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I struggle to see Char holding on to more than 20% of the licenced area and will be happy if they do as long as terms include commitment to operation date. This is far better than being held to ransom by bond holders. I can’t see anyone acceoting the risk to finance and develop the field without having controlling stake, their upside would need to be proportionate, regardless Char having taken the initial risk, there still a massive gain for char and confirmation of increases in volumes will offset such. Chariots webcasts to-date give me the impression of a remote computer screen monitoring the gas flow and each Friday checking the EFT payments. They have not demonstrated any development of administration to support the the development and operation. It’s all been third party (consortium) akin to the visions of 3rd party engineering consultants validating a proposal. Char have been very loose with time frames yet talk the talk as if it all just a case of dotting the i’s..
Not taking away what has been achieved but believe Char’s position is much as they originally presented themselves to be, early field explorer and as such much like specialist gold mining explorers that build a portfolio on realising upside through royalty’s. Char have much to gain by farming out for a reduction in licence share. Q is how long to first production. I am not negative the investment case although weary of broker targets. Their notes assume uplift in prospects yet the costs of such remains constant. Continuing to hold in hope
Gas supply required for decades.
China just signed long term lng contract to secure supply.
See.
https://uk.finance.yahoo.com/news/gas-stay-decades-fossil-fuel-010000495.html?soc_src=social-sh&soc_trk=ma
Jimmy
Ian,
I am not suggesting that chariot are selling 51% of its 75% licence holding . It’s my speculation that chariots 75% interest will split approx 40% to chariot and 35% to farminee.
The legals on such a deal are likely to be very complicated involving three exploration licence farm out agreements, and a non recourse finance loan to cover unexpected capex cost overruns and joint operating agreements acceptable to three parties for the licences and production licences. Hence a possible reason for a delay. Fortunately, chariot has an in house counsel with specific expertise in all these areas.
The value of chariot after a farmout will comprise of the implied value of the asset sold and by implication the pro rata value of the asset retained.
From the investor farminee they will want to get payback on their investment from production cashflow within 5 years of first production.
I suspect we are very close to finding out the deal,
However, we do know that it’s likely to be structured in such a way as chariot will not need equity funding to get to first production cashflow and that there is a funded pathway to increase reserves substantially and daily production to 150 mmcf per day if the low risk low cost drilling is successfull.
Jimmy
A true wizard then?
Oops.
Internet issues, message duplicated
How many years will it take to get 1.6 t out of the ground at a rate of 105....150.....mayor infrastructure investment is required to pull it off!!!
Yep still in.
Jimmy
25% of the licences is owned by Moroccan Government, if a Farmee takes 51% that only leaves 24% for Chariot and any dividends from the profits would be based on the 24% for all the existing shareholders. The 24% would also be the basis of the valuation of the Company and the shares with the inclusion, of course, of any other value Chariot has re the Hydrogen and Solar sides and also any cash injection by the Farmee (at say £50m that would be about 5p per share) as part of the deal.
Am I understanding that correctly?
I am guessing a Farmee would take a % of the licences in the deal rather than a stake in the whole Company. The deal will be a very complicated contract taking many pages of legal/technical wording which will have taken a lot of time to put together and that is after the time-consuming job of filtering out the winner from all the bids. You don't simply take the highest offer - you need to be confident you are getting the best overall value for the shareholders including the certainty of the Farmee to be able to deliver.
I've been there twice with 2 takeovers - the latter, a PLC, containing a serious mistake in a complicated equation which would have cost my selling client about half his proceeds had I not spotted it before it was signed.
Ian
How many years will it take to get 1.7t gas out of the ground at a rate of 105....150........
Need a whole new infrastructure to get that much gas out in 10-20 years..... £££
Ian,
Thank you for identifying the small error in my calculations, fat finger syndrome.
The issue which I was trying to address in a very clumsy way is the very low risk pathway to gross proven gas volumes of over 1.6 tcf .
Now technically chariot is correct to report that the chances of success of increasing proven gas volumes to over 1.6 tcf are between 49% to 61% , however the success rate onshore for similar geology with similar geophysical seismic signatures is 85%.
Now mr market is assigning this substantial increase in proven gas volumes with a nil chance of success , but big oil in California , I expect will recognise this low risk potential, and pay accordingly.
Let’s wait to see what’s announced , but if chariot keep from 40 to 50% of the licence this is incredible value in the share price now.
Chariot have set out the pathway to deliver this outcome without diluting shareholding equity.
Chariot stated, there was a competitive biding round for the oppportunity and the deal is in final stages, company brokers know the deal in my view and the re iterate guidance at 55 p, but that just the start.
Jimmy
Jim
637 proven gas, + maybe 735 , = 1372 not 1392, + maybe 280, gives 1672 - which is >1.6t . but isn't that a "maybe " rather than a "clear " pathway? Whatever, they are big numbers whichever way you count them.
Reading your previous posts tells me you have done your numbers and are quite expert in your theories. I know nothing about gas exploration and rely on instinct from what I read. What do I believe, and what could be an exaggeration or a big hope. On this one I'm excited and the caution being exercised is due to market makers keeping the price low to pick up stock that PIs are selling out of impatience but making a nice profit anyway. PIs like you and me and most on here have enough and probably most PIs are not on here or other chat rooms but simply read Simon Thompson Marcy and stick some with all their others and keep their fingers crossed. The MMs probably have their pockets nearly full by now and when the SP moves it may move a lot in a sort of stampede.
The value is there and if APs gang cannot sort it out they can find a buyer who can.
I agree with your last 3 words.
Ian
I sent the following email to Investor relations:
__________
I have a question about the awarding of shares to the directors and employees of the company under the Long Term Incentive Scheme (LTIP”), as follows:
I noticed that the company granted c. 16 million share awards on 12 August 2022 to the following officers and directors:
George Canjar 2.788.104
Adonis Pouroulis 5.111.524
Julian Maurice-Williams 4.182.156
Duncan Wallace 4.182.156
In spite of that, according to note 26 to the financial statements for 2022, 40.888.091 shares were awarded during the year to employees and directors, under the Long Term Incentive Scheme (LTIP”)
My question is: when were the remaining 24 million shares awarded, and to whom? When did the company inform the market about those share awards?
Regards
Ajil
We can only gauge an expection by what Chariot send out whether its a goal of a commitment.
Yes or n no?
I guess your "decades" of industry experience makes you a smarter man than AP?
Maybe you should have advised him on a longer timeline so not to dissapoint?
Anyhows 5 days still to play for to meet timelines but i am cool with it too but get off that high horse Ajil ay?
GP
Have you never set a goal (as opposed to firm commitment) and missed it ? I don't mean to sound condescending but ....
Ajilimon:
"Many on this board have become frustrated by perceived lack of progress driven by unrealistic expectations. Getting to FID by mid year is a big ask - AP set a goal not a firm commitment" .
Well AP obviously did not think this as unrealistic which is why he set a goal for completion by end of H1 with undoubtly some slack?
Of course some investors will be frustrated !!
Hi Whimax
Appreciate the feedback and support your considerations.
Maybe I am too cautious.
But seen how much money can get drawn in and AP and many of the board have very good Africa experience, I would like to see some more renewable field development personnel in the mix; a back ground from one of the European renewables energy companies would be good.
Heard about some shocking mismanagement in the windfarm side: Taiwan is a current example and that's a very developed country, granted its all offshore.
Hydrogen is looking very expensive to get going presently.
But I also appreciate, maybe I should wait a bit more and ser how the "Jewel in the crown" pans out first before firing off too many concerns.
If management are precived to be respected and doing well the market will SUPPORT the SP.
PS no def not expecting a divi, any time soon.
GLA
Rgds Sft
Surfit,
Here we are in complete agreement " AIM is investment vehicle that is fraught with shattered aspirations and Africa carrys higher geographical and political risk than anywhere else".
That said, I believe this management team know what they are doing and are moving this project forward as fast as can be expected.
Many on this board have become frustrated by perceived lack of progress driven by unrealistic expectations. Getting to FID by mid year is a big ask - AP set a goal not a firm commitment .
If they announce partnering by cob next Friday I will be delighted but if it doesn't come until late September I will be fine.
Have a good relaxing weekend
AJ
Hey Jim, I certainly hope so.
I appreciate they are attempting to build a renewables/hydrogen base to develop but as I "bang on" about we need careful financing.
It may be that Chariot is by building such a base, its aim is to be in a position to get a bite of the development cash that the IMF (or AfDB) want to be raised/released. And infairness AP and board members have note worthy experience.
I just want us to be at a stage that we are NOT paying for it. Their partnering with TotalEnergies is of some significant assurance but fiscal prudence will be essential. Africa is a very risky location that only the likes of oil, mining (many risky), UEA, Saudi's or China have the deep enough pockets to dive in deep with.
I apologise to those investors that feel I am too negative, my position is as a normal investor. So I assure its not from a short stance (I am not such a sophisticated investor) but as we have seen, and I have experienced, AIM is investment vehicle that is fraught with shattered aspirations and Africa carrys higher geographical and political risk than anywhere else.
GLA
Rgds Sft
Surfit,
Chariot previously suggested a spin out of the green and hydrogen business, so plenty of cashflow to finance a regular large annual dividend.
Jimmy
The latest announcement by chariot has outlined their plans to farmout, get a cash contribution and be carried through the development program.
We are starting with 637 bcf of proven gas and the development program will include drilling to complete the O sand reservoirs which have some proven reservoir and gas and will add if a further 735 bcf of very low risk reserves at 49% to 62% chance of success, if successful this will bring proven gas volumes to 1392 bcf.
The farm out deal will include the lixus and rissana licences and will most likely see the farmin or paying to drill anchois west which will add a further 280 bcf of low risk 52% chance of success.
These extra gas volumes are in reservoirs which have been drilled in anchois 1 and 2 and which contained gas, and the seismic signatures are also showing the presence of gas. Onshore in the same basin such seismic signatures in the same horizons have an 85% drilling success rate, so this is highly likely to succeed.
The extra gas volumes will allow daily gas volumes to increase to 150 mmcf per day, which is the pipeline to shore capacity and the project financing facility can be used to expand the onshore gas processing facility to over 150 mmcf per day.
We do not know what the chariot post farm out licence interest will be, but I am expecting it to be 40% to 50% .
Chariot advised the farm out was highly competitive and is now in the final stages of completion.
This strategy will leave chariot with no initial project debt, and a clear pathway to the development of over 1.6 tcf of gas and first gas in two years and likely to rapidly increase in daily production to 150 mmcf per day , without the need for further equity dilution and a valuation of less than 150 m stg £
Incredible value opportunity.
Jimmy
Hi Surfit.
I take your point(s) but isn’t the “lack of knowledge and expertise” where Total Eren (at least partly) come in, and why we partnered with them on both projects?
Re the siphoning off of funds to other areas of the business, yes, I expect that will be the case to some extent, but unless you/we are expecting a one off divi from Farm Out funds (which I’m not), that seems the natural and sensible use for those funds, ASSUMING no further funds are required to bring gas into production. Or am I missing something?
Regards
Whimax
Hi whimax,
It's just my opinion of course, with attempts at reasoning put forward to support such.
Trading and investment houses need certainties and calculated finance figures to work on.
The gas side is the only mechanism for income.
Watch this space on if /when they get some cash back from the gas expenditure its siphoned of on to the energy elephant.
I am also not against what they are proposing but imo they lack knowledge and expertise in both areas with only BENOIT GARRIVIER and LAURENT COCHE experience looking to being applicable.
Again all my opinions
Time reveals all.
GLA
Rgds Sft
I would like to see clear and separated figures for
All the best Sft
“I don't see how this has not gone to plan. We need a GSA, funding via partnering or banks and then FID. We have just had a great update on progress”
All of which of the above have yet to be concluded so it’s all still in “if” box.
I don’t need an understanding of the industry Ajil, I’m guided by the timelines set by Chariot and the more likely timeline slippage. 5 days to go is cutting it fine isn’t it?
I’m no expert but I know progress on time when I see it and so would the market.
Don’t be so condescending just because you have one or two decades in the industry.
We’ll have to agree to disagree there Surfit.
For me, the focus for 99% of investors at this point is the gas, and as you rightly say, although we’re not quite out of the woods in respect, I think it’s a ‘stick on’ that funding/farm out/FID will be sorted very soon.
AP said that the gas is the focus for the next 6 months, and that’s the catalyst for new money to come in to this imo.
The rest will follow in due course, but it’s not what’s deterring volume.
Hello all,
The gas prospect looks good and I have over the course of posts highlighted the potential that the BoDs have multiple offers and the resultant negotiation difficulties.
It also appears (thankfully) due to the potential on multiple offers that they are not going it alone (thank the lord, it was a negotiation tactics).
We are not out of the woods until all is signed but I feel positive that we will achieve the Gas results we all hope for.
To some extent I now ignore that aspect of the company as it will run a predetermined time line all things going to plan.....
IF some of you as investors ARE NOT concerned about financing the renewable elephant road that AP is marching us down then its a great opportunity and the share price is set to take off .......
I came in for the gas project but have started to see the other side of the business "arms" as they now call it getting ramped up and its lead by AP due to just his mining experiences and govement contacts.
If every one is happy with the renewable/ hydrogen path I could do with some one giving me numbers of cash required vs expected return...anyone?
Because all I am hearing is: Membrane technology's (been around in Norway and Holland for about 15yrs), South African power grid, project noir, mining renewables, water container company, risk, new technologies, massive investments but again no figures.
Are you not a bit concerned too, do you not think the ii's are as well: The drip feed of investment on share purchases came to a grinding halt 2 weeks before the fund 25mil fund raise in 2022 and its not returned since.
If your looking for a reason for a low sp imo it's because of the uncertainty of the other arms.
As to exit strategy with out clear financing for the rest of I will look at it after Sanction.
GLA
Rgds Sft
Thanks gooner and yes I totally agree.
Whimax if you hadn't posted so many "simply wrong and misleading" points in your previous posts it would have been much shorter 😜 Away and pour yourself another JD and coke and listen to some 🪗Jimmy Shand to try and compose yourself woman.