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Research: Energy & Resources
Renergen has announced that US government agency, Overseas Private Investment Corporation (OPIC), has approved a US$40m loan facility in favour of the Renergen subsidiary Tetra4’s Virginia gas field project. The funds, which have a 12-year term and 30 months’ grace period, are to be utilised for the first phase of development and commercialisation of a 36.4bcf natural gas and 0.87bcf helium field in South Africa’s Free State province. First phase development includes the construction and operation of a 52km gas gathering system and new liquefied natural gas (LNG) and helium liquefaction plant. Renergen now has funding in place for phase one development providing visibility on first gas sales, which we currently assume at the end of 2020. Our last published NAV valuation stood at ZAR21.8/share based on a 15% discount rate and US$280/mcf crude helium price. Renergen is looking at an Australian Stock Exchange (ASX) dual listing to increase liquidity. We expect further details to be released in early 2019.
Written by
Renergen |
OPIC funding a key endorsement |
Funding update |
Oil & gas |
27 February 2019 |
Share price performance
Business description
Analysts
Renergen is a research client of Edison Investment Research Limited |
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Renergen has announced that US government agency, Overseas Private Investment Corporation (OPIC), has approved a US$40m loan facility in favour of the Renergen subsidiary Tetra4’s Virginia gas field project. The funds, which have a 12-year term and 30 months’ grace period, are to be utilised for the first phase of development and commercialisation of a 36.4bcf natural gas and 0.87bcf helium field in South Africa’s Free State province. First phase development includes the construction and operation of a 52km gas gathering system and new liquefied natural gas (LNG) and helium liquefaction plant. Renergen now has funding in place for phase one development providing visibility on first gas sales, which we currently assume at the end of 2020. Our last published NAV valuation stood at ZAR21.8/share based on a 15% discount rate and US$280/mcf crude helium price. Renergen is looking at an Australian Stock Exchange (ASX) dual listing to increase liquidity. We expect further details to be released in early 2019.
Year |
Revenue (ZARm) |
Adjusted EBITDA (ZARm) |
Reported net income (ZARm) |
Net (debt)/ |
Cash from operations (ZARm) |
Capex |
02/17 |
2 |
(22) |
(19) |
12 |
(23) |
(21) |
02/18 |
3 |
(27) |
(41) |
3 |
(18) |
(14) |
02/19e |
4 |
(35) |
(41) |
5 |
(31) |
(107) |
02/20e |
27 |
(37) |
(26) |
(192) |
(20) |
(296) |
Note: EBITDA normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
OPIC funding adds to project credibility: the addition of the OPIC loan to Renergen’s capital structure provides endorsement for project Virginia, both in terms of its alignment with the South African government’s gas utilisation master plan, which aims to increase natural gas usage and reduce coal/diesel imports and because one of OPIC’s key objectives is to support projects with high developmental impact. We recently published a macro update on the global helium market.
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Disclaimer
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Disclaimer
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Research: Financials
MPC Capital’s overall performance in 2018 was rather subdued, affected by project delays and low transactional activity, as well as the write-down of a large legacy project. The latter, together with asset disposals, resulted in a decrease in assets under management (AUM) to €4.3bn. However, as MPC also attracted €0.8bn of institutional assets in FY18, the share of new, higher-yielding business in the current AUM has risen. Moreover, the company retained its solid cash position (€28.6m at end-2018) and equity ratio (at 74.3%), and aims at positive EBT in FY19.