Eon NRG Secured PRB Permitting Approval; Stock Soars 25%

Eon NRG Secured PRB Permitting Approval; Stock soars 50%

US onshore energy company, Eon NRG Limited (ASX: E2E) has secured all the necessary state and federal approvals to commence drilling of its first PRB well, Govt Kaehne 9-29. 

In an announcement made on 25th July 2019, the company confirmed that the permitting has been approved to drill the Powder River Basin (PRB) well, Govt Kaehne 9-29 and the ground on the well has been broken to commence the building of the well pad and access road for the new well. As per the release, it is expected that the Spudding of the new well will occur in September 2019.

Following the release of this news, the stock of Eon NRG skyrocketed 25% by the end of trading session on 25 July 2019.

The application for the permit to drill (APD) was filed last month as announced on 6th June 2019, following the finalisation of all the necessary surveys, environmental studies and surface use agreement.

The company has high hopes for its Govt Kaehne 9-29, as offset wells generally have good initial production rates and estimated ultimate recovery (EUR), plus the well is located in a structurally high position in a reservoir, which is oil-rich with 30-40’ of pay expected in the Dakota Formation.

The company intends to drill the Govt Kaehne 9-29 to a depth of ~6,300 feet. It is expected that it will take around 12 days for the well to reach to its total depth. Once the total depth is reached, drill stem testing (DST) and open hole logging will be performed to evaluate the reservoir deliverability. It is anticipated that it will take another 45-60 days for the company to complete the well for production.

To support the drilling at Govt Kaehne 9-29 well, the company already raised $2.544 in March 2019 via a renounceable rights issue. In an update provided on 28th June 2019, the company informed that following the completion of Govt Kaehne 9-29 well’s cost analysis, Eon has chosen Capstar as the drilling rig contractor.

Cashflow Analysis: In the first quarter of 2019, the company received US$1,031,000 of cash as receipts from customers. During the quarter, the company spent US$105,000 of cash on development activities, US$414,000 on production activities, US$348,000 on staff casts and US$166,000 on administrative costs. The net cash used for operating activities in Q1 2019 was US$94,000. During the quarter, the company received $1,620,000 from financing activities, which includes US$1,802,000 received from the issuance of shares. The cash and cash equivalents at the end of Q1 2019 were US$2,687,000, much higher than the cash balance of US$1,169,000 from the previous quarter.

In Q1 cash flow report, the company estimated that in June Quarter, it would receive around US$1,152,000 of cash as receipts from customers. The estimated cash outflow for the June quarter included US$76,000 for exploration and evaluation activities, US$418,000 for production, US$262,000 for staff costs and US$162,000 for administrative and corporate costs.

About Eon NRG: Eon is an experienced, low cost oil and gas production company, which has the potential to add significant production from the upcoming drilling program. Over the past few years, the company has worked hard to develop value-creating opportunities. In addition to the PRB project, the company’s oil and gas division has several other assets which include Borie Oilfield, Silvertip Field and California Oilfield.

Along with the oil and gas division, the company also has a battery minerals division, from which the company intends to provide a range of new technologies, energy supply and storage solutions in the future. Last year, the company secured rights over 42 lode claims covering 840 acres of land in the Stillwater Range, Nevada, covering a number of historic mine workings. The company is planning to continue its low-cost exploration activities on Nevada prospects and has an intention to cater to the growing demand of the battery minerals in the future.

Recent Updates

Laon Facility Renewal: In the month of June 2019, the company announced its decision regarding the extension of existing loan facility’s maturity date from ANB Bank for three months under the existing terms and conditions. The extension is expected to provide more time to the company for assessment of its Govt Kaehne 9-29 well and PRB prospects.

Senior Management Appointment: In June 2019, the company announced the appointment of industry veteran, Simon Adams as an Executive Director. It is expected that Simon’s extensive experience of working with both private and public companies as well as his finance and corporate knowledge will add value to the company’s Board.

In the month of May 2019, the company announced the appointment of highly experienced, Matthew McCann as a Chairman, following the retirement of Mr Stowell. In his 25 years of experience, Matthew McCann held various senior level roles in big private and public companies, making him a valuable member of the Board.

Stock Performance: The company’s stock, at market close on 25th July 2019, was trading at a price of 0.005, with a market capitalisation of circa $3.08 million and a daily volume of ~4,228,710.


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