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Renergen

JP: RENJ

ZAR1526.6m market cap

ZAR13 last close

Renergen is an emerging producer of helium and liquefied natural gas (LNG), with existing production and sales of compressed natural gas.

Investment summary

Renergen secured final funding for Phase 1 of its Virginia Gas Project in H219. The project is now firmly in the development phase, major equipment orders have been placed and first liquid production of both LNG and helium is expected to start around July 2021 – with the latter a first for sub-Saharan Africa. Our risked NAV currently stands at ZAR23.9/share. A horizontal well targeting large fractures in an untested sandstone group at Virginia established a region of high helium concentration of 12% (compared with 2–3% in previous wells). An inclined well was spudded on 3 August 2020 to target 2–3% concentrations while proving the inclined well concept. Drilling issues have resulted in the well being abandoned (at no cost to Renergen), but an existing vertical well will now be utilised to intersect the gas-bearing fault using a more accurate and faster rotary drilling rig. An independent estimate from Sproule from 1 July 2020 estimates that the Virginia Project holds 2U (P50) prospective helium resources of 106bcf. Global helium demand is c 6 bcf/pa.

Y/E Feb
Revenue (ZARm)
EBITDA (ZARm)
PBT (ZARm)
EPS (fd) (c)
P/E (x)
P/CF (x)
2018A 2.9 (26.9) (27.1) (0.3) N/A N/A
2019A 3.0 (43.2) (46.9) (0.5) N/A N/A
2020E 4.8 (50.6) (49.9) (0.5) N/A N/A
2021E 8.6 (30.4) (30.9) (0.3) N/A N/A
Industry outlook

Renergen is targeting the heavy-duty LNG truck market which is a rapidly evolving market globally. Meanwhile helium prices are likely to remain buoyant following the shutdown of the US strategic reserve in 2018.

Last updated on 21/10/2020
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Sector
Oil & gas
Share price graph
Balance sheet
Forecast net debt (ZARm) 58.7
Forecast gearing ratio (%) 59
Price performance
%
1m
3m
12m
Actual 4.5 (12.2) 44.6
Relative* 0.7 (10.5) 46.6
52-week high/low ZAR15.9/ZAR8.8
*% relative to local index
Key management
Stefano Marani CEO
Fulu Ravele CFO
Nick Mitchell COO