Criterium Energy Ltd (TSX-V: CEQ): First Gas in 2Q26 with a Likely Upgrade to Discovered Gas Resources
• The contract for the construction of a new 21 km gas pipeline (previously 14 km) for the SE‑MGH 5–7 mmcf/d development was signed in early January. Site preparation is already underway, with first gas expected in 2Q26.• Project capex is now estimated at US$2 mm (vs. prior guidance of US$2–3 mm), of which US$1.9 mm has already been incurred. The subsequent North MGH phase—requiring ~US$1 mm of incremental capex—would lift total production to 7–10 mmcf/d.
• The company has agreed key commercial terms for a gas sales agreement at US$6–7/mcf, in line with expectations. This is an important step that unlocks the project.
• FY25 production averaged ~845 bbl/d (vs. our estimate of 865 bbl/d). While we adopt a more conservative stance on oil output given the limited capital allocated to oil, the company has now tested the MGH‑32 well at North MGH at 2.1 mmcf/d. This adds to the MGH‑20 well, which tested at 2.5 mmcf/d last year. Additional testing is planned this quarter on reservoir zones that previously produced gas before being shut‑in in 2014.
• The facility processing fee remains the key outstanding commercial item.
• Discovered gas resources estimates are expected to increase. Given the performance of the SEM‑01 well, the current 15 bcf estimate for SE‑MGH is likely to be revised upward. No resource estimate has yet been provided for N‑MGH; this will be included in the YE25 reserves report.
• We reiterate our target price of C$0.35 per share.
Future activity
Criterium is expected to begin developing the Macan Gedang gas field in 2027, which could lift total gas production to more than 14 mmcf/d for a modest ~US$3 mm of capex. The company may also move to appraise the Cerah gas discovery (2U prospective resource of 34 bcf), where the Cerah‑1 well encountered gas in the Gumai formation but was never tested due to historically low prices and the absence of accessible infrastructure.
Valuation
Given the company’s increasing focus on gas, we assume for now that oil production remains flat. Our NAV for the oil 2P reserves stands at C$0.07/sh. Developing SE-MGH and North MGH would add C$0.14/sh, Macan Gedang, C$0.08/sh and Cerah (to which we now attribute value), C$0.11/sh for a total potential valuation of C$0.40/sh. We are not carrying any value for MGH-43 pending visibility on resources. Our ReNAV for Criterium is C$0.32/sh.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
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