(Idea) Logan Energy - A Smallcap Name Worth Your Time
Editor's Note: We find Logan Energy extremely interesting and attractive.
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Note to readers: Dollar values are in Canadian dollars unless otherwise noted.
Logan Energy (LGN:CA) is a development-phase growth E&P that was spun out of Spartan Delta (SDE:CA) in 2023 to develop part of SDE’s high-quality liquids-weighted acreage. We’ve liked the name since we began covering it in January. Recent developments only strengthen our conviction about the company’s ability to achieve its long-term growth objectives.
Long-Term Growth Story is Intact
Logan’s objective is to develop its acreage and acquire new acreage to grow production from today’s level of 7,300 boe/d to more than 20,000 boe/d in five years. It is targeting an asset life of at least 20 years. Its planned organic growth trajectory is shown below.
Source: Logan Energy May 2024 Investor Presentation.
Logan is in the early phase of developing its own resources. It faces the problem of being undercapitalized relative to the opportunity presented by its substantial resources. The chart below contrasts its acreage position with its low volumes of production in the Montney.
Source: Logan Energy May 2024 Investor Presentation.
To boost production to a level proportionate to its resource base, Logan will need capital. A capital infusion would enable it to transition from the current phase of land retention, acreage delineation, and well design optimization, to the next phase, where it grows scale and proved reserves. Its plan calls for reaching this next phase in early 2025. By then, management should have a good handle on the best acreage for development, the cost of its development, and Logan’s near-term production growth trajectory.