Jericho Energy Ventures Inc. (JEV:TSX.V; JROOF:OTC PINK: JLM:FRA) gained additional research coverage as Atrium Research initiated on it with a Buy rating and a CA$0.40 per share target price, reported analyst Nicholas Cortellucci in a June 15 note.
"Jericho Energy is positioned for the energy transition by owning and operating both cash-flowing hydrocarbon joint venture assets and innovative hydrogen applications," he wrote. "The future of the company lies with its patented Hydrogen Technologies."
Significant Return on Investment
Given the Canadian energy company is currently trading at about CA$0.24 per share, the potential return for investors is significant, at 67%, Cortellucci noted.
The analyst presented the reasons why Jericho is a compelling investment opportunity.
Assets and their upside
Jericho's oil and gas joint venture assets in exploration and production properties in Oklahoma are generating record cash flow and production is steadily increasing. In the last 12 months, its 61 active wells have produced an average of 305 barrels of oil per day and 1,959 cubic feet of natural gas per day.
"This business allows Jericho to generate nondilutive cash flow which can be reinvested in the high-multiple hydrogen industry," wrote Cortellucci.
In this space, Jericho owns Hydrogen Technology, which developed a zero-emissions boiler technology for the industrial heat and steam industry. The company's cleanH2steam Dynamic Combustion Chamber Boiler produces steam and the byproduct water, using the power of hydrogen combustion in oxygen. They designed this system to replace traditional fossil fuel-based combustion boilers.
"The patented technology is currently going through engineering studies with 34 customers, and we expect this to result in firm contacts over the next year," noted Cortellucci.
Jericho also owns two minority interests in companies with technologies that solve key problems in the hydrogen value chain: 6.5% of H2U Technologies and 10.3% of Supercritical.
"These investments have massive upside potential in the likely event of a sale in the medium/long term," Cortellucci commented. "Jericho wants to own the entire hydrogen supply chain through its many ventures, which ultimately will result in efficiencies and cost reductions across the ecosystem."
Seasoned team, insider ownership
Cortellucci pointed out that Jericho's executives and directors all have extensive expertise in hydrocarbon and renewable energies. At the helm is Brian Williamson, president and chief executive officer (CEO), who brings to the table knowledge and experience gained from his 25 years in the energy industry.
Management has skin in the game, cumulatively owning 10% of Jericho's stock. Of that, Head of Corporate Strategy Ryan Breen owns 7%, Williamson owns 1% and two directors own the remaining percentage.
"Jericho also has various key strategic shareholders that we would not expect for a company of its size," noted Cortellucci.
Owning 36%, they include McKenna & Associates; the Graves family, which is prominent in the energy space in Oklahoma; Edward Breen, DuPont's chairman and CEO; Belzberg & Co., the investment firm headed by Take-Two Interactive CEO and Chairman Strauss Zelnick; the Hegna family; and Leo Wealth.
What to watch for
Jericho has three significant potential catalysts on the horizon, noted Cortellucci.
One is an increase in oil and gas production, which is expected this year. It is also anticipated the company will land contracts related to its hydrogen steam boiler system, at any given time. These could push up the share price. The third possible stock-moving event is Jericho receiving additional governmental funding.
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