Criterium Energy Ltd (TSX-V: CEQ): Sale of Bulu unlocks value and transforms the company’s balance sheet
• Criterium has signed a letter of intent to sell its 42.5% interest in Bulu for US$7.75 mm. US$2 mm will be received as a non-refundable deposit upon signing of the definitive agreement (expected imminently) and the remaining US$5.75 mm will be due upon closing, which is expected in 1Q24.• The company acquired the interest in Bulu for US$1.6 mm. The sale price represents ~5x that amount.
• Completion of the transaction requires only customary notifications in New Zealand and Indonesia.
• The cash proceeds from the sale are equivalent to C$0.28 per share on the current 38.4 mm share count (before the previously announced equity financing) or C$0.08 per share post financing (139 mm shares).
• The US$7.5 mm proceeds represent a significant boost to the company’s balance sheet. The proceeds are expected to be applied to Mont d’Or.
• The total consideration can fund either 4-5 wells in Tungkal or the estimated equity component needed for the gas development or could be used to pay down the Mont d’Or debt.
• Criterium has previously announced a C$18.9 mm capital raise comprising a C$12.2 mm (~US$9 mm) convertible debt and C$6.7 mm (~US$4.5 mm) of new equity.
• Pending the signature of the definitive agreement, we re-iterate our target price of C$0.40 per share.
Valuation build-up
We continue to estimate the value of the company based on the Mont d’Or development programme at ~C$0.23/sh (based on the enlarged share count following the capital raise). Drilling the 2C contingent oil resources would add ~C$0.09/sh unrisked while the sanction of the gas aggregation project would add a further ~C$0.03/sh to ~C$0.35/sh. Drilling success at the Cerah prospect would add a further C$0.09 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.
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.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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