Renergen is producing far less liquefied natural gas (LNG) than expected and is selling it at far lower prices than planned.
This was revealed in the company’s interim financial results for the six months ended 31 August 2023.
Renergen generated R23.8 million over the six months, much less than the guidance shared with investors in March.
To understand the full extent of the disappointment, it is important to look at what Renergen said in recent years.
Renegen said in its guidance that it aims to produce between 2,500 GJ and 2,700 GJ of LNG per day from its phase one expansion.
Last year, Renergen CEO Stefano Marani told Matador Invest they would sell LNG at the high R200 to low R300 mark.
He added that the plant operates for 345 days per year, which made it possible to calculate the revenue it planned to generate.
According to these figures, Renergen should generate between R242 million and R298 million in annual revenue from LNG extraction.
However, the latest results revealed that Renergen extracted only 119,309 GJ in 175 days. It translates into 682 GJ of LNG per day.
Using these figures, it further showed that Renergen sold its liquified natural gas LNG for only R199.48 per GJ.
This is around 67% of the approximate R300 selling price for LNG, which Marani mentioned in his interview with Matador Invest.
This means that Renergen produced significantly less LNG than expected and sold it for less than its CEO projected.
Investors’ disappointment was exacerbated by the revelation that Renergen had not sold any liquid helium (LHe) during the reporting period.
Marani explained that Renergen’s Phase 1 of the Virginia Gas Project was seen as a “proof of concept” to show what is possible.
However, the first phase had been riddled with problems, delays, and missed deadlines. To date, Renergen has failed to prove that it can produce LNG and LHe profitably.
Daily Investor asked Renergen about the missed targets, but the company said it could not share this information with selective individuals or media.
“The information will be communicated formally on SENS with the market and in our subsequent quarterly update,” Renergen said.