TEG is incredibly undervalued - Desk note from CPS today:CPS...

TEG is incredibly undervalued - Desk note from CPS today:

CPS Capital (“CPS”) recently acted as Lead Manager & Broker to the oversubscribed AUD$10,000,000 capital raise for Triangle Energy Limited (“TEG”) at 2.2c per share with a 1:2 ASX:TEGO.

Following up from the raising we wanted to provide an updated overview of the company’s current valuation and why we think the company is currently undervalued just on its cash position, ASX:GAS holding and oil inventories alone.

Balance Sheet

• Cash June 30 2021 - $598,000. Tranche 2 Placement $8,225,000. May Lifting Revenue $1,300,000. = $10M
• Major shareholder of State Gas Limited (ASX:GAS) with an interest of 47,884,693 shares, the investment is equivalent to ~$19M at a discounted price of AU$0.40 per GAS share (currently trading $0.46).
• Crude oil inventory TEG 78.75% - $2,800,000 representing 43,833 barrels of oil stored at BP Kwinana.

Therefore, TEG is currentl ytrading at a EV of Negative $6.3Mpurely based on its assets and attributing no valuation to any of its current projects or ongoing oil revenues.

Fair value to just these items alone would be ~3.1c per share which includes a discount on GAS &excluding Last Quarterly Revenue’s.

What’s to come:

• ESG Approach - Triangle and Pilot Energy Limited (PGY.ASX) have also agreed to form the Cliff Head Wind and Solar Project Joint Venture (Wind & Solar JV) with Pilot owning 80% and Triangle 20% (subject to agreeing the terms of a joint operating agreement and the WA-481-P transaction completing).
• Update on Non-Binding term sheet with BP Singapore Pte Ltd (BP Singapore) related to offtake agreement for its product.
• CH6 Workover is now re-entering the well with a swathe of new equipment and enhanced capabilities and expects to bring approximately 120 barrels of oil per day online.
• CH11WI Slickline Intervention Campaign well injection performance testing is positive. It is expected that the reconfiguration of the injection zone of CH-11WI will contribute to increased oil recovery from Cliff Head.
• Cliff Head Satellite Drilling has an online data room has been established with companies continuing to be engaged in the farmout process. Successful wells on Western Development or SE Nose could be completed for immediate production and could have initial production rates of 3000 – 4000 BOPD. Targeting drilling during 2022.
• Mt Horner Production Licence L7(R1) - The company commenced a farmout campaign and has opened an online data room with several companies evaluating the opportunity.
• Acquisition of 78.75% of WA-481-P and Formation of Joint Venture.

Peer comparison to other block owners in the area which includes Strike Energy (STX.ASX).

Why do we think this could go higher..

• During the quarter, the CHJV produced 61,075 barrels of crude oil at an average daily production of 671 per day. Production figures are lower due to scheduled routine field maintenance both onshore and offshore during May. During normal stable production in April and June the average monthly production rates were 726bopd and 713bopd, respectively.
• Workovers to potentially increase BOPD.
• USD/AUD price has strengthened from a $1.27 low to a current price of $1.36.
• Oil prices have increased to near 5-year highs and has settled above the USD59.75 recorded in the companies last Quarterly Report.
• Clarification on the BP Singapore Non-Binding Term Sheet.
• Farm out discussions are on going and could be agreed to at any point in the future.