On Wednesday, NG Energy International Corp (GASX:CN) stock received a Buy rating from Clarus (NASDAQ:CLAR) Securities, with an initial price target set at Cdn$2.50. The energy company, which is currently in the third phase of its contract for the Tiburon block, is said to have significant potential due to the estimated ~3Tcf of natural gas in the region.
The company's contract for the Tiburon block involves a structured approach, divided into six phases of 12 months each. NG Energy is presently in the third phase, which focuses on the acquisition, processing, and interpretation of 3D seismic data. However, current community issues have led to a halt in oil and gas activities and the declaration of a force majeure in the region.
Once operations can recommence, NG Energy is set to acquire a 10% working interest (WI) following the completion of the phase 3 seismic work. The company's stake will increase by an additional 15% after the drilling and testing of one exploration well and by another 15% after a second exploration well is drilled and tested.
The analyst's remarks point out the paused state of operations due to community issues but also underline the growth potential for NG Energy's working interest in the Tiburon block. This phased development plan could see the company's interest in the block rise significantly upon the resumption and successful completion of the outlined activities.
Investors are being made aware of the current suspension but are also given a glimpse of the potential rewards that could come with the eventual resumption of NG Energy's operations in the Tiburon block. The Cdn$2.50 price target reflects the analyst's optimism about the company's prospects once it overcomes the current operational challenges.
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