Opinions
Bruce Campbell (2)
Avanti Energy
AVN-X
HOLD
Sep 19, 2024
Stock price when the opinion was issued
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Very impressed from an operational standpoint. Market has oversold stock. Drilled wells that have been successful (top 3 in North America). Recent fundraising cancelled due to weak share price. Drilling program is risky. Complex financing strategy has put pressure on the share price. Continues to hold shares and likes the company.
Believes large opportunity in Helium sector.
Stable demand for Helium - good for business model.
Management team transitioning from energy sector.
Facility in place to process Helium gas.
Expecting production in early 2024.
Free cash flow expected @ ~$40 million in 2025.
Very under followed/under valued stock.
Are in helium in Canada and U.S. with 3 successful wells. After drilling, they're now getting that helium to market. A US partner will process the gas. What price will they get? They project $20-30 million which would allow them to drill even more wells. Helium is far more stable than natural gas. he expects a January effect for AVN. Last year, they raised money for production but impatient shareholders sold, and they've seen tax-loss selling last month. It's one of his larger holdings.
Pipeline in place right now, waiting for facilities. Big thing right now is a pending sales agreement. Management confirms this week that helium price has a chance to move up, and focus is on getting the sales agreement done. Once the agreement is in place, you can step in with a bigger position, because company can then secure debt, build out facilities, and start producing.