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I see now what you mean. I still am a little doubtful though, unless the energy costs would be lower with electrolysis versus using natgas as feedstock I don't think the Mauritania project would necessarily benefit. Natgas price increases also affect energy prices in general as well after all. I'm not convinced thr margins would necessarily increase for that project. Anchois no doubt will benefit directly from this natgas environment though

Hi Jimmy,
I guess I wasn't exactly clear. What I meant was, if the natgas price gets higher yes that would increase ammonia and hydrogen prices as well. But what about the margins of a hydrogen/ammonia producer? They would have to buy natgas at higher price to produce hydrogen/ammonia. Wouldn't that mean that even though the price of hydrogen/ammonia goes up the MARGINS don't increase because the producer would need to pay more for the feedstock meaning the costs just get carried over downstream? Or am I missing something?

Jimmy, mostly I agree but I'll have to question this:
"In addition, the high natural gas price is the main driver of an increase in hydrogen and ammonia prices, this now makes the Mauritania renewables strongly economical."
Wouldn't a hydrogen project using natgas only move over the costs of the high natgas price over to the offtaker? Meaning only the actual natgas producer would truly benefit while downstream the costs would just get carried over?

Or second post I think actually hah. Third now

First post on the COPL chat, I'd just like to thank Tiburn and others for the greatly informative posts. Exciting to see what the Rydder Scott report says and what the production numbers this year end up being. More than 4,000bbl gross (or about 2,000bbl net to the company) and the hedge gets filled, allowing COPL to leverage the spot price. CUDA deal is also an interesting cherry on top. Very cheap right now

Much appreciated Jimmy! That helped a lot, Anchois really is a phenomenal project.

Hey Jimmy, I'd like to ask since I know you've got experience in the sector. You said they have ~750Bcf in reserves right now. Is this your rough estimate after seeing the Anchois-2 results? We will get more accurate estimates soon right? And also you said the word 'reserve' as opposed to 'resource', is the expectation that the next estimate will turn the 2C resources and some of the 2U prospectives into 2P reserves? Just trying to learn the process and resource/reserve definition stuff here since so far I've been more of a mining guy than an oil/gas guy.

...going on in Europe, I was about to say. Last few words probably reached a character limit.

Have a good weekend everybody!

I spent some time looking at recent events and the sitaution in and around Morocco and Europe. Here are some relevant articles I found interesting, if anybody is interested.

https://www.moroccoworldnews.com/2022/01/346449/spain-facing-severe-gas-shortage-after-meg-pipeline-closure
https://www.bloombergquint.com/business/morocco-aims-to-import-chilled-gas-via-spain-after-algeria-snub
Spain had enjoyed a diverse supply of gas thanks to the MEG pipeline, now they are facing tight supply thanks to only Medgaz pipeline from Algeria now remaining. Algeria has increased pipeline flows and LNG shipments and has financed an expansion to the pipeline last year in response but it appears it's not enough and is therefore probably putting upward pressure on energy prices in Europe. Morocco used to receive ~35Bcf of natgas annually from the MEG pipeline, now they have to import their gas flowing the opposite direction as LNG bought in the international markets, shipped to Spain and regasified there because currently there are no regasification facilities in Morocco. Obviously this also increases energy prices in Morocco.

https://www.moroccoworldnews.com/2022/01/346819/ocps-african-dominance-makes-morocco-a-global-leader-in-food-security
https://www.moroccoworldnews.com/2022/02/346911/morocco-s-growing-role-as-gatekeeper-of-the-worlds-food-supply
Morocco is home to more than 70% of the entire world's phosphate rock resources and is apparently an important food and fertilizer exporter. To say that Morocco plays an important part in the global food supply would be no exaggeration. According to britannica.com the three main exports of Morocco are: agricultural produce incl. citrus fruits and market vegetables; semiprocessed and consumer goods incl. textiles; and phosphate and phosphate products. Phosphate rock is a main fertilizer ingredient and is used to create phosphoric acid or, together with ammonia, ammonium phosphate. Ammonia on the other hand is made with natgas or hydrogen (95% of hydrogen is also made with natgas). Although the phosphate exported seems to be processed into fertilizer products at the destination rather than in Morocco especially due to other African nations' much more developed hydrocarbon industries. When it comes to domestic fertilizers though they need energy, either domestic or imported, and Morocco doesn't seem to want to be dependent on natgas imports.

https://oilprice.com/Energy/Energy-General/Europe-Is-Running-Out-Of-Space-For-LNG.html
https://oilprice.com/Energy/Natural-Gas/Can-Norwegian-Natural-Gas-Solve-Europes-Energy-Crisis.html
Europe's capacity to import LNG is reaching its limits and as a result shipments may start to plateau or decline. As for other sources of natgas, Norway is already pumping at full capacity. I'm sure the MEG pipeline closure also exacerbates the supply crunch. As a side note I'm going to say I really like Irina Slav's articles, she seems to be on point with regards to the energy crisis go

Good post Legalwolf. You're right the MOU/LOIs are not legally binding but they do indicate that there is real interest in Anchois. As I pointed out in an earlier post there are still uncertainties and a long time before cashflow. Financing and project development can go many ways and CAPEX is imo likely going to be much higher than $300M in this environment and some equity may be issued.

In the meantime we will get more newsflow from the Anchois-2 results which should solidify the market's understanding of the value of the project and the new discovery. We will also get updates from the company's other investment avenues. I have no doubt that Anchois will soon be financed and built to production on time.

I would like to again emphasize the strategic importance Anchois has for the Kingdom of Morocco. They are going to have to import LNG regasified in Spain for a contractual minimum of five years, and these deals are signed in a time when natgas prices are extremely elevated in Europe. Just how much will they pay per mmBtu for the foreseeable future without the production from Anchois I wonder? Current annual natgas demand that needs to be supplied with the LNG imports is about 35Bcf or 35,000,000mmBtu, and the demand is forecasted to triple by 2040 so if the projection is realistic the demand could increase at about 3.5-4Bcf per year. That's a lot of money if you have to pay upwards of $25 per mmBtu! There is a lucrative market opportunity here and a very supportive jurisdiction with top tier incentives from the govt (ZERO tax for the first ten years and a miniscule royalty) and a derisked high quality project with high margins, high rate of production and long life. Anchois should at initial rate of production once the wells have reached a stable rate of flow be able to bring 17.5-24.5Bcf of domestic gas annually to the Moroccan people. Thanks to the high price Morocco has to pay now that Algeria has cut them off the market price able to be realized from Anchois will potentially exceed $10/mmBtu or more.

Knowing these facts is important because right now the market is clearly ignoring the value here or overestimating the risks. The pieces are coming together and things are all lining up for Chariot. The political and economical environments are great for us too.

You're right Jinx I'm getting ahead of myself. I'm new and I misunderstood Pete's message. It's why I asked him what his worries were for clarification. Will the jury let me off now please ;)

The Anchois-2 discovery wasn't transformational because people dumped shares? Hahaha

Ah pardon me for mistaking what you were saying Pete

I've kept buying more myself as well. All of this emotional short term fuss related to the share price is making some lose their head. Just sit tight and enjoy the ride!

I'm not sure what you're worried about Pete. Cashflow is two or three years away and project financing hasn't been secured yet. It isn't surprising to me that the price remains low, there are risks related to financing and project development. Personally I have accounted for them in my own back of napkin calcs and I think the stock is very much derisked but some other investors may decide otherwise. And again cashflow is at least two years away. Some might think it's too early and that this is dead money. And then there are others like SHC and Jimmy who know what the facts are and what the value is like and who have the conviction and patience to hold until gas starts flowing.

Are you just worried because the share price is going down right now? Don't you have the patience to wait two or three years? If the answer is no then why not sell and come back later? Not trying to be confrontational or anything, just wondering. I think it's fantastic that the share price is as low as it is. The gas isn't going anywhere and the prices in Morocco will remain elevated for years to come.

Hydrocarbons will be in great demand in the future as well once the realities of the "green transition" start setting in. There will likely be backpedaling by policymakers due to rising prices. Nuclear is also an obvious choice for the future but it's faster to fall back on hydrocarbons than to start building new nuclear reactors.

Recommended reading, this simply won't work:
https://issues.org/environmental-economic-costs-minerals-solar-wind-batteries-mills/#.YfaHjIfwr8w.linkedin

Thank you very much SHC. I suppose I'll have to read some old news releases to get a better idea on the Brazil & Namibia assets

I would also like to ask if anybody knows what Chariot's interest is in the Namibian blocks. I couldn't find info on that other than that they have been written off along with the Brazil assets and that interest remains held.

Thank you for sharing your informed take once again Jimmy. Helps in understanding what the value of the Namibia assets could be. I'm only here for the flagship Anchois project but I sure don't mind the other promising business avenues Chariot has.

Dumped 20m shares on the market. That would explain the price action. I'm very happy that I have been able to buy at these prices and it would be a shame if the price goes up. I'm like Rick Rule, I'm delighted when the price is low. But I won't complain if the price starts getting closer to a fair value!