Coelacanth Energy

Investment Insight

Coelacanth presents a compelling investment opportunity with its ownership of approximately 150 net sections in the Montney Formation in the Two Rivers oil and liquids rich natural gas region, boasting $64.4 million in working capital and a strategic position near major producers.

Overview

Coelacanth Energy (TSXV:CEI) is a junior oil and natural gas exploration and development company, focusing primarily on the prolific Montney region in northeastern British Columbia, Canada. With a substantial landholding of approximately 150 net sections in the Two Rivers area of Montney, Coelacanth is strategically positioned to harness the potential of one of the most resource-rich natural gas basins in North America. This company sets itself apart with its well-structured growth strategy, financial stability, and commitment to sustainability, making it one of the promising junior players in the region.

Coelacanth Energy has established a strong foundation to deliver on its future production targets by ensuring it is fully permitted and funded to embark on its infrastructure developments. The company is in the process of deploying $ 80 million to facilitate the smooth transition from exploration to production. Coelacanth’s financial health is further evidenced by its $64.4 million in working capital as of Q2 2024. This financial cushion not only supports ongoing infrastructure projects but also provides the company with the flexibility to expand its operations.

Capital deployed for project development will be allocated towards constructing processing facilities, pipelines, and necessary gathering lines, which are all crucial components for transporting and processing oil and gas. With processing contracts secured for up to 60 million cubic feet per day (mmcf/d) and long-term gas takeaway agreements for 100 mmcf/d, Coelacanth is well-positioned to scale its production quickly and efficiently. The company aims to have its infrastructure fully operational by mid April 2025, ramping up cashflow, marking a significant milestone in its transition to a full-scale production company.

The Montney Formation is recognized as one of the most significant natural gas reserves in North America, covering large portions of British Columbia and Alberta. Known for its high levels of natural gas and natural gas liquids (NGLs), Montney has attracted numerous large oil and gas producers, including companies like Canadian Natural Resources (CNQ), Shell, ARC Resources (ARX), Tourmaline Oil Corp (TOU), and ConocoPhillips (COP). The presence of such large players highlights the importance of this region in contributing to both the Canadian and global energy markets.

Coelacanth’s landholdings are strategically located in the Two Rivers area of Montney, giving it access to a highly productive portion of the basin. Unlike many junior exploration companies, Coelacanth is drill-ready, positioning it favorably among its peers. By securing significant infrastructure and landholdings, Coelacanth ensures its ability to tap into the natural gas and oil resources that lie beneath its properties, a key advantage in the competitive Montney region.

Two-Pronged Strategy

Coelacanth Energy Inc. has adopted a well-defined two-pronged strategy for growth, which focuses on both immediate production goals and long-term resource development. This approach provides a balanced focus on infrastructure development and resource delineation.

Coelacanth is focused on delineating its land base resources alongside infrastructure development. This involves drilling wells to explore and prove the extent of hydrocarbon deposits across multiple zones within the Montney Formation. By continuing to delineate its resources, the company aims to demonstrate the productivity and economic viability of its assets, which is critical for long-term growth. The delineation process also helps Coelacanth de-risk its projects, ensuring that future drilling activities are economically sound.

Company Highlights

• The company holds approximately 150 net sections of land in the Two Rivers area, a prolific oil and liquids rich natural gas region.
• Coelacanth is fully permitted and financially secure, with $64.4 million in working capital as of Q2 2024 and a $52 million credit facility with its main lender.
• The company is spending approximately $80 million to construct pipeline and facility infrastructure to bring production on in April 2025.
• The company’s strategic location in Montney places it near major producers like ARC Resources, Tourmaline Oil Corp, Shell, and ConocoPhillips.
• Two Rivers East, its primary project, boasts 1,532 (thousand barrels of oil equivalent) mboe per well in proved and probable reserves.

Key Projects

Two Rivers East and Two Rivers West

The Two Rivers East project is Coelacanth’s primary development focus. This area has shown significant potential for oil and gas production, with initial tests yielding compelling results. The proved and probable reserves (P+P) for Two Rivers East are estimated at 1,532 mboe per well, with approximately 30 percent of the reserves comprising oil and NGLs. Initial production tests from wells in the Lower Montney zone have confirmed the commerciality of this resource, with one well producing 1,345 barrels of oil equivalent per day at (boepd) at 61 percent oil, and three others producing an average of approximately 1,300 boepd at averaging 38 percent oil. These results underscore the viability of Two Rivers East as a key asset for Coelacanth’s future growth.

The Two Rivers West project also holds considerable proved and probable reserves of approximately 1,148 mboe, 34 percent of which consist of oil and NGLs. Similar to Two Rivers East, initial production tests have demonstrated strong deliverability. For example, the Upper Montney well in this region produced an average of 1,284 boepd during its test phase. These tests indicate that the Two Rivers West project will contribute significantly to Coelacanth’s production capabilities as it continues to expand its operations.

Coelacanth’s strategic location in the Montney, coupled with large contiguous landholdings and established infrastructure, positions the company for long-term growth. The company’s land position in the light oil window of Montney further enhances its value, as light oil typically commands a premium over heavier oil grades. Coelacanth is the number one landholder in this lucrative area, providing it with a significant competitive edge.

Moreover, Coelacanth’s management team has a proven track record, having successfully built and sold six oil and gas companies prior to founding Coelacanth. This experience adds credibility to the company’s long-term growth strategy, instilling confidence that Coelacanth can replicate its past successes in the Montney region.

Board and Management

Rob Zakresky – President and CEO

Rob Zakresky has a significant background in the oil and gas sector, previously serving as the president and CEO of Leucrotta Exploration as well as five additional predecessor companies. He has been with Coelacanth Energy since its inception and is recognized for his strategic leadership and focus on enhancing shareholder value. His expertise in financial management and operations is reflected in his approach to driving the company's growth.

Bret Kimpton – Vice President of Operations and COO

Bret Kimpton joined Coelacanth Energy in 2022, bringing a wealth of experience from his previous role as vice president of production at Storm Resources, where he contributed to significant production growth. He has a strong background in construction and operations, especially in the Montney region of British Columbia, managing various fields. His role at Coelacanth focuses on overseeing operational efficiency and implementing the company's growth strategies.

Nolan Chicoine – Vice President of Finance and CFO

Nolan Chicoine has also been with Coelacanth Energy since its inception. His responsibilities encompass financial oversight, including financial planning, reporting, and analysis. He plays a crucial role in aligning the financial strategies with the company's operational goals. His background includes significant experience in financial management as CFO for Leucrotta Exploration, Crocotta Energy, and Chamaelo Energy.