The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Bigg, thanks but not the answer
SF , it's Dn not Danielle, but then you already know that.......
Bob, personally I believe it's reasonable to assume $500-600M CAPEX. The high inflation environment has absolutely affected capital expenditures in the resource sector. However even taking that into account the math checks out. Also they don't even need 1Tcf or more to get finance, I had done my math based on 600Bcf and high CAPEX initially before the added 50m net pay. Now I conservatively expect 800-1,000Bcf reserves. Let's not forget, the current 361Bcf came from 50m of net pay at Anchois-1.
Dan, in the newest interview about a month ago Duncan Wallace says the company is doing studies on the size of the resource. The CPR is coming, patience. See: https://youtu.be/CLzahAcs7hU
..." i like having one bird in my hand than having two in the bush...."
i say, ' Saucy '
schlemiel, the last time i looked the £250m was from 2019, pre-covid - that price has double since then and i feel confident in saying that. it's not only the price you are dealing with it is the supply of parts. i take your point that 25% and selling cheap, but if you can't afford to develop it or can't pay to keep it, it counts for nothing. with a finance deal, char will aslo dependent on a certain gas price - it wasn't that long ago that premier and enquest were on the ropes because the couldn't pay the finance they had taken out for new developments because price of oil/gas was so low. the situation that we have at the moment is not a world gas shortage, but shortage due to gas being turned off during covid and not going back on - we are still below precovid. what happens to price of gas if russia/ukraine conflict gets resolved? i like having one bird in my hand than having two in the bush.
the IRR and payback period for Anchois (longlife asset greater than 20 years in a commodity with forecast prices to the bullish side) are gold standard with significant upside from further exploration across CHAR's licenced area...capex cost of getting to production? £175m-£250m?...
even the most conservative minded project accountant would conclude that Anchois is a cash cow over time and wider exploration upside a massive cherry on the cake but of course securing debt funding to cashflow is the key for all companies who find themselves in such enviable circumstances...As has been stated already Soc Gen wouldn't be involved if it didn't think it could secure a deal, they wouldn't waste their time and we have 25% of Anchois owned by the State of Morroco, that in itself is a positive
Anyhow, since there is no diffinitive answer about whether a CPR has been authorised by anyone on here, i've emailed the company.
I'll see if they give me a courtesy of a reply, should not think it could be price sensitive information
Ceo b
I very much like the low risk potential of anchois north.
I just do not see the need to farm out, it’s always an option I accept.
Jimmy
Ceo b
What we do know from the last rns is that the anchois field is planned to at 70,000 mcf per day.
What we also know is that the forward price of gas for summer of 24 , a low gas period, is $16.50 mcf,
That’s is capable of generating $421 milllion gross revenue per year.
Obviously various stages to get there, but I am confident they can do it and that the gas market is supportive, which in turn secures the debt finance.
By the way that’s based on 361 bcf of gas, so the upside on new gas reserves just gets better.
Jimmy
jimmy, it's all speculation at this point for me and why i need to see the cpr. under a 1tcf, it's a slog to get finance and that's why perhaps gen soc has been brought in. the other question is what are the rates of interest - if we get hammered with high inflation, how is that going to affect terms of payment. over 1tcf and this starts flying by itself and dependence on banks becomes shielded. if the price of gas goes above $15, we'll all have bigger problems to deal with - higher prices beyond this is not necessarily good for us as it limits the number of interested parties that can come in and buy/farm into us. i like the idea of a major because they are a multinational and have the experience of dealing with politics and regulations in other countries and doing these projects on a regular bases. i'm not sure char are set up for that. also , 'subsea alliance' could be a recipe for indecision with so many interested parties with everyone being an owner. if the field is 2 tcf, 50% is the same as owning a 1tcf field so don't see the issue in selling a 25% stake. also, there's no harm in opening up data rooms to see what offer come in. regarding all this green gas, if it come a buy out, i would be happy for adonis and co to take it away for nothing.
Ceo b
Chariot have options to deliver this project to cashflow, farm out is indeed one such option, but it most likely also gives away the upside from low risk folllow on exploration in the lixus area.
The other options are
1. Project finance,
2 project finance and venture debt,
3, infrastructure finance as as Macquarie bank build and lease the the pipeline, plus project finance debt.
Lots to choose from jimmy
ceobaib, you are talking a lot about the CPR, can you confirm accurately who it is and when it's expected, thanks
aj, all hypothetical and depends on the cpr data. imo, if the report comes back +2 tcf, 25% is going to get you + $750 million easy. who operates will would still be down to chariot. with that kind of money you still be part of the subsea alliance, but drive the bus as opposed to letting soc gen drive it. it's a different scenario if cpr is less than 1tcf - in that case soc gen may be the best route.
jimmy, you know you are being too generous with those comments . nothing of real substance has been delivered yet. yes, they have delivered on wells, but it's no more than any other smaller company could have done. from what i can see, this subsea alliance is full of service companies, which are still struggling to recover so I can't see anything coming from them regarding funding. with respect to soc gen, not sure what the terms of the deal are - but relying on them fully will be like relying on a loan shark so can't see the best deal. imo, this is a sellers market and have no problem in getting fair value by farming out directly, especially backed with a cpr.
CEO - I take all your points on board.
Can you elaborate on what you think an acceptable farm-out to a major woudl look like ? Would you see the major operate ? What % split would we retain after farm-down ? What would economic model be ? Chariot on a full free carry ?
I still think the FR to see us to debt funding and FID is optimal for 2+ years SP.
Hi ceo b
Chariot have a strong track record of delivering on time and on budget. The sub sea alliance who will project manage the development are experts in this area and they will be funded by project finance put together by Soc Gen , experts in that area also.
All normal, great project, no need to farm out. Just take note of the updated npv value of chariots interest at $900 million for only 361 bcf of proven gas from A and B sand. Or approx 74 p a share,what’s not to like.
Jimmy
aj, + 1tcf field is big - how greedy can you get? i'm not sure this 'sub sea alliance' are cash rich enough to get this field into production in a timely manner. the cash resides with the operators and at the moment they are very cash rich with incentives to lock in value. chariot has been here before, when they under took drilling into subsalt - with hindsight this activity was too big for them given the enormity of the poject and its technical challenges.
if you mean maximising value for investers by repeating this weeks performance, it doesn't fill me with confidence. surely they can farm out 25% of +1tcf field backed by a cpr confirming reserves - that will pay for more than half of the development.
CEO - do you mean bids to farm-in or for a buyout ?
imho a farm-out wuld be highly dilutive and not in shareholders lmedium/long term interests.
A buyout would significantly under value the asset and again would, imho, not be in the long-term (ie over 2 years) interest of shareholders.
On the other hand if you are underwater and looking to recover I can see the attraction of either option for a quick win.
bbb, i thought this option would have been on the cards. are you saying it's not? i hope they haven't signed themselves into agreements that keep them tied in.
Bids for what?.... They're developing the field themselves to maximize value for investors
is chariot going to open data rooms for interested parties to review anchios data to put bids in? that's something i would like to see.