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The rns states that the npv 10 of the anchois project for chariots 75% is $1.6 billion using a $12 mcf gas price, this appears to have been validated by netherland Sewell.
So what can we infer from this, firstly a farm out concept and later a prospective ebitda valuation.
1. $1.6 billion is £1,260 million for chariots 75% , assuming big oil will not pay npv 10 value for a pre development then let’s arbitrarily reduce that by 50% to £630 million for 75% . Assuming they farm out 50% of 75% they reduce to 37.5% and get paid £314 in terms of past costs and carried costs , then the farm out valuation for chariots shares is £314 value received and £314 for the remaing 37.5% of the licence they hold, assuming 1.1 billion shares in issue that’s 58 p a share, not far off the brokers estimates.
2. As chariot are pre revenue and pre anchois development, farm out valuations are probably relevant, but they will also be two years from first production, so they will transition over time to an ebitda valuation basis. We know the field will produce initially at 105 mmcf per day and the rns is stating $12 an mcf for valuation purposes, so the ebitda is as follows, 105x $12x 365x 96.5% net after royalties is $1215900 less opex $40 million $1175900 x 37.5% chariot interest =$440 = £346 million p.a. Shell are valued at ebitda of 5 =£1732 million or £1.57 per share, double that if you wish because first ten years are tax free and similar to tallow ebitda value of 10x.
That’s the value journey we are on.
In my opinion, there is a considerable haste in raising funds in this way and I was trying to figure out what could be going on.my speculative thoughts.
A) the first thought was something has gone wrong with anchois and they need money to keep the lights on. However, the rns is very specific nearly all the funds to be used for an onshore drilling campaign. Directors would be in trouble if they raised funds on false pretences, so this looks like a genuine opportunity.
B) in negotiating a farm out chariot need the financial backing to stop a farm investor winding down clock to get better terms as chariot run out of money, so doing this fundraising improves a negotiationg position.
C) chariot have moved quickly to secure the onshore acreage adjacent to its southern rissana acreage where 7 tcf of gas prospects have been identified in the near offshore area. They firstly need to secure that for themselves ahead of one the 40 companies that visited the data room. However, I believe there is a bigger prize which is indirectly referenced to the 3D data set offshore. I read a paper a few years ago about a deep canyon offshore , which I suspect may be a continuation of a narrow basin onshore , perhaps with a very thick turbidite sand sequence in an area with proven gas source rocks, this may be bigger than one thinks, just speculation on my part, no inside information.
Jimmy
Jimmy,
Would welcome your thoughts if you think it if might be this license.... I dug this out from my archives. Unfortunately, the links no longer work.
The LMS-1 well was drilled to a total depth of 1158 meters. The primary target was in the H-9 sequence which is a Miocene aged shallow marine deposit that had not been previously tested in the area. The well encountered 16.4 meters of net conventional gas pay sands which had an average porosity of 32% in an over-pressured section. Similar to the previously drilled LNB-1, heavier gas shows were encountered indicating the presence of a deeper thermogenic source rock charging the structure. In addition, the cuttings showed evidence of fluorescence indicating the potential presence of liquid hydrocarbons within the section encountered.
The well is now being completed as a conventional natural gas producer in the H-9 interval and once the rig has left the location the well will be perforated and tested. It is anticipated that the test will be conducted approximately 30 days after the rig has departed the location.
http://otp.investis.com/clients/uk/sea_dragon/rns/regulatory-story.aspx?cid=675&newsid=1007094
then ….
The well test program in the LMS-1 well in the Company’s Lalla Mimouna Nord permit in Morocco has been completed. Upon test the well flowed at sub-commercial rates which at this stage we believe are temporary and due to damage created by the fluids used to control the elevated pressures encountered in the well whilst drilling, however this is still being investigated. At present, we believe the damage is the result of formation clays reacting to certain components used to increase the mud weight of the drilling fluid. The reservoir section, beyond this zone of damage, is thought to be of excellent quality based upon the well log response and is not expected to have been damaged by the drilling fluids. Once the fluid interaction study is complete, a stimulation program will be designed and implemented and the well test will be repeated.
http://www.sdxenergy.com/~/media/Files/S/Seadragon-Corp/press-release/press-release-2018/20180618_SDX%20Press%20Release.pdf
If I recall it was just SDX's precarious financial position that made them relinquish.
AJ
Recently rellnquished by SDX.
https://www.energy-pedia.com/news/morocco/sdx-energy-announces-gas-discovery-at-lms-1-well--morocco-173537
https://hydrocarbons.onhym.com/en/exploration-acreage-map
I’m sure if he fancies a few years at His Majesty’s pleasure that would be a good way to go about it, right enough.
Look, I’m not adverse to a bit of critical thinking, but……
Whimax - Star1 may have it right. Who is the buyer of the 10%? Could have done this at 17p or even 20p months ago but looking after your mates at 14p was more attractive. Especially if your mates are even yourself? 9% plus 10% becomes a much stronger position.
Starbanker1, I’m not sure I understand either the rationale or the meaning behind your post?
Why would AP want to give someone/an entity 9% of Chariot at 14p, dilute his own holding by that amount, then want to accept/force through a lowball offer for the business?
Apologies if I’m missing something obvious, but that seems nonsensical. AP is many things, but stupid ain’t one of them, and neither is he in the habit of accepting lowball offers (something which we have actually found out to our cost in previous farm-out negotiations).
Surprised with all the good news to come that the share is not motoring.On balance the news overnight that the issue is oversubscribed should have put an engine into the share price
ICB888 says "you needed to remain invested to get your open offer shares"
You have just reached a new low with that comment😂
The placing does not alter what we are expecting imminently from Anchois. Here is a reminder from Simon Thompson on 28th June. Extract from article:
“ Around 40 companies accessed the data room and I understand that multiple offers have been received from significantly larger exploration and production companies, according to the company. Chariot has already spent $50mn (£39.2mn) on the project and the board anticipates “retaining a material stake in the licences and a [significant] upfront cash consideration”.
Analysts at Auctus Advisors believe that as soon as the details of a farm-out deal are released to the market then it would lead to a material re-rating. That’s because the combination of the carry on the project and upfront cash payment would materially reduce the risk of any significant dilution for Chariot’s shareholders. I completely agree, especially as I understand that some of the potential partners could fund the project from their own balance sheets.
To put the undervaluation of Chariot’s shares into perspective, Auctus has an unrisked valuation of $839mn (£655mn) based on Anchois’ 1C contingent resources of 365bn cubic feet (Bcf) and 2C contingent resources of 637Bcf. That’s more than four times Chariot’s current market capitalisation. In addition, Anchois has 2U prospective resources of 754Bcf, which have a 49-61 per cent geological chance of success, and offers potential prospectivity across its Rissana offshore licence, which has a total 2U prospective resource of seven Tcf and could attract larger players, too.………
Trading on a steep discount to analysts’ core net asset valuations of 65p, and with an Anchois farm-out firmly on the cards, the shares are well worth buying“
Look back at how Char raised money during the 2021 drilling campaign and shareholders who participated had a good outcome from that. I think it was a clever way of managing potential fluctuations in the sp in the run up to major news as you needed to remain invested to get your open offer shares. I would not be surprised if the Anchois FID news lands before all the new shares are actually issued and you are sitting on an instant profit.
With what Chariot are sat on this should have been a Bank Funded deal and not a Placing in the middle of summer when the demand for oil and gas decreases and so does the oil and gas prices and share prices. So many opportunities also to have raised at much higher prices.
Sorry for the delayed response. Just hacked off at more dilution than necessary here.
Interesting to see all the differing opinions on our most recent placing, a placing I fully expected, and whilst disappointed, genuinely really surprised. It is interesting to note that most (not all) of the more positive comments are coming from posters who I suspect are traders rather as long term holders (although I am surprised at one or two posters openly showing disapproval who I didn't expect to) but hey-ho we are all here to try and make a bit of money at the end of the day.
I personally don't think I will now see a return on my investment and will not be taking "advantage" of the placing so it is just a case of sitting it out and see where we go.
And the next "RNS" was yet again most definitely not the catalyst but some on here will have you believe that it is just around the corner, yep it is always just round the corner.
I am starting to wonder if our main man AP is not actually Phil Connors, 🌧️ but even he came good in the end so there is still hope....
One very deflated (or should that be diluted) KB
PS: Surfit, Please keep posting as it is nice to have a sense of realism amidst all the la la land posts😐
This is looking like the 1st step to a takeover.
they are in discussion with party A.
party A likes CHAR and instead of buying in open market go for a capital raise and instantly own 10% of the company.
the risk is that now before any announcement Party A can make a full bid for CHAR at any 40 p and Adonis will recommend it to the board.
this makes a lot of sense.
i'm as ****ed off as anyone else with regards to this recent raise, or rather, the timing/price of it.
the company appears to be very close to fid and there are a number of interested parties who they're in final discussions with. it can't be long now and they do have enough cash to keep them going until fid (if they were to accept whatever deal was put in front of them).
so i can only assume that in order to get the deal they want – they had no choice in doing the raise.
we don't know what deal(s) the potential partners have put on the table, but one can only assume that whatever the deal is/are, it would be much much improved if/when chariot had this new licence in the bag and the cash to drill it. i think that's the logical explanation for why a raise now. anyone got a better explanation?
if chariot were offered terms that are say 25% better on anchois with this additional licence and no carry, then a 9.3% dilution makes perfect sense.
hopefully this is just a cold business decision based on hard numbers regarding what delivers the most amount of value over the next few years rather than the next few weeks.
the following statement has also been repeated in both yesterday's and today's rns;
“the company continues to make good progress on its partnership process for anchois, with the fundraise providing an improved financial position ahead of finalising negotiations.”
Your “Mates rates” are also being offered to you in the open offer so what is your problem. You will also in all probability be able to buy in the market close to the placing price as indeed you can today. If the shares are going to rise substantially on Anchois news what’s 1p when it’s on its way to 60p according to todays broker note. If you don’t want to be diluted just make sure you increase your holding by 10% at around the placing price.
Can't believe they have done a raise when they stated an offer imminent and they had about £4m in the bank, then again it's Aim and it's UK so not surprised. This is similar to another aim company 'Alba' albeit a much larger discount raise. Char have stated they are creating share holder value, hope this raise make it closer to higher bid price.
COMPLETED .....
https://www.lse.co.uk/rns/CHAR/result-of-oversubscribed-placing-and-subscription-qr61gdd0cswghtm.html
Truly staggering how this fiasco happens time and time again on AIM stocks.
aimo & dyor
Don't see the fuss personally. Not a bad price. They should have just done it 6 months ago as the share price has done nothing all year due to most knowing a placing was coming. Hopefully we can now kick on.
Wonder who took all the stock,---could it be our potential new JV partner.-----Still sorting out the terms of farming into Anch, but putting up the cash for the extension to the field---would make sense.
Also a possibility that granting of the on-shore licence may have been dependent on ‘proof of funding’ to progress development immediately. The numbers kind of fit $3m x 4 wells plus planning and peripherals?
Farm-out has/is taking longer than hoped (possibly due to farminees playing hard ball on up front payment as mentioned last night) so proof of funds maybe had to be dealt with this way.
Bit painful, but that’s AIM for you. If it ultimately bring productivity forward, I won’t argue with it.
One has to agree with the brokers that this is value enhancing. Nothing has changed regarding Anchois and the next news on that could well land during this placing. The placing is to take advantage of early cash flow from an onshore well. CHAR have form on this with the placing during the drill which was very beneficial financially for shareholders. This seems very positive to me and I would expect my open offer shares to be well above 14p when they are issued to me.
Cenkos report has upped their target price to 60p. They have been first on the sell side for weeks and now the fund raise is done ( oversubscribed what a surprise!) they think we are worth more. Hopefully once the panic sells have been moped up we will bounce
Hi Gooner, I had similar thought's on the price range mentioned but IMO was hoping that I was again wrong,sad to say I wasnt. I am fortunate to be in the position that I am in,as my average is just under 7 so yes I have still made profit but the amount of shares I hold its been an absolute gutter to see where they are now when we hit 24p as that is why I have so much frustration at the company. £1 party is another umpteen years away if that ever happens. I still hold at present but I am inclined to sell up and move on,time will tell if that decision is the right or wrong one. I hope you are also in a similar position, best of luck going forward m8👍👍
RNS further comments:
The Fundraising is conditional, inter alia, upon the passing of the Resolutions (as defined below) at the General Meeting, on admission of the New Ordinary Shares to trading on AIM becoming effective and the Placing and Open Offer Agreement not being terminated in accordance with its terms. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, neither the Placing, the Subscription nor the Open Offer will proceed.
Is that the September GM or one just for the directors?
Most would have recieved their electronic voting requests prior this RNS share placing.
So I am assuming most have already cast a vote for, against or abtain on points 6 and 7?
6. AUTHORISE ISSUE OF EQUITY
7. AUTHORISE ISSUE OF EQUITY WITHOUT PRE-EMPTIVE RIGHTS
Myself I had actually ALREADY voted AGAINST 6 and 7 ( AND No. 3 also..re electing AP) before this latest cash grab RNS.
Again would urge others, if you have not already done so to do the same. It will not stop any of the planned actions as LSE posters here would not carry sufficient quantity of voting rights but it may raise our profile.
Rgds Sft
Last week I posted the below fictitious just for fun communication email from that man:
I wasn’t that far off the truth just 2 trading days later was I?!!
-AP kindly replied and told me that it’s all progressing nicely but if we do run out of cash we will raise at 12/13p in Q3/Q4.
I then asked AP if he follows this BB and he said he does and is somewhat amazed how some investors will believe in anything. -
Mugging us off. A raise has been in the pipeline for a while and NOT just in the last 2 weeks. Chariot have never and will never work that fast!
Smyth there will be blood on the streets but if your average is around this price then I think we”ll be ok but I think we can forget the £1 party!
They have used many words that to alot would mean so much different in terms of time. I think that target you mention is not even in the distant future. Really think we are going to see a sea of Red today after that news☹️☹️☹️ Absolutely gutted after that landed....