Opinions
Greg Dean, CFA
Logan Energy
LGN-X
BUY
Feb 13, 2025
Stock price when the opinion was issued
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He has lots of respect for management and has made money in their prior ventures. It is a proven and ambitious team. It is interesting because it is growing revenue and production by 200% as well as cash flow. Has under two terms of debt. He likes their longer term development plan. They have an interesting and smart view of infrastructure. They are not paying out cash flow in dividends but are using it for developing per share growth. Ultimately they don't need capital markets.
If you are looking for exposure to LNG, Tourmaline would be good.
Logan market cap is now $401M, with the stock down 3%YTD. It trades at 10X earnings, no dividend. It has no reported debt but not much cash either. Revenue is expected to grow more than 50% this year and next, hitting close to $300M in 2026. EPS 7c to 11c expected next year. We do not see a cash flow projection, but with its production growth it should be decent, though offset by lower market prices somewhat. Production grew more than 30% in the Q1, to close to 10,000 B/d (34% liquids). We would consider management quite competent and insiders own 16% currently. It now has nine analysts following the company, all at BUYS. Average target price is $1.18. Considering its growth, balance sheet, management and valuation, it looks to be a very solid mid-cap in the sector to us.
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Whenever he can, tends to avoid commodities, currencies, interest rates, and government policy. When he does that, things go well. The caveat is that in oil & gas you can find companies that are in the very early stages of growth.
He owns this one. Management team is from the Spartan group with a proven track record. Lots of growth potential here. Balance sheet has debt to cashflow under 1, which is a requirement for him.