocene sands with at least 12 metres vertical thickness and porosity of ~20%. • The top of the Eocene sand was encountered ~40-50 m higher than expected, suggesting a much larger and flatter structure than expected in the P50 case. • The better-than-expected reservoir quality and thicker sands suggest better well deliverability and higher flow rates, which result in a higher production plateau and lower development cost with a positive impact on NPV.
ADX Energy (ASX: ADX): Adding further exploration prospects with MND to the FY24 programme
- • ADX has farmed out a 50% interest in an exploration area with in the ADX AT I licence to MND in return for a A$0.73 mm back costs payment plus A$7.34 mm funding in exploration drilling. • The exploration area farmed-out to MND includes the LICHT and IRR gas prospects. • The LICHT prospect location (16.2 bcf gross best case prospective resources) has already received a drilling permit including the environmental clearance.
Chariot Limited (AIM: CHAR): Like-minded farm-in partner to unlock Anchois
- • The transaction consists of two tranches.
- Energean will initially acquire 45% and 37.5% interests in the Lixus and Rissana licences respectively for US$10 mm on closing plus US$15 mm on FID.
- Energean will also fund US$85 mm of gross costs including drilling the Anchois East well and up to US$7 mm seismic at Rissana.
Coterra Energy Inc.: Initiation of Coverage – Business Strategy
- This is our first report on oil and gas behemoth, Coterra Energy.
- The average daily production volumes in the second quarter amounted to 665 thousand barrels of oil equivalent.
- In contrast, the average daily oil production reached a significant high of 95.8 thousand barrels daily, marking a significant milestone for Coterra.
Criterium Energy Ltd (TSX-V: CEQ): Sale of Bulu unlocks value and transforms the company’s balance sheet
- • Criterium has signed a letter of intent to sell its 42.5% interest in Bulu for US$7.75 mm. • The company acquired the interest in Bulu for US$1.6 mm. • Criterium has previously announced a C$18.9 mm capital raise comprising a C$12.2 mm (~US$9 mm) convertible debt and C$6.7 mm (~US$4.5 mm) of new equity.
Criterium Energy Ltd (TSX-V: CEQ): Further improvements on Mont d’Or transaction terms
- • The completion payment by Criterium on the closing of the Mont d’Or acquisition has been reduced by 60% to US$4.5 mm. • Only US$4.1 mm will now be repaid to Mont d’Or debt holders on completing the acquisition (US$9.6 mm previously) with US$0.5 mm being written down (US$4.3 mm previously). • On completion of the acquisition, Criterium is expected to hold US$25 mm of debt and US$8 mm in cash (including US$4.5 mm of new equity) resulting in US$17 mm in net debt (excluding US$3.0 mm of Mont d’Or residual debt to be converted into equity in 2025).
Devon Energy Corporation: Reinvestment Strategy Paying Off – A Deep Dive Into Their Approach! – Major Drivers
- Devon Energy Corporation delivered mixed results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
- Their disciplined capital management during the quarter maintained reinvestment rates above 50% of cash flow, doubling free cash flow compared to the previous quarter.
- We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price.
Eastman Chemical Company: Tackling Market Instabilities – A Strategy for Success! – Major Drivers
- Eastman Chemical delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
- The primary contributor to the decline in earnings this year was attributed to volume and mix, resulting in a variable margin decrease of approximately $450 million.
- Eastman’s management is cautiously optimistic about market stability, particularly in non-discretionary sectors like pharma and medical, anticipating some modest growth.
DRX: New Contracts Announced; Increasing Target Price (Again)
- What you need to know: • ADF announced the signing of a series of new contracts totalling $234M, adding to its backlog of $339M reported for Q3.
- This morning, ADF Group (DRX:TSX, ADFJF:OTC) announced the signing of a series of new orders totalling $234M.
- Contract Announcement In May 2023, ADF announced the signing of a large-scale contract for the first phase of a major project in the pharmaceutical sector in the Midwest.
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