• Sun. Jun 16th, 2024

An Undervalued Growth Opportunity in Europe’s Energy Crisis

Microcap European natural gas explorer plans to drill at high-impact sites in Austria and Germany this year. Additionally, they are shooting 3D seismic at another field and applying to double their land portfolio in Germany.

Last month, we wrote about MCF Energy Ltd. (TSXV: MCF) (FRA: DC6) (OTCQX: MCFNF) and its plans to capitalize on Europe’s energy crisis. Since then, the company’s growth prospects have become more apparent and we consider this to be significant. 

During the last month, amid softening European natural gas prices heading into summer, MCF Energy has come under pressure and we believe the recent weakness is transitory. Meanwhile, the company has been executing rapidly and management has done a great job with advancing the business.

Last week, MCF Energy issued an operations update and provided more visibility on the growth prospects that are associated with the business. We are favorable on how the story has advanced so far this year and believe the market is not assigning enough value to the projects the leadership team is executing on. 

As part of the update, management said it expects to start drilling high-impact exploration wells in both Austria and Germany in the third and fourth quarter of this year. So far, MCF Energy has selected the locations of the wells and the permits have either been issued or are in process.

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Plans To Double The Size Of Its Footprint in Germany

Earlier this month, Germany closed its final three operational nuclear plants. The country is the largest energy consumer in Europe and relies heavily on imported natural gas. Germany’s lack of modern domestic gas exploration has created a unique growth opportunity for MCF Energy and we believe the market discounts this aspect of the story.

As part of its growth strategy, MCF Energy is executing on an initiative to double the size of its operating footprint in Germany and we are monitoring how this aspect of the story advances over the next few months. So far, the company’s focus on Germany’s natural gas sector is gaining significant momentum as it is executing on several initiatives to capitalize on this burgeoning market.

A few months ago, MCF Energy expanded its acquisition of German oil and gas interests through its purchase of 100% of Genexco GmbH, a private German oil and gas company. The transaction provided MCF Energy with valuable projects in Germany and an expert in-country team. We are bullish on the growth prospects that are associated with the deal.

Genexco owns a portfolio that includes four exploration licenses, three undeveloped discoveries, and two abandoned fields. Over the next year, Genexco plans to double the size of its license portfolio and has submitted several applications for new project areas. A significant portion of the Genexco acquisition consideration is tied to the success of these new license applications.

When it comes to MCF Energy’s projects in Germany, management considers the Reudnitz project to be a priority. Based on previous studies, the project has significant reserves of methane and helium and is located in the same administrative district as the European Tesla production site.

Going forward, MCF Energy is planning a pilot plant and is preparing to acquire 3D-seismic in the winter 2023/2024 to further explore the potential of the site. We are bullish on the company’s growth prospects in Germany and believe the market has underappreciated the developments that have been made so far. 

Executing On A Major Project In Austria

Austria is another key market for MCF Energy. One of MCF Energy’s most attractive assets is its 20% stake in the Welchau prospect in Austria, a large anticlinal structure in the Austrian Alps. Environmental studies are progressing at Welchau and drilling is anticipated to begin in September, and last 6-8 weeks. Based on its large potential size, success at Welchau could be a positive development for Europe’s energy security.Long lead materials and services for the well have been confirmed, and an experienced local operator has been contracted to drill the well. 

From a geological and engineering perspective, the prospect is fully prepared for drilling operations and we are bullish on the potential value that is associated with the project. We believe that MCF Energy is well positioned to capitalize on the Welchau prospect and expect the management team’s experience to play a significant role in the success of the business. 

Executing on an Organic and Inorganic Growth Strategy 

We believe that MCF Energy has been ahead of the curve when it comes to the energy opportunity in Europe (especially Germany). We believe the region has been overlooked and expect the company’s first mover advantage to serve as a major growth driver for the business over the long-term.

MCF Energy has previously said that its top priorities are successfully testing the prospects it has in Austria and Germany, and its aggressive acquisition strategy (focused on new projects and concessions).  In addition to the company’s ongoing projects, the management team is focused on identifying new opportunities.

During the last year, MCF Energy has been focused on researching the European energy market. By researching projects and utilizing strategic relationships, the company has been able to create a database of acquisition targets in Europe (especially in Germany). This focus has helped MCF Energy identify new opportunities and stay ahead of the competition.

An Undervalued Growth Opportunity 

The ongoing war in Ukraine has exposed a severe vulnerability in Europe’s energy market. The continent has scrambled to provide alternative sources of Russian gas, has urged rationing, and has even increased its mining of coal to address shortfalls. We are favorable on MCF Energy’s strategy to acquire valuable and scalable natural gas assets in the EU and believe the business has significant upside potential. 

MCF Energy is led by a management team with a proven track record of success in the energy sector. The founders and leaders of the firm have previously increased production at Europe’s largest heavy oil field by 4000% with Bankers Petroleum and managed Europe’s largest oil and gas exploration in six countries with BNK Petroleum.

By having a strong leadership team, MCF Energy can execute on a calculated growth strategy and we want our readers to be aware of this aspect of the story. Over the next year, we expect more investors to become aware of MCF Energy as the company continues to deliver on its milestones.

Company Relationship Disclosure

OTB is responsible for the OTB opinions provided in this disclosure except all sources or information provided by other parties were not verified or authenticated and OTB does not undertake to confirm or substantiate or be responsible for such information provided by other parties.

Any Content posted regarding a Profiled Issuer is not a solicitation or recommendation to buy, sell or hold securities. We cannot and do not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. All information should be independently verified. We are not responsible for errors or omissions in our publications, and any opinions expressed are subject to change, without notice. We do not, nor are we under any obligation to undertake due diligence or investigation or authenticate and verify whatsoever regarding Profiled Issuers or any Content posted in relation thereto and we do not receive any verification from the Profiled Issuer regarding the Content we disseminate. Similarly, while we endeavor to facilitate the provision of quality information, we are not responsible for any loss or damages caused or alleged to have been caused by its use nor verify or authenticate or update such information.

Pursuant to an agreement between Spotlight Media and MCF Energy Ltd. we have been hired for a period of 180 days beginning January 11, 2023 and ending July 11, 2023 to publicly disseminate information about MCF Energy Ltd. including on the Website and other media including Facebook and Twitter. We are being paid $3,000 per month by MCF Energy Ltd. and were paid “ZERO” shares of unrestricted or restricted common shares. We plan to sell the “ZERO” shares of MCF Energy Ltd. that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of MCF Energy Ltd. in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

This article contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs regarding future performance are “forward-looking statements”. Forward-looking statements can be identified by the use of words such as “expects”, “does not expect”, “is expected”, “believes”, “intends”, “anticipates”, “does not anticipate”, “believes” or variations of these words, expressions or statements, that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, will occur or will be realized. Such forward-looking statements involve risks, uncertainties and other known and unknown factors that could cause actual results, events or developments to differ materially from the results, events or developments expected and expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, dependence on obtaining and maintaining regulatory approvals, including the acquisition and renewal of federal, provincial, state, municipal, local or other licenses, and any inability to obtain all necessary government authorizations, licenses and permits to operate and expand the Company’s facilities; regulatory or policy changes such as changes in applicable laws and regulations, including federal, state and provincial legalization, due to fluctuations in public opinion, industry perception of integrative mental health, including the use of psychedelic-assisted therapy, delays or inefficiencies or any other reason; any other factor or development likely to hamper the growth of the market; the Company’s limited operating and profitability track record; dependence on management; the Company’s need for additional financing and the effects of financial market conditions and other factors on the availability of capital; competition, including that of more established and better funded competitors; the impact of the Russia-Ukraine conflict on the global economy; the continued impact of the COVID-19 pandemic; and the need to build and maintain alliances and partnerships, including with research and development companies, customers and suppliers. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. Despite the Company’s efforts to identify the main risk factors that could cause actual measures, events or results to differ materially from those described in forward-looking statements, other risk factors may cause measures, events or developments to materially differ from those anticipated, estimated or intended. 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 forward-looking statements. The Company does not undertake to revise forward-looking statements, even if new information becomes available as a result of future events, new facts or any other reason, except as required by applicable laws

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