Renergen reports huge loss – and still no helium

Renergen’s latest results showed that the more liquid natural gas (LNG) it produced and sold, the bigger its losses. It has also failed to produce commercial helium.

This was revealed in Renergen’s results for the 12-month period that ended 29 February 2024, released this week.

Renergen, through its wholly owned subsidiary Tetra4, commenced producing and selling liquefied natural gas in September 2022.

Tetra4’s LNG production steadily increased in the first half of 2024, averaging approximately 17 tonnes a day.

However, the LNG plant was placed on maintenance from September 2023 to early February 2024.

Respite the maintenance, the positive start to the 2024 financial year contributed to an overall revenue increase of 128.4% – from R12 million to R29 million.

This is where the good news stopped. The revenue was minuscule compared to Renergen’s promised target EBITDA of between R5.7 billion and R6.2 billion by 2027.

Another major challenge is that costs increased far faster than revenue. Its operating expenses increased from R43 million to R147 million, a R104 million increase from the previous year.

Security expenditure increased from R322,000 to R7.5 million, and employee costs increased from R2.8 million to R25.7 million.

Renergen’s LNG selling and distribution expenses went up by 444% – from R1.5 million to R7.9 million.

Simply put, Renergen’s cost of selling liquid natural gas is rising much faster than its revenue from sales. The more it sells, the more money it loses.

As a result, the company reported an operating loss of R135 million. This means that for every R1 of additional revenue Renergen generated, it extended its operating loss by R6.1.

Renergen reported a net loss of R110 million thanks to a R37.2 million tax credit it received. It means the company made more “money” from this tax credit than the revenue it produced.

Renergen reported total LNG production of 2,876 tonnes for the 2024 financial year, which translates to between 8 and 9 tons of LNG per day.

This is significantly less than the 52 tons of LNG per day that Renergen promised would be produced in 2024.

Most significantly, Renergen has still not sold a drop of helium. Despite big promises, it has failed to prove that it could commercially produce and sell helium.

Renergen revenue and operating expenses