NG Energy International Reports Preparing To Spud First Well At Prospective Flagship Asset, Finalizing First Contract For Gas Sale

Photo: Drilling Rig at Sinu-9 Drilling Property by NG Energy

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The Russian-Ukrainian war may have helped put natural gas in Wall Street’s spotlight.  

Russia is the world’s second-largest producer of natural gas, producing 22,728,734 million cubic feet of the commodity per year. With the world governments applying stringent economic sanctions on the country, the price of natural gas has skyrocketed to levels unseen since early 2008. A glance at the Trade Economics chart shows that natural gas prices rose to $8.7 per metric million British thermal units (MMBtu) on May 5, 2021, representing an over 200% increase in price since the start of 2022. 

Propelling natural gas to further heights of significance may be a report by the IEA. Since 2010, it stipulates, coal-to-gas switching has saved around 500 million tonnes of carbon dioxide, an effect equivalent of adding an extra 200 million – Tesla Inc. TSLA or Rivian Automotive Inc. RIVN – electric vehicles (EVs) running on zero-carbon electricity on the road over the same period.

In times when the supply-demand deficit in natural gas may be significantly skewed, natural gas operator NG Energy International Corp. GASX says it has doubled down on its production efforts, announcing in a press release plans to commence drilling and spudding on its main projects in Columbia.

NG Energy Press Release: Near Term Gas Production and Drilling of Flagship Asset 

On May 5, 2022, NG Energy announced that drilling at the Magico 1 well at Sinu-9, the company’s flagship oil and gas asset is expected to commence this month. 

The Sinu-9 block, located directly East of Canacols (CNE.TO) Nelson Field, has excellent exploration potential for both natural gas and lite oil according to the company in a press release on March 24th

The Magico 1 well will be drilled to a measured depth (MD) of 8,000 feet in three phases using a 1,500 hp hydraulic rig. At least three intervals of interest have been identified with seismic interpretation and will be tested.

The company also:

  • Reached a prepayment agreement for up to four months of estimated production at Maria Conchita, the company's near term production asset
  • Anticipates there will be almost 50% insider and associate participation in up to $20 million CAD convertible debenture unit offering which is expected to close by May 20th

NG Energy has reached an agreement with Energy Transitions S.A.S E.S.P. to acquire 80% of the total gas production volume from the Maria Conchita field. This agreement provides for an interruptible gas supply period between May 2022, when operations are expected to begin, and December 2022. 

The company anticipates entering into a firm gas trading contract with Energy Transitions in December 2022, as required by Colombian law, with an expected five-year term. 

The company, which states it is cognizant of the importance of guaranteeing the future performance of the well by not stressing the initial production, has agreed with Energy Transitions that such prepayment would be at a price of $5.08 per MMBtu for 4 MMSCFD for the first 15 days of gas production thereby giving the company immediate cash flow from the sale of gas. This represents the first cashflow for the company and may be a significant step forward in its mission to help Colombia fuel its clean energy transition. 

After the initial 15 days, and throughout the interruptible contract period, the company expects to ramp up production to 16 MMSCFD.

Click here for more on NG Energy. 

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