NG Energy International Corp. (“NGE” or the “Company”) (TSXV: GASX) (OTCQX: GASXF) is pleased to announce, as operator of the Joint Operating Agreement signed with its partners Clean Energy Resources, Desarrolladora Oleum and First Global (the “JOA Partners”), that it has entered into a non-binding Memorandum of Understanding (the “MOU”) with its infrastructure partner, INFRAES, for the completion of up to an additional 76 MMcf/d of pipeline capacity from Sinu-9 to be constructed in two stages, over the course of 15 months, following the execution of a definitive agreement.
Sinu-9 Accelerated Infrastructure Development
In accordance with the MOU, the next stage of the Company’s Sinu-9 infrastructure development is expected to be contracted under a Build, Own, Operate and Maintain (“BOOM”) agreement, whereby INFRAES intends to build two pipelines each with up to 38 MMcf/d of capacity and cover 100% of the project cost. The first 38 MMcf/d pipeline will have a construction timetable of nine months following the signed definitive agreement, expected to be signed in Q4 2024. The second pipeline will be a twin pipeline and have a 6-month timetable following the completion of the first stage and the necessary development drilling at Sinu-9, expected to occur throughout 2025.
INFRAES has received permits and easements for 60% of the 16.9 km pipeline route to the receiving station at Recolectora Norte. Over the coming months, the Company, its JOA Partners and INFRAES will evaluate the most optimal location for its second Central Processing Facility (the “CPF”) and finalize plans for the logistics of the pipeline infrastructure.
Accelerated Development Drilling and 3D Seismic at Sinu-9
As part of the next phase of development of Sinu-9, the Company is expected to drill the Hechicero-1 well in Q1 2025, at the latest, and, subsequently, management believes that eight additional exploration and development targets in the area north of Magico-1 need to be drilled in order to fill this infrastructure capacity. This drilling program is anticipated to take up to 24 months to complete, once commenced. The Company is expected to also complete 185 km2 of 3D seismic to enhance and de-risk its development of the southeast portion of the block and its exploration drilling up to Hechizo, while the Company and its partners continue to advance through the exploration phases of its E&P contract with the ANH. The private consultation of 3D seismic is expected to begin in Q4 2024 and should take roughly 12 months to complete.
Don Sewell, President and Director of NGE commented. “As we commence natural gas sales imminently and complete the first stage of infrastructure projects at Sinu-9, we are taking proactive steps to expedite the exploration and development of the block at this pressing time in Colombia as the natural gas shortage in the country is upon us. We are grateful for the swiftness of our JOA Partners in getting this first step done and are thrilled to again work with INFRAES through the planning and execution of the next phase of infrastructure projects at Sinu-9, which, once complete, will enable a production capacity of up to 116 MMcf/d, bringing total gross production capacity for the Company to 136 MMcf/d or roughly 14% of the country’s current daily demand, making NG Energy one of the top independent natural gas producers in Colombia.”
Brokered Private Placement
In conjunction with the acceleration of the Phase II development plan, the Company is pleased to announce that it has entered into an agreement with Eight Capital and Clarus Securities Inc., as co-lead agents and joint bookrunners, on behalf of a syndicate of agents (together, the “Co-Lead Agents”) pursuant to which the Company has launched a proposed private placement, on a “best efforts” basis, of up to 28,572,000 common shares of the Company (the “Offered Shares”), at an offering price of C$1.05 per Offered Share (the “Offer Price”), for gross proceeds of up to C$30,000,600 (the “Offering”) to qualified accredited investors.
The Company has granted the Co-Lead Agents the option, exercisable in whole or in part at any time until 48 hours prior to the closing of the Offering, to offer for sale an additional 15% of the Offered Shares in the Offering, at the Offer Price (the “Co-Lead Agents Option”).
Upon closing of the Offering, the Company will pay to the Co-Lead Agents a cash commission equal to 6% (3% for president’s list orders) of the gross proceeds of the Offering (including any exercise of the Co-Lead Agents Option), all payable in cash.
The net proceeds of the Offering will be primarily used for the Company’s next phase of drilling and 3D seismic at Sinu-9, flowlines connecting wells to the first and second CPFs at Sinu-9, drilling of Aruchara-4 at Maria Conchita, completion of reservoir studies at both Sinu-9 and Maria Conchita, and any remaining balance will be used for working capital and general corporate purposes.
The Company expects to receive participation from several premier Canadian and international institutions. Additionally, the Company expects that insiders and current stakeholders will participate in the Offering and, to date, has received interest from potential investors for the balance of the Offered Shares in the Offering.
The securities being offered have not, nor will they be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons in the absence of U.S. registration or an applicable exemption from the U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.
The Offering is scheduled to close on or about September 18, 2024, or such other date as the Company and the Co-Lead Agents may agree and is subject to certain conditions including, but not limited to, the execution of an agency agreement and the receipt of all necessary regulatory and other approvals including that of the TSX Venture Exchange. The Offered Shares shall be subject to a four-month plus one day hold period commencing on the day of the closing of the Offering, under applicable Canadian securities laws.
Brian Paes Braga, CEO of NGE commented, “We are very pleased to announce our brokered private placement and the strong investor interest received; the Offering is expected to bring tier-1 global and premier Canadian institutions on board as shareholders, as well as existing strategic partners and insiders. This timely investment coincides with Colombia's urgent need for reliable domestic natural gas supply as the country faces a rapidly approaching gas shortage. We are confident that our accelerated development of Sinu-9, which has already demonstrated significant resource growth in its initial stages, will play a vital role in bridging this supply gap. As we enter the next phase of development, we are well-positioned to drive production growth, deliver conversion of our large resource base into reserves, and create value for all stakeholders as we continue to execute on our strategic plan. I would like to extend my sincere gratitude to all parties involved for their tireless efforts, as we strive to make a meaningful impact on Colombia's energy landscape.”
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
