Tenaz Energy (OTCPK:ATUU.F) M&A Announcement Transcript

Summary of Tenaz Energy (OTCPK:ATUU.F) M&A Announcement Company Overview - Company: Tenaz Energy - Acquisition: GEMS project, a non-operated interest in the Gateway to the Ems project offshore in the Dutch and German maritime sectors [1][13] Industry Context - Market Position: Tenaz Energy is positioned as the largest producer in the Netherlands, excluding the state company EBM [2] - Production Growth: The acquisition is expected to significantly enhance production capabilities and growth rates in the Netherlands [14] Financial Highlights - Market Capitalization: Approximately CAD $575 million before the transaction [3] - Debt Levels: Projected to increase from CAD $100 million to over CAD $400 million post-transaction [3] - Production Estimates: Pro forma production expected to be 16,200 barrels of oil equivalent per day (boed) for 2025 [3] - CapEx Guidance: Estimated drilling and development capital expenditures (CapEx) for the year are CAD $100 million to CAD $110 million [4][42] Acquisition Details - Transaction Value: Cash consideration of USD $232 million (approximately CAD $322 million) and an equity component valued at CAD $12 million [35] - Contingent Consideration: Up to USD $60 million based on exploration success over the next ten years [37] - Production Multiple: Estimated flowing production multiple of about CAD $48,000 based on expected 2026 production [37] Asset Characteristics - Production Profile: Current production from the N5A well at 77 million cubic feet per day, with expectations to average around 42 million cubic feet per day net to Tenaz next year [21] - Cost Structure: Low operating expenses projected at around €5 per barrel of oil equivalent (BOE) [15] - Environmental Considerations: The project will be powered by a nearby wind farm, making it one of the lowest emission hydrocarbon production projects globally [16] Strategic Implications - Growth Strategy: The acquisition aligns with Tenaz's strategy to build a cornerstone asset base in the Netherlands, enhancing cash flow and free cash flow generation [44][45] - Hedging Strategy: Ongoing hedging activities are expected to secure approximately €100 million in revenue during the hedge period [43] Future Outlook - Development Plans: Plans for further drilling and development, including two development wells and one exploration well over the next year [21][40] - Long-term Potential: Significant long-term exploration potential with additional identified prospects and resources [34] Conclusion - Overall Assessment: The acquisition of GEMS is viewed as a high-growth, high-margin opportunity that strengthens Tenaz Energy's position in the North Sea and aligns with its strategic goals [46][47]