Logan Energy announces transformative Montney acquisition, revised 2025 growth outlook

Logan Energy Corp. has announced a transformative move with its agreement to acquire a 50% operated working interest in key Montney assets in Simonette, Alberta. The deal, valued at CAD 70.8 million before adjustments, is set to significantly enhance the company’s production capacity. This acquisition, combined with a CAD 47.7 million equity offering, positions Logan Energy for accelerated growth into 2025 and beyond.

The acquisition marks a strategic investment for Logan Energy, bolstering its liquids-weighted portfolio and expanding its footprint in one of Alberta’s most lucrative hydrocarbon basins. The assets, which currently produce 795 barrels of oil equivalent per day (BOE/d), are expected to provide a substantial boost to Logan Energy’s production targets.

Acquisition to redefine Logan Energy’s growth trajectory

Logan Energy’s acquisition agreement includes not only a 50% working interest in Montney assets but also 100% of overriding royalty rights in the Simonette area. By integrating these assets, Logan Energy anticipates ramping up its production from a previously stated target of 20,000–25,000 BOE/d to 24,000–27,000 BOE/d by 2028. The deal, set to close on December 17, 2024, aligns seamlessly with Logan’s long-term strategy to enhance operational efficiency and maximise returns from oil-weighted inventories.

The acquisition includes strategic infrastructure, such as a 9-million-barrel water reservoir and an oil battery, which are expected to yield operational synergies and reduce costs significantly. Experts within the company project savings of over CAD 10.2 million in infrastructure-related expenses within the first five years of development.

Equity offering fuels strategic investment

To finance the acquisition and strengthen its balance sheet, Logan Energy has launched an equity offering worth CAD 47.7 million. The financing, conducted through a private placement at CAD 0.73 per share, is being led by National Bank Financial Inc. and Eight Capital. Logan Energy intends to utilise the proceeds to repay debt incurred during the acquisition, enabling smoother integration of the new assets into its portfolio.

According to company insiders, the offering will also provide financial flexibility to accelerate drilling and infrastructure development projects in early 2025. Closing of the equity offering is contingent upon the successful completion of the acquisition.

Updated 2024 guidance reflects strategic adjustments

Logan Energy has revised its 2024 guidance to reflect the anticipated impact of the acquisition and equity offering. While average production for 2024 has been adjusted downward to 8,400 BOE/d due to temporary natural gas shut-ins, the company has increased its capital expenditure budget to CAD 157 million. These funds will be directed towards accelerating projects in the newly acquired Montney assets, including drilling and completions scheduled for early 2025.

Despite production adjustments, Logan Energy has maintained its forecast for 2024 adjusted funds flow at CAD 52 million, reflecting cost savings and strategic deferrals.

Pro forma 2025 budget highlights robust growth potential

Logan Energy’s 2025 pro forma budget outlines an ambitious yet achievable plan to grow average production by 63%, reaching approximately 13,650 BOE/d. The company plans to leverage the Montney acquisition to drive material liquids growth, particularly in oil and condensates, which are projected to increase by over 90% compared to 2024 levels.

The budget allocates CAD 195 million in capital expenditures, including CAD 47 million for the acquired assets. Key development activities include drilling nine net wells at Pouce Coupe and five at Simonette, alongside significant infrastructure investments.

Strategic implications for Logan Energy

Logan Energy’s latest moves signal a commitment to long-term value creation through strategic acquisitions and disciplined financial management. By focusing on liquids-rich assets and leveraging existing infrastructure, the company is poised to deliver significant returns to shareholders.

Energy analysts have noted that the acquisition strengthens Logan Energy’s position in the Montney region, a key area for hydrocarbon exploration and production in Canada. The company’s ability to integrate new assets efficiently while maintaining a stable cost structure underscores its operational expertise.

As Logan Energy embarks on this new phase, its strategic investments are expected to drive substantial production growth, operational efficiencies, and enhanced shareholder value, reaffirming its status as a leading player in the Canadian energy sector.