London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Fraserd = about 2p per share. How do you know?
Ian
They're getting about $20m in back costs.
Fernan10,
Negociations over Oil & Gas assets are nearly always convoluted. More so when it comes to smaller O&G companies who don't have the required amount of capital to develop the asset(s) they own and thus need to negociate a farm out (or multiple farm-outs) to proceed the project.
And of course, the aim of any large farmiee is to try and get as much of the desirable asset off the smaller player as cheaply as possible. Dangling a bit of extra cash over and above back-costs can be a very cheap way of acquiring a larger share of the desirable asset that's being negociated over.
I still haven't heard a better reason for why the raise now. If, as we are led to believe, the deal is close to completion (with back-costs being paid in cash) why not wait for the $50 Million to arrive prior to drilling a new asset?
It would be a rare kind of farm-in if some form of back costs weren't paid in the form of a cash payment.
Last time I had a hunch it was that Chariot were going to drill Namibia alone without a 3rd party farmed in - nearly everyone on here – including the resident experts - were telling me there was zero chance of that happening.
Until it did of course.
"During the partnering negotiations I can only assume Chariot were offered additional cash to drill the onshore wells under the new licence for less retention of the Anchois asset and because of the sheer value of Anchois, Chariot instead deemed a raise and dilution of 9.2% (and retaining more of Anchois) better value for shareholders over the long term than relinquishing more of Anchois to the partner."
A potential farminee for the offshore project, offering Chariot cash to drill some onshore wells in a license that Chariot doesn´t have yet?
One of the most convoluted reasonings that I have read in years.
Regards
Oooh!.. You're so cynical, NewK... sasa.
"Lots changes in 4 years..."
Yep, hair turned grey and withered away too. Not sure if that just old age or waiting for CHAR to finally make me some money. atb
Old H. Something big may have happened and something bigger may be about to happen. 4 years ago the additional gas had not been discovered. Neither did we have the additional licence around Anchois. Neither were we looking at solar and Hydrogen. We are now nearer first gas than 4 years ago. We have several prospective partners trying to do a deal with us. We may have a new licence on shore soon. The Brokers are looking for a sp of 60p +. Lots changes in 4 years.
Hi Jimmy,
Good reply Re: point 3.
Regarding points 1&2. The raise wasn't to secure the onshore acreage - it was to drill 3 wells. I suppose the commitment to drill alone could have secured them this new onshore acerage, but they'd have the money to drill after back costs from farming out part of Anchois, but they elected to raise instead, which is why I think they did so to keep hold of more of the Anchois asset...
I view onshore as a separate venture. Will in be a good investment? The geology and Predator experience would suggest so. If the wells funded by the raise return hydrocarbons worth twice as much (or more), it's a good move.
We're all waiting for something big to happen but may have overlooked that it already has. If we go back 4 years, we had a share price of 3p and a Market Cap of £15m with about 480m shares in issue.
We now have a share price of around 15p and a Market Cap of £150m with almost 1.1bn shares in issue.
So in this time we effectively have a 10 bagger. However because the shares have actually 5 bagged and the dilution s of 3 Raises is about 50% , it simply doesn't feel like that. In Mid 2020 Finn Cap were forecasting 31p per share and if you remove the 50% dilution then the shares are effectively worth 29p so almost at that target.
So anyone who put £1000 into the company in July 2020 but did not participate in any of the fund raising now has £5,000 and yet we are all still expecting so much more to happen. Maybe it already has and that's why all this good news is not shifting the share price.
Hi Kingbilly,
I believe the offshore discoveries in Namibia are now at about 12 billion bbls, pity chariot missed out .
The farm out market died in Namibia all those years ago and chariot did not have production income to stay in the game and hence dilution, that’s why low cost exploration and production onshore Morocco is so important.
When the chariot onshore licence gets issued I will post the link to published papers that indicate to me why this onshore move could be very much more than many people think.
Jimmy
Jimmy I remember back in the day when it was all happening n Namibia your knowledge of the Geological side of things was impressive from your posts on II, it is just a shame we didn't find the elephant then and we would have be in a very different place now, granted it was high risk exploration, but your optimism is as contagious now as it was then and it's good to see you back posting more frequently now since the placing was announced as you've been very quiet of late.
If my memory serves me correctly I think chariot had approximately 236million shares in comparison to the soon to be 1.1 billion. What a difference a few years makes😐
KB hoping our main man Jimmy's inclination/research gives us the Jam😉
Hope its a pleasant surprise - gas demand in Morocco and for Europe this winter should be focussing minds, could it be that this demand needs to be met now - not in 2yrs time, Jimmy and that is the driver for this...how useful is Anchois "jam tomorrow" against this
Hi King Billy,
I have been studying the controlling deposition faults of the rifian corridor , which control the turbidite deposits offshore, and guess where these faults are onshore,
Excited.
Jimmy
I like your thought process BDC
Though it still means (imo), they have overspent and underestimated.
As a management team they still have to "try" and convince ii's (and me now) that they can build a company that is sustained on generated income rather than fully maintained and paid for by investors (Since 2012?).
This latest raise and dilution (+100% in just over a year) just reflects VERY poorly (understatment) on the team, in pulling out a rabbit and telling us it's black (onshore story) rather than white (we need more cash to keep going).
But what IF and I mean IF the onshore ( or as i like to call it : pirate treasure map) is actually NOT gas viable? they are off gambling again before generating income.
Best rgds Sft
Jimmy "I think there is a pleasant surprise waiting."
Have you been doing the Tarot cards Jimmy?😁
Well put post Jimmy, right on the money with that.
Personally VERY happy with my holding here and VERY much looking forward to what is to come !!
BDC,
There are a few good reasons for the recent fundraiser ahead of the farm out of anchois.
1. The anchois reservoirs are Miocene turbidite sands, these are sands that have been reworked from a shallower deposition environment and deposited in fault controlled settings offshore in previous geological time. It’s likely that such substantial sand reservoirs came from a deltaic deposition area to the east, in what is now onshore. So if chariot can identify such an area from the geology of its huge offshore 3D seismic coverage, then such an area could have very large gas potential, in a low drilling cost area near a pipeline.
2. It’s likely that some of the 40 companies that visited the data room will have been aware of such potential, so urgent to move quickly to secure the acreage.
3. We do not know what the farm out is going to be, but it may include non recourse debt to finance part of chariots share of capex, so chariot would benefit from having an independent cashflow while non recourse debt is repaid from anchois cashflow.
I am looking forward to learning about chariots onshore drilling plans, I think there is a pleasant surprise waiting.
Jimmy
Joe Bloggs should maybe take ownership of his own portfolio and decisions, instead of constantly moaning that his shares are not doing what he wants them to do, rather than what it said on the (baked bean) tin (i e this is AIM, high risk, high reward, and prices go up as well as down).
Joe Bloggs seems like a bit of a child who likes to stamp his feet and shout at everyone when things don’t go his way.
Don’t be like Joe Bloggs!
I think the point of why dilution/why cash now is being missed by some.
I don't necessarily think the 'early cash' narrative for the onshore asset equates to 'much earlier'. It may come a bit earlier than Anchois, but probably not a whole lot earlier.
The processing facility needed for Anchois still needs to be built and surely that's what they will be using to process the onshore gas too?
Maybe what's more likely to happen is that, as part of the Anchois farm out agreement, Chariot will agree to give up operatorship in exchange for keeping a large chunk of it on a free-carry, plus $50+ Million in back costs.
Any relinquishment of operatorship will take the project timeline out of Chariots hands and place it into the hands of the farmiee.
With $18 Million (from the raise) they can drill the 3-4 onshore wells and with an additional $50+ million coming in from Anchois back costs, they could afford to develop the onshore licence without a partner under their own efficient timeline (developing onshore wells costs a fraction of offshore).
That would leave them with a percentage of Anchois without needing to allocate anymore capital to it along with their own smaller project as owner/operator. 'Early' revenue could come if (as part of the partnering contract) the new operator agreed to build the processing plant as a project priority (which Chariot could use to process their onshore gas).
Of course this is all conjecture as we have very little detail to go on. But what I have been trying to figure out is why the raise now, instead of waiting for the back costs to come in - which must be in the region of $50+ Million?
I can only think it has to do with the partnership offer(s) on the table for Anchois.
During the partnering negotiations I can only assume Chariot were offered additional cash to drill the onshore wells under the new licence for less retention of the Anchois asset and because of the sheer value of Anchois, Chariot instead deemed a raise and dilution of 9.2% (and retaining more of Anchois) better value for shareholders over the long term than relinquishing more of Anchois to the partner.
What little Chariot have told us about this onshore licence is that its future gas has been earmarked for industry and with Chariots recent partnership agreement with Vivo Energy (a gas distributor to industrial customers in Morocco), they have the means to deliver.
Meanwhile, the larger partner/operator of Anchois can concentrate on supplying ONEE power stations and Europe.
Thoughts?
Joe Blogs manages to find a can of baked beans in the cupboard so after devouring them on a couple of bits of stale bread he used to make toast he looks out his calculator and realises that it is actually even worse than he thought.
His 200,000 shares were sitting at 0.10p average so total cost of £20,000
He then bought the extra 10% of 20,000 shares as advised to him by ICB888 and Whimax, two thoroughly upstanding members of the chat board who would never mislead anyone.
So his total cost is now £23,000 (20,000x01.5 + his existing £20,000)
And his total share count is 220,000 at a cost of £23,000
He then realises his average his increased from 0.10 to 0.1045 an increase of 4.5%
Joe suddenly feels like he may have been lead up the garden path once again, as not only does he have no pennies left in the bank but his holding's average cost price has just increased by 4.5%
Joe is not a very happy boy and he says bad words about a certain couple of posters who he thought were decent chaps🤥
ICB888 says 'You can avoid dilution of your own holding by increasing your holding by 10%"
Okay, so Joe Blogs has 200000 chariot shares and to avoid being diluted he has to buy 10% more = 20000 chariot shares.
He has £3000 in his bank account which he spends purchasing the extra 20000 (20000*0.15) shares to avoid dilution.
But now Joe Blogs has no money left in his bank account and he is tummy is rumbling as he hasn't eaten all day.
But according to ICB888 he has not been diluted and everything is rosy🤥
Sell what you have and buy them back later then 🤷🏻♂️
You can sell now for about 14.7p. If you’re so sure they’re going to 14p, that’s you reduced your own personal dilution by about 5% right there.
But you won’t, cos you’d rather spend your day moaning about it lol.
I suppose for some 10% might not seem much but this pretty much depends on the size of your holding. Not to mention whos to say we wont fall further after the shares issues goes through? Isnt that what happened the last time🤔🤔.. Its safe to say we wont know this until this utter schit show passes this date and all will be revealed...Until then we will drop further and wait for the outcome.