New Zealand Energy Corp. (TSX-V: NZ): Pipeline reflections
• Natural gas prices in New Zealand remain elevated at US$10–15/mcf. The closure of the Strait of Hormuz, and the subsequent bombing of the South Pars/North Field complex (the world’s largest gas field), have further tightened global LNG supply.• Construction of New Zealand’s first LNG import terminal in Taranaki is expected to begin this year , with commissioning targeted for late 2027 or early 2028. In this context, NZE’s existing gas infrastructure could become strategically significant.
• NZE holds a 50% WI in the only gas pipeline linking the Taranaki port (New Plymouth) to regional gathering systems, gas storage and key power‑generation assets. The pipeline is ~49 km long and runs from the Waihapa Production Station to the Omata Tank Farm. It has a current capacity of 100 mmcf/d but this could be increased with compression.
• Assigning a monetary value to the pipeline is a challenge, but it clearly has some strategic worth. Although it is currently excluded from the Tariki gas‑storage project, we believe it is likely to feature prominently in discussions between Genesis and NZE. At the very least, the asset increases the probability of a monetisation of the gas‑storage business.
• Key near‑term catalysts include the Tariki‑5 flow test and the anticipated indicative offer from Genesis for the gas‑storage project. Our risked valuation for the storage asset is ~US$52 mm net to NZE, equivalent to C$1.26 per share. We re-iterate our target price of C$1.35 per share.
Valuation
We apply a 50% discount to the unrisked value of the Tariki gas‑storage project, benchmarked against the 2017 sale of the Ahuroa facility. Including the value of the upstream business our ReNAV is C$1.38 per share.
Sintana Energy is a development stage company engaged in oil and gas exploration and development activities in the United States.
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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