JEV: Q3 Financials in Line with Expectations
What you need to know:• JEV reported Q3 financial results that were in line with our expectations. Its O&G JV was EBITDA positive again this quarter, reminding us that JEV can effectively redeploy cashflow from the low multiple O&G business to the high multiple hydrogen business.
• Find our recently published management interview here.
Yesterday, Jericho Energy Ventures Inc. (JEV:TSXV, OTC:JROOF) reported Q3 financial results that were in line with our expectations. Production from its O&G JVs was consistent with last quarter, posting positive EBITDA due to the higher commodity prices. This reiterates our original thesis in JEV, where the Company can shift capital from the low multiple O&G production industry to the high multiple hydrogen services industry. We remain highly confident in Jericho as Hydrogen Technologies continues to make advancements each month and high commodity prices support the cash flow generation of its O&G JVs. We are maintaining our BUY rating and C$0.50/ share target price on JEV.
Key Highlights
• The O&G JV produced 241 bbls/d of crude oil, 552 MMcf/d of natural gas, and 65 bbls/d of NGL compared to our estimates of 270 bbls/d, 550 MMcf/d, and 80 bbls/d respectively. This resulted in 389 BOE/d, 173 BOE/d of which was attributable to JEV. The slight miss on crude oil production was due to delays in drilling that we expected would occur in Q3.
• The JV realized an oil price of $80.41/bbl, natural gas price of $2.26/Mcf, and NGL price of $24.60/bbl. This resulted in total revenue of $2.0M for the JV, declining YoY based on lower commodity prices.
• Joint Venture Adjusted EBITDA came in at $140K compared to our estimate of $0.4M and $1.5M last year.
• Adjusted EBITDA came in at ($1.2M) compared to our estimate of ($1.1M). Given that the O&G side broke even, the loss was attributable to hydrogen product development and general corporate expenses.
• Jericho ended the quarter with $0.5M in cash and $3.6M in debt.
Jericho Oil is an oil and gas company engaged in the acquisition, exploration, development and production of overlooked and undervalued oil properties in the mid-continent region of the United States.
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