NG ENERGY ANNOUNCES FILING OF Q3 FINANCIAL RESULTS

CALGARY, AB, Nov. 26, 2024 /CNW/ – NG Energy International Corp. (“NGE” or the “Company“) GASX GASXF is pleased to announce that it has filed its financial results for the three and nine months ended September 30, 2024. The Company’s consolidated financial statements and management’s discussion and analysis for the three and nine months ended September 30, 2024 are available on the Company’s website (www.ngenergyintl.com) and profile on SEDAR+ (www.sedarplus.ca).

Financial Highlights:

• Quarterly revenue of US$9.1 million versus US$2.5 million in Q3 2023, a 270% increase YoY, and YTD revenue of US$29.5 million;
• Quarterly cash flow from operations of US$6.3 million versus US$(1.1) million in Q3 2023, and YTD cash flow from operations of US$16.2 million;
• Quarterly funds flow from operations (“FFO“) of US$3.7 million versus US$(1.8) million in Q3 2023, and YTD FFO of US$13.7 million;
• Record realized average natural gas pricing during the quarter of US$8.07/Mcf;
• Operating netback of US$5.45/Mcf versus US$1.92/Mcf in Q3 2023; and
• Average gross production of 15.0 MMcf/d (12.0 MMcf/d net).  

Operational Highlights:

• Successful completion of the Brujo-1x well in 3 zones;
• Successful completion of the construction of the Phase 1 28.3-kilometre pipeline connecting the Sinu-9 Block to Promigas’ national pipeline transportation network at the Jobo Station;
• Began commissioning of the pipeline to between 1,100 – 1,400 PSI, which has subsequently been completed;
• Began commissioning of the early production phase of the Central Processing Facility 1 (CPF-1), which has subsequently been completed; and
• Signed a Memorandum of Understanding (the “MOU“) with infrastructure partner, INFRAES, for the completion of up to an additional 76 MMcf/d of pipeline capacity from the Sinu-9 Block, which is anticipated to be completed over the course of 15 months and constructed in two stages, following the execution of a definitive agreement. The MOU will accelerate the Sinu-9 Block development plan, which will help address Colombia’s domestic natural gas supply shortage.

Corporate Highlights:

• Appointment of Mr. Don Sewell as President;
• Appointment of Mr. Leonardo Chavez as Vice President of Operations; and
• Successfully completed a C$30 million equity financing, which welcomed several premier institutions as shareholders, as well as greater commitments from existing strategic partners and insiders. The net proceeds will be used to accelerate the next phase of the Company’s growth.

Brian Paes-Braga, Chairman and Chief Executive Officer, commented, “This quarter has seen significant progress for our company across all aspects of the business, highlighted by the successful completion of crucial works to Sinu-9 Phase 1 infrastructure, allowing us to bring the field into production subsequent to the end of the quarter. I want to again extend my gratitude to our operational and technical teams, our midstream partners, our working interest partners, as well as all our consultants and the communities in which we work that have been such key stakeholders throughout our development activities this year. We are excited about ramping up production at Sinu-9 and the next phase of expansion, as our company and partners continue to add much-needed capacity and supply to the Colombian marketplace which continues to experience a major deficit. The addition of key management and new employees has also led to better execution, a growing culture of excellence and has been the start of foundational building blocks in an effort to achieve all our ambitious operational goals as we look forward into continued industry leading growth for our critical domestic energy business.”

The Company experienced a slight decrease in average daily production at Maria Conchita over the quarter due to temporary compressor issues and downtime with its contract partner. The Company is actively implementing a plan to reconfigure the compressor setup to enhance operational efficiency and mitigate risks, ensuring a reliable backup system. This work is ongoing and expected to be completed by the second week of December. In parallel, the Company is implementing expansionary compression plans in preparation for the drilling of the Aruchara-4 well, scheduled for the first quarter of 2025, which would see total capacity increase to up to 25 MMcf/d. Lastly, the Company is currently conducting a workover of the Aruchara-1 well, cleaning up 285 feet of sand using coiled tubing to better expose the 3 perforated zones to the wellbore, with the goal of enhancing productivity.

Brian Paes-Braga continued, “At Maria Conchita, we experienced intermittent downtime as a result of temporary compressor issues. Higher gas prices have offset some of these short-term challenges, leading to continued strong financial performance. These issues are actively being resolved and we look forward to the much anticipated drilling of Aruchara-4, which will be offsetting the extraordinary 65.2 MMcf/d test at Aruchara-3 last year. The re-scoping of Maria Conchita continues to be a focus for our technical team as we better interpret the over 1,000-foot gas pay zone experienced in drilling Aruchara-3 last year.”

“Lastly, I want to welcome and thank our new institutional shareholders that supported us in our September equity raise. This was an opportunity for NGE to welcome long-term investors to our shareholder registry, something that will be a core focus into the end of the year and for 2025 as we continue to institutionalize the business and shareholder list.”

Jorge Fonseca, Chief Financial Officer, commented, “Looking ahead to Q4, we are excited to see the commencement of production and the ramp-up from Sinu-9 and how this affects our financial performance for the first time. This milestone marks a significant transition for our company, as we move towards a profitable business and have successfully brought online our second gas field, resulting in regional diversification as well as doubling the number of wells in production, resulting in continued de-risking of the business. The successful completion of infrastructure at Sinu-9 provides a solid foundation for hyper growth, enabling us to scale up production while enhancing our financial and operational performance. We are committed to delivering long-term value for our shareholders as we accelerate our operations and solidify our position in the Colombian energy market.”

About NG Energy International Corp.

NG Energy International Corp. is a growth-orientated natural gas exploration and production company focused on delivering long-term shareholder and stakeholder value through the discovery, delineation and development of large-scale natural gas fields in the Americas, supporting energy transition and economic growth. NGE’s team has extensive technical and capital markets expertise with a proven track record of building companies and creating significant value in South America. In Colombia, the Company is executing on this mission with a rapidly growing production base and an industry-leading growth trajectory, delivering natural gas into the premium-priced Colombian marketplace (~US$8/MMBtu) with projected triple digit production growth over the next 2-3 years towards a production goal of 200 MMcf/d. The Company expects to achieve a production increase of >150% exiting 2024 and has seen a 551% year-over-year increase in 3P reserves, 314% year-over-year increase in 2P reserves and 241% increase in 1P reserves. To date, over US$100 million has been invested in the exploration and development of Sinu-9 and Maria Conchita with significant contributions from insiders who currently own approximately 32% of the Company. For more information, please visit SEDAR+ (www.sedarplus.ca) and the Company’s website (www.ngenergyintl.com).

Cautionary Statement Regarding Forward-Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release, including, without limitation, statements related to the timeline for completion of the pipeline capacity increase at the Sinu-9 Block, the timeline for completion of the compressor back-up system at the Maria Conchita Block and the drilling of the Aruchara-4 well. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption “Risk Factors” in the Company’s most recent Management Discussion and Analysis and its Annual Information Form dated April 26, 2024, which are available for view on SEDAR+ at www.sedarplus.ca. These risks include but are not limited to, the risks associated with the oil and natural gas industry, such as exploration, production and general operational risks, the volatility of pricing for oil and natural gas, the inability to market natural gas production and changes in natural gas sale prices, changing investor sentiment about the oil and natural gas industry, any delays in production, marketing and transportation of natural gas, drilling costs and availability of equipment, regulatory approval risks and environmental, health and safety risks. Forward-looking statements contained herein are made as of the date of this news release, and the Company disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management’s estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Abbreviations

The abbreviations set forth below have the following meanings:

Information Regarding the Preparation of Reserves and Resource Information

Sproule International Limited (“Sproule”), an independent qualified reserves and resources evaluator, has conducted the reserves and resource evaluation for Maria Conchita and Sinú-9 in accordance with the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”). It adheres in all material aspects to the principles and definitions established by the Calgary Chapter of the Society of Petroleum Evaluation Engineers regarding annual reserve and resource reports that are being released in the public domain. The COGE Handbook is incorporated by reference in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.

The Company’s Form 51-101F1 – Statement of Reserves Data and Other Oil and Gas Information for the fiscal year ended December 31, 2023, prepared by Sproule in accordance with the COGE Handbook and has an effective date of December 31, 2023 (the “2023 51-101F1”) was filed on SEDAR+ on April 26, 2024. As per the requirements of Form 51-101F1, since Maria Conchita and Sinú-9 are both located in Colombia, the Company has disclosed its reserves in the 2023 51-101F1 on an aggregated basis. The reserves in the 2023 51-101F1, which are attributed to Sinú-9 are based on the Sinú-9 Report (as defined below) and the reserves in the 2023 51-101F1, which are attributed to Maria Conchita are based on the Maria Conchita Report (as defined below). The Company uses natural gas liquids and conventional natural gas as the two product types to report the Company’s reserves.

The report entitled “Evaluation of the P&NG Reserves and Resources of NG Energy International in the Sinú-9 Block, Colombia” (the “Sinú-9 Report”) was prepared by Sproule with an effective date of December 31, 2023 and a preparation date of December 21, 2023. Sinú-9 is located in the Department of Córdoba, Colombia. The Company’s working interest in Sinú-9 is 72%, subject to payment of ANH sliding scale royalties. Reserves and resources attributed to the Hechizo, Brujo, Magico, Mago, Hechicero, Encanto, Milagroso, Porquero, Embrujo, Ensalmo and Sortilegio zones have been included in the Sinú-9 Report.

The report entitled “Evaluation of the P&NG Reserves and Resources of NG Energy International in the Maria Conchita Block, Colombia” (the “Maria Conchita Report”) was prepared by Sproule with an effective date of December 31, 2023 and a preparation date of December 20, 2023. The Company holds an 80% working interest in Maria Conchita, which is located in the Department of La Guajira, Colombia. Reserves and resources attributed to the H1, H1A, H1A1, H1B, H2, H2B, H3, H4 and LM2 zones have been included in the Maria Conchita Report.

For additional information regarding the Sinú-9 Report, the Maria Conchita Report and the reserves information contained in this news release please see the 2023 51-101F1 filed on SEDAR+ on April 26, 2024, and the Company’s news release dated December 27, 2023 entitled “NG Energy Announces 551% YOY Increase to 3P Reserves”.

Caution Respecting Reserves Information

The determination of oil and natural gas reserves involves the preparation of estimates that have an inherent degree of associated uncertainty. Categories of Proved, Probable and Possible reserves have been established to reflect the level of these uncertainties and to provide an indication of the probability of recovery. The estimation and classification of reserves requires the application of professional judgement combined with geological and engineering knowledge to assess whether or not specific reserves classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk, probability and statistics, and deterministic and probabilistic estimation methods is required to properly use and apply reserves definitions.

The recovery and reserve estimates of natural gas liquids and natural gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein. The estimated future net revenue from the production of the disclosed natural gas reserves does not represent the fair market value of these reserves.

Information Regarding Reserves

Reserves are estimated remaining quantities of commercially recoverable oil, natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are further classified according to the level of certainty associated with the estimates and may be subclassified based on development and production status.

“Proved reserves” are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated Proved reserves.

“Probable reserves” are those additional reserves that are less certain to be recovered than Proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable reserves.

“Possible reserves” are those additional reserves that are less certain to be recovered than Probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated Proved plus Probable plus Possible reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves.

The qualitative certainty levels referred to in the definitions above are applicable to “individual reserves entities” (which refers to the lowest level at which reserves calculations are performed) and to “reported reserves” (which refers to the highest-level sum of individual entity estimates for which reserves estimates are presented). Reported reserves should target the following levels of certainty under a specific set of economic conditions:

• at least a 90% probability that the quantities actually recovered will equal or exceed the estimated Proved reserves; and
• at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated Proved plus Probable reserves.

A qualitative measure of the certainty levels pertaining to estimates prepared for the various reserves categories is desirable to provide a clearer understanding of the associated risks and uncertainties. However, the majority of reserves estimates will be prepared using deterministic methods that do not provide a mathematically derived quantitative measure of probability. In principle, there should be no difference between estimates prepared using probabilistic or deterministic methods.

Each of the reserve categories (Proved and Probable) may be divided into developed and undeveloped categories as follows:

“Developed Producing reserves” are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

“Developed Non-Producing reserves” are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown.

“Undeveloped reserves” are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (Proved, Probable and Possible) to which they are assigned and expected to be developed within a limited time.

In multi-well pools it may be appropriate to allocate total pool reserves between the developed and undeveloped subclasses or to subdivide the developed reserves for the pool between developed producing and developed nonproducing. This allocation should be based on the estimator’s assessment as to the reserves that will be recovered from specific wells, facilities and completion intervals in the pool and their respective development and production status.

Estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. Additionally, all estimates of future net revenue, whether calculated without discount or using a discount rate, do not represent fair market value.

SOURCE NG Energy International Corp.

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