Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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All of you are missing one vital point.
"Energean's carry of Chariot's costs is non-recourse"
What this means is Energean won't recover a penny of their carry costs until and unless we are in production. Energean have taken on all the commercial risk to bring the project to first gas.
For bearing this risk, they'll get 50% of our revenues until carry is paid off but what we also get this:
"7% royalty payment on Energean's gas production revenues in excess of a base hurdle on the realised gas price (post transportation costs)"
This is an excellent commercial deal.
All IMHO DYOR
Happy
As I see it, the $10m and $15m are just keeping Chariot in cash for onshore and bacon sandwiches for a few months. Asset value of Chariot is not affected much. $25m is only 2.5p per share. Hopefully the confidence Chariot have in a successful flow test will be a turning point if correct.
If the upcoming drill and flow test are successfull, then Energean "will have the right to acquire a further 10% of Chariot's equity in the Lixus licence for:
o US$850 million gross development carry to first gas (including the US$85m gross carry)
o US$50 million 5-year zero coupon convertible loan note with a strike price of £20 adjusted down for dividends or issuance of three million Energean shares, at Chariot's option on FID
o 7% royalty payment on Energean's gas production revenues in excess of a base hurdle on the realised gas price (post transportation costs)
___________________
My comments:
As I said before, the "carry" is a loan from Energean to CHAR, with a market interest rate, and then can´t be taken into account in any attempt to calculate the market value of Anchois.
But the other elements of the "price" to be paid by Energean to eventually acquire another 10% of the project (a US$ 50 million loan note or 3 million shares from Energean, and a 7% royalty) are relevant in order to make an estimate of the market value of Anchois, after an eventually successfull flow test.
Just the US$ 50 million note puts the "after flow test value of Anchois" north of US$ 500 million.
It clears that, Energean currently perceives that the lack of a flow test so far poses a substantial risk, that should be reflected in the current market value of the project. In its current state, the project is not derisked enough to be valued at more than a few million. That`s the reason they agree to pay only US$ 25 million to acquire 45% of the project. After a successfull flow test, the the project value will increase more than 10 times
Regards
My concern at this point regards SP is what it will be going into the next drill and the impact IF the results are underwhelming?
No doubt v disappointing to see the share price tank on the back of the farm-in news.
While aspects of the deal itself are being pored over and used to try to justify the crashing share price, I think more time should be devoted to Energean and what this company brings to the table.
It may be a FTSE250 and not the major oillie we dreamed of, BUT it has an impressive track record and portfolio, not just as an operator in its own right, but also has experience working alongside oil major CNOCC in the North Sea.
Worth reading why Energean is a good bedfellow:
https://www.energean.com/operations/
Sometimes you have to wonder how the markets works !
Who would have thought RR would x10 bag in 3 years, unfortunately I sold mine and stuck a significant proportion into here a few months back ..... RR still climbing even though well over bought, now +30% from when I sold, CHAR -30% from when I decided to swap investments !!! .... D'oh!
That is the real market value of the project.
As I explained in my previous post, the "carry" by Energean is simply a "loan" from Energean to Chariot, to be repayable from CHAR´s share of sales revenues from the project.
Posters like BDC, talking that "in a success case, we will have a 20% equity in a 1 tcf project, almost free of costs, with a 10 year holiday" forget that we will have to repay the carry to Energean.
Regards
Surfit:
you asked for clarification about the following paragrah in the press release:
"Energean's carry of Chariot's costs is non-recourse, and has a coupon of 7% over the one year Secured Overnight Financing Rate (SOFR), with the carry including interest repayable from 50% of Chariot's future net sales revenues from the Lixus licence"
It means the following:
- The amount of the carry will simply be a "loan" from Energean to CHAR, with a market interest rate.
- CHAR will repay the amount of the carry only from their share of the revenues from Lixus, without exposing CHAR´balance sheet (that is, if sales revenues are not enough to repay the debt, CHAR will not be obligated to compensate the déficit).
Nothing to write home about
Not sure what all the fuss is about really !!!
Almost everyone here has been waiting for the Offshore deal to be done, the company delivered that yesterday, a deal that is about as good as it gets in the terms, OK it isn't a Major so to speak, but nonetheless Energean are not too shabby either.
I would 100% say the terms of this deal are hugely better than anything a Major would have given, so Chariot are damned if they do, damned if they don't, because had they signed a Major in, and the deal was half what is on the table today, we would all be shouting "shafted".
No one expected the price action yesterday, it is clearly not easy to put a finger on exactly "why", someone or outfit sold a hefty amount into that volume yesterday for whatever reason, and we don't know, maybe they have a very good profit even at the lowest 10.5p yesterday, and used the volume to take that out, who knows !!
We move on, the multi well drilling program for a significantly easier, cheaper and quicker onshore is coming up fast and that should breath some fresh air into the stock, and as Energean is Operator for Offshore, then Chariot can put their fuller attention/focus on what is afoot.
Let the games begin !!! well they already have lol.....
If ever there was anyone that deserved NOT to break even and/or lose money, it’s you kb. You are literally the most pathetic, whinging, embarrassing excuse for a so called investor, ever to grace these BBs.
I tried to tell you months ago to sell up and leave, because investing wasn’t for you, but you didn’t listen, you just kept moaning, and repeating your nauseating tag lines. Do yourself, and the rest of us a well overdue favour, take my advice now, sell your shares, take whatever money you have left and go buy some premium bonds or something!
Absolute 🤡
I am doing okay smyth thanks for asking, yesterday sure was a bitter blow and whilst I had suggested we may struggle to breakthrough the 18p level I most definitely did not see that coming.....Yet another kick in the plums from chariot, one so hard I was sounding a bit Joe Pasquele all of yesterday😔
I rather think there may have been a few traders caught out as well and no doubt they will keep posting how amazing the deal is to try and recoup their losses🤷♂️So be prepared for a barrage of happy👏ing in the coming days/weeks....
I would say if the deal was as good as they would like you to believe we would not be sitting in the 11p range this morning, simples🤔
The total giveaway from the "usual suspects" who were all so, so excited at every placing about being able to get more shares and even take extra shares, is not one of them have voiced their disappointment at yesterday's price drop, which speaks volumes🙄
This really is a💩show and the chances of me even breaking even seem to get further and further away with every "positive" RNS......Confused dot com Argh😖
Jam tomorrow🤬 Aye right
Very poor move I’m afraid !
Laughable!!
There’s not a snowballs chance in helll that Chariot would be signing this deal, if ONHYM or the Moroccan Govt were even remotely concerned about the consequences from a geopolitical perspective.
Try harder 😂
“Wood for the Trees” springs to mind.
Why?.. The U.K has done it in the past, God knows the yanks are constantly doing it! At the end of the day Money talks and bull**** walks. The young are idealists and the old wise men have learnt their lessons and make plans! Always been the way and always will!
Regardless of money and positions, this is a bad move.
Getting in to bed with a genocidal occupier is hardly going to have people clapping their hands.
This has been strung out far too long by the management team, and now more risk with another drill supposedly in early 2024 - I guess we should expect that in Dec 2024.
What’s all this about ? An anticipated FO by many loyal holders , who have been patiently waiting to be rewarded by a fall in share price . World has gone bonkers !
...and the tension will ease... I know it, the World knows it! The retaliation of Israel's war efforts is already being felt by the U.S this morning. Alienating the entire Arab region is not in the best interest of Israel, and they know it. Morocco needs this gas supply badly. Lot's of political play here, you just have to be able to read between the lines.
KB,had said many times that there was going to be a sucker punch and this has not disappointed! The amount of posts early yesterday morning, high fives,Merry Christmas posts and this is what we have been waiting for was certainly short lived. Strange thing I find is the market has shown yet again this wasnt the RNS that they had promised, hence the sells and these clowns are still trying to big it up,thats the 3 Stoogies for you🤣🤣🤣...In all honesty, utterly utterly disappointed with yesterday. IMO we will soon find that 1 of the 6% has massively reduced their holdings,lets wait and see.....Hope you are well m8👍
“So far, Morocco has not in any way threatened to break ties, or anything else. But there is concern, and these are uneasy times across the Middle East and North Africa,”
Relationship “icy”
Maybe the market is not happy with the political background from the chosen partner……
The "next" alleged "catalyst" RNS is just around the corner folks so fill yer boots as the train will be departing soon🤷♂️
Everything is going to plan and there's nowt to be concerned about........🤔
Deja Vu anyone 🥱
Well I've already added, current sp I seemed as good enough, waiting for lower will take up too much of my day IF it ever happens, and the goal here is to wait for new year works, which, let's be honest is right around the corner with a high CoS drill that'll change the company's future with a multiple of today's market cap! It's a win win for me.
I concur whimax, the aim market is very unpredictable at the best of times but even more so atm, strong hold for me, may even add to my holding.
Couldn’t agree more Happyinvestor.
This deal gives Chariot the opportunity to earn vast amounts of revenue with no further dilution and zero debt (in fact less than zero due to structure of deal) off the back off 1 drill with a very high COS.
It’s an absolute no brainer. If people can’t see it, simply because the SP didn’t react “correctly” yesterday, more fool them.
Https://www.upstreamonline.com/finance/ambitious-energean-strikes-deal-to-operate-morocco-s-biggest-gas-project/2-1-1567268
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All IMHO DYOR
Happy