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Comparison with CHAR makes sense in the way that both are involved with gas. However, there are big differences between the assets of both companies.
For Example, CHAR was targeting nearly 1 TCF gas (best case) in all 5 zones (A B C O), while, AEX is looking for up to 8 TCF gas (2 TCF net to AEX).
CHAR need project funds to monetise the discovery, maybe $300-500m capital is required to start the first gas; while, AEX is fully carried by the partner till the first gas production. No, the financial risk to AEX.
CHAR did 10x from low, if that applies to AEX, then 10x from low (0.45p) may be 4.5p;
CHAR discovery was made, when gas prices were under $5; whereas, current gas prices is nearly $9; the economics is much more lucrative then it used to be
Anchois is an offshore project, which required significant capital & technical skills compared to Ruvuma onshore basin, which is low cost & easy to process for early production.
In a broad game, both companies are winners in their respective way. But, based on certain factors; Aminex looks much more compelling investment than Chariot (with the exception of Tanzanian/African delay time).
According to WHI report, Serenity based on $80 Brent, is worth nearly $700m net to I3E. If we do the maths, this 25% of Serenity valued at nearly $250m (net to EOG) or 20p per share. Also, currently Brent is trading at $120, the valuation is more compelling.
IMO, this is the best ever farm/out agreement done by any AIM listed company.
First, deal to cover all future cost related to appraisal & production; this mitigating the risk of dilution .
Second, due to their influence and financial position, ARA are in better shape to deal with TDPC for gas deal & other approval etc
Third, with the resources the ARA have, they could exploit the resources more efficiently (both in terms of technical and financial).
The deal looks much better for AEX… you can hardly see any JV deal of this kind
I think, these predictions are very optimistic & seems to be unrealistic.
I personally think, based on positive 3D seismic results (resource upgrade, improved CoS & possible indication of oil), market cap is likely to be around £70-80m by spud …
I think, financial risk to AEX is relatively low as compare to other partner since AEX is fully carried by the partner.
Any discovery will definitely be reflected in the market cap . Market will give value valuation to the current market cap based on future cash flows.
I’ll intend to have look to Chariot, significant gas discovery has been made back in Jan, with potential of 500-700 BCF gas. Production is nearly few years away, and still no funding been arranged for development stage. There is huge financial risk to CHAR (Equity dilution), but still market give big value to the discovery (from 5p to 25p).
Same, TXP made huge discoveries in 2020 in Cascadura, and despite the fact that production is years away, market have given them significant value from £20m market cap to £200m …
Compare to CHAR or TXP, I believe AEX is in much better shape: no financial risk, no dilution risk for development; and gas production within 2 years albeit govt is pushing for 18 months. 3D results will give huge resources upgrade.
Also, previous two well & CT1 will be used as a producers well, so low CAPEX for ARA Plus quick production.
Also, NT1 & 2 been tested and flowed 15-20 mmfcd, so they knew the potential gas rates but for CHAR, no flow rates but still market has given them big value
Hopefully the placing overhang will clear soon, and the market will settle soon.
Expecting, the price to be much higher by mid summer on anticipation of Serenity well & Wressle revenue
There is a good chance that AEX will rerate in the next 6 months, by spud time. As of now, price is stuck in 0.80s due to placing shares. Once these shares are churned, this will rise.
There are number of events due before spud that can be share price catalyst: rig contract, 3D completion, 3D results, and drill.
Also, there are few other drills is happening before CH-1 spud: CLON EOG ECO etc, due to which most of buyers have invested over other shares. Once they sell, v likely they will move money to AEX, I believe could be late summer. Also, by that time placing overhang will be gone.
With regards to upside potential, 30% of shareholding is with ARA due to which free float is limited. This rise very quickly, when buyers gets in.
I personally expect, price of nearly 2p by spud, if 3D confirm big gas reserve of over 3-5 TCF recoverable as per ARA estimate based on 2D.
Also, gas prices is much much higher than it used to be in 2017 during NT2 time, so the economics looks much better now at >$7 gas price.
Share price was spiked to 7p on NT2 results, with now better financial position (free carry), high gas prices, and near term production (1-2 years), price is expected to be much higher than 7p on positive results.
Since 2017, dilution was very limited. Hardly they have raised apart from recent placing.
Also, there will be progress from Kilwani 3D
All looks good in my opinion, it’s just a matter of time before price started to rise. Do expect a lot of ramp or pump or PR or whatsoever from summer onwards
If Jade hit oil, then Topaz will likely to be drilled soon in the next available window (subject to approvals & other docs). If Jade fail, then EME may likely to do post-result analysis about future plan.
I believe, Topaz is mainly dependant on Jade results.
You can't blame the board for the poor weather. Now, it's over the weather, so that they can do a site survey & then drill.
However, now the worst weather has gone & weather will be improved in the near future. So, survey & drill is not far away.
The company is expecting the first gas in late 2024 (in two years of the drill result).
The development program will be straight forward. They will use the previous two wells (NT1, NT2) and upcoming CH-1 as a producer well. They will just need to connect pipes from the wells to the infrastructure. It seems to be economical and straightforward process.