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We feel now is a pretty good time to analyse NG Energy International Corp.'s (CVE:GASX) business as it appears the company may be on the cusp of a considerable accomplishment. NG Energy International Corp., a natural gas company, engages in the acquisition, exploration, development, and exploitation of oil and natural gas assets in Colombia. The CA$230m market-cap company posted a loss in its most recent financial year of US$17m and a latest trailing-twelve-month loss of US$51m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is NG Energy International's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for NG Energy International
NG Energy International is bordering on breakeven, according to the 2 Canadian Oil and Gas analysts. They expect the company to post a final loss in 2024, before turning a profit of US$38m in 2025. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 166% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for NG Energy International given that this is a high-level summary, but, bear in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one issue worth mentioning. NG Energy International currently has a debt-to-equity ratio of 128%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
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There are key fundamentals of NG Energy International which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at NG Energy International, take a look at NG Energy International's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine: