Hi all,
Just thought I’d put together an outline of the growth opportunities that I see in TEG going forward for all current and future shareholders.
This information should not be seen as financial advice. Always do your own research before investing in any company.
Perth Basin permits
I’ll start with the most notable news that has recently come to light. As determined by the 3D seismic data for L7 and EP437, the following indications were given for potential oil and gas resources within the permits:
- Low estimate (P90) = 167bcf & 1mmstb
- Best estimate (P50) = 393bcf & 5mmstb
- High estimate (P10) = 753bcg & 21mmstb
In a recent interview, TPD’s managing director claimed that “50bcf if commercialised is $500m in revenue in today’s market.”
https://cdn.jwplayer.com/previews/sxCmHmWa
Using this as a guide, we can estimate revenue based on our results as:
- Best case gas (P50)= $3.93b
- Best case oil (using $111.55 average from our last oil shipment at Cliff Head) = $557.75m
- Best case combined value (P50) = ~$4.5b
These are very strong results, particularly when compared to Talon’s JV with STX on their Walyering project:
- Low estimate (P90) = 20bcf & 0.2mmbbls
- Best estimate (P90) = 63 bcf & 1.2mmbbls
- High estimate (P10) = 263bcf & 6.3mmbbls
https://www.openbriefing.com/AsxDownload.aspx?pdfUrl=Report%2FComNews%2F20191206%2F02182798.pdf
M&A activity
Over recent times, the Perth Basin has seen strong M&A activity. “WA-based mining billionaires Gina Rinehart and Chris Ellison have made it clear they want to produce and use cheap gas from the basin as an intriguing battle unfolds for control of Warrego Energy and Norwest Energy…”
https://www.copyright link/companies/energy/behind-the-heavyweight-battle-for-perth-basin-gas-20230106-p5cat8
Where we are particularly lucky in this regard, is that our resource findings have been seen to overlap into neighbouring permits, which may attract attention from the larger companies that own them. The estimates from the seismic only includes resources that fall within our permits. “These are gross 100% on-block resources. As previously noted, two of these prospects extend into adjacent acreage.”
https://triangleenergy.com.au/wp-content/uploads/2023/03/230327-L7-and-EP-437-Prospects.pdf
Our largest resource (Booth) extends into the neighbouring area owned by NWE (soon to be MIN), while Mtn Bridge Sth also crosses into a permitted area operated by Arc Energy, who have a 50% JV with Origin Energy (ORG) on the Corybas project.
https://www.asx.com.au/asxpdf/20050224/pdf/3pwb4qg17tnzv.pdf
As the number of company takeovers increases, “acquirers are willing to take huge risks with Minres acquiring Norwest after a single (good) well, implying a gas discovery value of $2.5 billion.”
https://company-announcements.copyright link/asx/stx/45c657da=bc64-11ed-9af6-c2c7baa32eec.pdf
Carbon capture opportunity
The potential opportunity of transforming Cliff Head into a carbon capture facility after oil exporting ceases is another catalyst that may provide enormous value to the company.
Our JV partner Pilot Energy estimates the following values for this opportunity:
Pre-tax NPV = $210m @ 1.1mtpa & IRR = 40%
https://pilotenergy.com.au/sites/pilotenergy.com.au/files/asx-announcements/61094725.pdf
- “Minimal risks and capex requirements due to straight-forward adaptive re-use of existing plant, pipelines, wells, platform, and reservoir.”
- “Foundation for future development of clean hydrogen and ammonia production.”
https://pilotenergy.com.au/sites/pilotenergy.com.au/files/presentation_file/2023-02-22cus-conference-final.pdf
- “According to the duo, the Cliff Head CSS offers characteristics that place it among the top 20 projects in the world.”
- Payback period of just 4 years
https://www.businessnews.com.au/article/Triangle-Pilot-finalise-WA-carbon-capture-play
Carbon capture is a key focus for a lot of the largest gas and oil companies in the world, and can provide opportunities for income once production comes to an end.
From 6 mins:
- Santos is one of the global leaders in carbon capture and storage.
- De-risks projects from carbon prices coming into the Australian market
- Looking to invest in technologies to solve these issues (carbon capture and storage)
- Gas is going to be an important transition energy source.
https://www.******.com.au/media/playing-defense-with-healthcare-and-energy?videoId=28116§ionId=1885
State Gas
Another asset that TEG holds as a cash reserve is its stake in GAS, which has recently seen an increase in their flow rate to 457,000 scf/day, making it “unquestionably economic.”
https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02645596-2A1438617?access_token=83ff96335c2d45a094df02a206a39ff4
Our current investment value (10.1% @ 25c/$56.21m MC) = ~$5.68m
Expansion opportunities
An area of excitement for me is the potential diversification we may see in future with new project/s entering the portfolio. The deals signed recently allow for a cost-free drilling campaign for our two permits, allowing funds to be used to explore more opportunities globally. Conrad has addressed this on multiple occasions:
“That allows us to use some of our funds in building a broader based portfolio for this company. We’re going to be able to bring more acreage and spread our exploration outside the Perth Basin.”
https://*.com.au/companies/news/1003613/triangle-energy-hails-new-farm-in-partner-new-zealand-oil-gas-1003613.html
“One possibility that comes to mind is the UK… they belatedly realised that they’re very short of gas… we’re having a look through that… it is an example of what we’re looking at.”
https://newsdirect.com/news/triangle-energy-completes-farm-out-negotiations-with-talon-473724999
After some quick research, I believe this what Conrad could be alluding to –https://www.ft.com/content/8146804f-770e-42ee-8435-72469f92b4fd
- New North Sea gas fields will be prioritised during a licensing round.
- Aimed at boosting domestic (UK) production in the short term.
- Fast-tracking of applications for discoveries in the southern North Sea.
- Process could grant more than 100 permits.
And guess where has recently seen carbon storage permits approved… that’s right, the North Sea!
https://www.rivieramm.com/news-content-hub/news-content-hub/denmark-grants-first-co2-storage-permits-for-north-sea-projects-74909
Financials
Assumed $12 cash in the bank ($7.5m obtained from last quarterly announcement + $4.5m from last oil shipment announcement).
Market cap @ 2c = ~$27.52m
GAS investment + cash = ~17.68m
$27.52m – $17.68m = $9.84m
This would value our current assets at $9.84m. When we consider that our farm-in partners paid ~$10meachfor a 25% stake before interpreting seismic data, we can see how much the market is currently undervaluing us. The results have since shown a very strong resource that has de-risked the permits further, likely adding to this value. Then when we consider the fact that our oils sales are currently generating income, this discrepancy continues to grow.
Factoring in potential from here, I can easily see that this company has the opportunity to move north in massive multiples very quickly.
Summary
Looking at our current assets and the future potential expansions and developments, I believe there is a terrific growth profile for this company.
We have numerous potential revenue streams that could provide enormous upside from our current valuation. The JVs that we have secured with strong companies that understand the Perth Basin gives us an improved chance of success.
Finally, we are led by what I consider to be a world-class management group. Conrad and the team have demonstrated a high level of professionalism, not only in the operations of the business, but also in communicating progress and opportunities to shareholders. I have full belief that this company can become a fantastic growth story in the oil and gas industry because of their commitment to our projects and investors.
A final reminder that this is only my opinion and should not be taken as financial advice. Always do your own research before investing.
(20min delay)