Criterium Energy Ltd (TSX-V: CEQ) has reached another important stage in the development of its Indonesian gas assets, with the signing of a definitive Gas Sales Agreement for the SE-MGH project.
The latest research note from Auctus Advisors LLP, dated 31 August 2026, highlights the agreement as a significant step towards first gas, which is now expected within three to four weeks. Auctus has reiterated its C$0.40 per share target price for Criterium Energy, compared with a share price of C$0.14 when the research was published.
SE-MGH Gas Sales Agreement secured through 2040
Criterium has signed a definitive Gas Sales Agreement with PGN, PT Perusahaan Gas Negara, covering gas sales through to 2040.
Importantly, the agreement incorporates a take-or-pay commitment and establishes a sales price at the upper end of the previously indicated US$6.5 to US$7.6 per mcf range. The agreed US$7.6 per mcf price is 9% above the US$7 per mcf assumption previously used by Auctus.
The next contractual milestone is the Facility Sharing Agreement, which Auctus expects to be signed within approximately a week of its research note.
Development work at SE-MGH is also well advanced, with the overall project estimated to be approximately 85% complete. Remaining activities include the installation of hot bends, trenching and backfilling, commissioning and start-up.
Key Criterium Energy operational highlights
- Definitive Gas Sales Agreement signed with PGN, covering sales through 2040.
- Gas sales price agreed at US$7.6 per mcf, 9% above Auctus Advisors’ previous US$7 per mcf assumption.
- SE-MGH development approximately 85% complete.
- First gas expected within three to four weeks of the 31 August 2026 research note.
- Initial SE-MGH production expected at approximately 5 to 8 mmcf/d.
- Auctus forecasts approximately US$12 million of operating cash flow in 2027, before debt service.
- Criterium plans additional gas production from N-MGH, Macan Gedang and Cerah.
- Second-quarter 2026 production was 627 bbl/d.
First gas could change Criterium’s financial position
The importance of SE-MGH extends beyond simply adding another production stream. Auctus believes the start of gas sales could begin to improve Criterium’s balance-sheet position and materially increase its cash-generating capacity.
Research Analyst Stephane Foucaud wrote:
“First gas at SE-MGH is expected in 3–4 weeks and represents a rerating event, as it begins to address balance-sheet weakness. We forecast ~US$12 mm of operating cash flow in 2027 (pre-debt service), marking a step-change in financial capacity.”
That forecast illustrates why the timing of first gas is central to the broker’s investment case. The initial SE-MGH phase is expected to produce between 5 and 8 mmcf/d, but Auctus sees this as only the first part of a broader gas development programme.
Criterium plans to add N-MGH, which could contribute another 2 to 3 mmcf/d, followed by Macan Gedang with approximately 5 mmcf/d. Cerah represents another potential development, while drilling at both Macan Gedang and Cerah is currently scheduled for 2027.
Auctus sees additional valuation potential
Auctus currently calculates Criterium’s 2P net asset value at C$0.13 per share.
The broker estimates that taking a final investment decision on the Macan Gedang gas project by the end of 2026 could add C$0.09 per share. It attributes a further C$0.14 per share to the Cerah gas development, taking the potential combined valuation to C$0.36 per share.
There is also further potential attributed to Criterium’s oil resources. Auctus calculates an additional C$0.20 per share of unrisked net asset value from the company’s oil 2C resources, including the waterflood opportunity and Lemat formation.
On this basis, Auctus reports an overall unrisked NAV of C$0.59 per share and a risked exploration NAV, or ReNAV, of C$0.39 per share. The broker has maintained its C$0.40 per share target price.
Thoughts:
Criterium Energy is approaching a potentially important operational milestone. The signing of the long-term Gas Sales Agreement removes one of the key commercial steps required before production, while the agreed US$7.6 per mcf sales price is better than the assumption previously used by Auctus Advisors.
Attention now turns to completing the remaining SE-MGH work and achieving first gas. If the timetable outlined in the research note is met, the project could begin contributing gas revenues within weeks, with further production opportunities at N-MGH, Macan Gedang and Cerah offering potential follow-on growth.
