The path to a local green energy
The path to a local green energyLATEST
ANALYSIS
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We initiate coverage of LFDE (BUY): the company develops sustainable energy resources in France, for local consumption.
LFDE produces gas and electricity via two related activities.
In Northern France, LFDE captures the gas that is accumulating in former coal mining galleries, thereby preventing this gas from being released into the atmosphere. This gas is sold at one site as pipeline-quality gas to Total Gas&Power. At other sites, the gas will be directly converted via gas engines into green electricity and sold under a 15-years Feed in Tarif (FiT) agreement.
In Eastern France, the company recovers the pure gas present in coal seams lying at a depth of 700-1,500 metres. This gas will then be sold as gas to local utilities or industrial players.
The strategy of the group is to supply an economically and ecologically competitive clean energy for regional consumption in both Lorraine and Northern France, while growing its gas reserve base through further appraisal wells in Lorraine and expanding its operations in neighbouring countries.
The current market capitalisation stands at c. €117m with the share price at €23.2; we see a large upside (+61%) based on the company’s project pipeline.
Française de l’Energie offers a unique exposure to green energy, combining a largely de-risked resource base with a massive growth potential.
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