Criterium Energy Ltd (TSX-V: CEQ): Flow rate of up to 8 mmcf/d at South East MGH. Reducing FY25 capex guidance
• The SEM-01 well at South East MGH flowed 7–8 mmcf/d on test on 40/54” and 48/64” choke sizes. Further choke expansion was constrained by surface facility limitations. This follows the MGH-20 well at North MGH, which flowed at 2.8 mmcf/d on test.• The successful re-entry of SEM-01 de-risks the entire project and confirms the phased development across both fields, with initial production of 5–7 mmcf/d expected in 1Q26, rising to 7–10 mmcf/d in 2Q26. Criterium is projected to generate positive free cash flow from 1Q26.
• South East MGH is estimated to contain 15 bcf of 2C contingent resources, which are expected to be reclassified as reserves following the execution of a gas sales agreement by YE25. No formal resource estimate has been disclosed for North MGH pending an extended well test program. This will evaluate multiple zones across four wells (only one tested to date) and assess potential liquids output. Our unrisked NAV for the combined MGH assets stands at C$0.14 per share.
• Capital efficiency has improved as no further wells are required at South East MGH. Capex to first gas has been revised down from US$3–5 mm to US$2.5–4 mm, of which ~50% has already been spent. With US$1.6 mm in cash at end-June and US$2 mm in operating cash flow (pre-working capital) in 2Q25, we expect the company to be able to fully fund the development.
• We re-iterate our target price of C$0.35 in line with our ReNAV.
What next?
We assume Criterium will prioritize the development and monetization of its gas resources, with the Macan Gedang field scheduled to come onstream in early 2027. Development capex of ~US$3 mm is expected in 2H26, supporting a production uplift to 12–13 mmcf/d by early 2027. This production level is forecast to generate annualized free cash flow of ~US$10–11 mm, from the gas business alone,providing a strong platform for rapid deleveraging and balance sheet strengthening. Oil drilling activity is expected to resume in 2027, alongside the planned exploration of the Cerah gas prospect, which carries 26 bcf of prospective resources.
Valuation
Criterium shares trade at ~30% discount to our 2P NAV based on the oil reserves alone. Developing SE-MGH and North MGH would add C$0.14 per share, Macan Gedang, C$0.08 per share and Cerah, C$0.14 per share for a total potential valuation of C$0.36 per share. We are not carrying any value for MGH-43 pending visibility on resources. Our ReNAV for Criterium is C$0.32 per share.
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.
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