Member Info for BouncyDeadCat

"Maybe something similar is happening now with Anchois, and hence the need to drill an additional well."

No. Because unlike the Barryroe field, Anchois HAS been farmed into. By an experienced operator who understands the geology of the region.

Trying to compare Anchois which is a relatively simple field to that of Barryroe which I understand has a very complex geology frought with issues, is a bit of a stretch even for an attempted deramp ;-)

Anchois East will be a find if successful - lots of buying.

Onshore drilling will be a find if succesful...

Am busy with work so haven’t got much time to post on here today, however, felt I need to address this...

Energean's carry of CHARIOT'S COSTS is non-recourse, has a coupon of 7% and is repayable from 50% of Chariot's future net sales revenues from the Lixus licence.

WHAT THIS MEANS IN PRACTICAL TERMS: From the revenue Chariot receives from its sale of Lixus gas (20% of 1Tcf @ $10 per mcf = $2 Billion) it has to pay back its share of carried costs (20% of $850 million) = $170 million. Comparative to revenue this is a very small amount of debt with extremely favourable repayment terms for Chariot. Firstly, it's non-recourse debt, which means Energean cannot demand more of Chariot’s share of Anchois in lieu of repayment, nor can they demand Chariot give them more than 50% of their received revenue from Anchois gas sales to pay back the $170 million carried costs early. From the estimated $2 Billion in revenue that will flow to Chariot from Anchois gas sales, $170 million is a very small amount of debt and probably even serviceable from just onshore gas sales.

Also, the 7% interest rate on the debt could be nullified or even succeeded by a 7% royalty payment on Energean's gas production revenues to Chariot if/when the realised gas price is above the base hurdle price (important to note: this 7% royalty is set on all of Energeans gas sales revenues which represents an 80% stake in the asset.

Energean getting a bargin on a 1Tcf+ gas asset which is ready for production (all contracts signed with Moroccan government). Energean taking a 45% stake, extending to 55% dependent on drill results.

Drill hopefully happening in Q2 2024 (April-June).

Professional,

Thanks for the info. If that's the case then it's Jan/Feb for the onshore Loukos drill and April-June for the offshore Anchois drill.

H1 2024 is going to be an extremely busy period for Chariot.

Goodluck everyone, whatever you decide to do.

FID comes after Anchois East drill. Everything following depends on this.

Did anyone catch in the conference call when they plan to drill Anchois East? I thought I heard 2024 but not sure if H1 or H2...

They're drilling onshore Loukos early part of 2024 (Jan/Feb).

Whimax,

I personally don't subscribe to the manipulation theory.

Indeed there has been a large seller or sellers today.

Arghh, I only managed to suck up 81,000 shares around the 11.1 -11.5p mark. I wanted more!

HappyInvestor,

See my post today at 13:07 titled 'The reason Chariot is down after this RNS'.

The market is only considering associated downside risk with regards to this deal due to the necessary drill. There's no consideration with regards to the upside potential - which is asymmetric.

On a risk/reward basis, it's very good. If Energean take up the additional 10% post drill, Chariot receives $25 million cash, a free $850 million production cost free carry, $50 million in Energean stock, 7% royalties on all of Energeans revenues above base price and best of all... $2 Billion in revenue with a 10 year tax holiday attached.

This happy clapper is trying to buy as much as he can around the 11p mark 😀 👏 👏 👏

A market cap of cira £110 Million makes absolutely no sense. Just 1 producing onshore well is worth 3x more than this and they have 3 of them lined up for drilling in early 2024.

Couple this with a successful drill of Anchois East and you get another $850 million. For £110 Million

Downside is limited. Upside is asymmetric. 😀

👏 👏 👏 👏 👏 👏 👏 👏 👏 👏 👏 👏

The deal is excellent PROVIDING the Anchois East drill is successful and Energean elect to take up the additional 10%. If they do, then the upside for Chariot's share price becomes truly asymmetric. With a $850 million carry on development to production, the revenues on Chariots 20% share of Anchois gas sales will have few costs attached.

If only we had a crystal ball that would allow us to take a peak into the future...

*That equates to $2 Billion in revenue at an agreed gas sales price of $10 per Mcf.

The entire future of Chariot's portion of Anchois is dependent on Duncan Wallace's work as an O&G geologist and his confidence in there being more gas located in Anchois East. Let's hope he's as good as we think he his.

The most important part of the RNS can be boiled down to this; Only on a successful drill will the $850 million free carry kick in. Everything else is irrelevant. We all know that Moroccan power stations and industry are hungry for gas and the Moroccan government are fully behind this development having had to pay high imported LNG prices for the last 3 years. Gas sales agreements and such like are mere formalities at this point. What's far more important is for Anchois to be a 1Tcf+ resource.

Downside risk

If the Anchois East drill is unsuccessful, Chariot only receive $25 million in cash and an $85 million free carry (90% less) for Anchois. This would give them enough to develop the Loukos onshore acreage (of which they hold a 75% interest), but for offshore Anchois, they would likely need to look for either another partner or give more of the asset away to Energean. This would be the downside – they would end up retaining much less of Anchois.

Upside potential

On a successful drill the SP will rocket. Not only will Chariot receive an $850 million free carry to production retaining 20% of Anchois, they would also get $50 million in Energean stock plus a 7% royalty payment on ALL of Energean's revenues above the base hurdle gas price which would be substantial if there were to be an uplift in gas prices. But what's most important to consider if the drill is successful is that Chariot will receive 20% revenue on the sale of 1Tcf+ of gas over the course of a 10 year tax holiday. That equates to $2 Billion in revenue.

Conclusion

Today's drop is probably overdone when you consider the downside risk is somewhat backstopped by Chariot's onshore acreage and the cash it's going to receive from Energean regardless of the outcome of the Anchois East drill ($25 million). This $25 million, together with the recent placing ($19 million) is probably going to be enough to get the onshore acreage into production even without a successful Anchois East drill. However, on a succesful Anchois East drill everything gets unlocked, including the $850 million free carry and on such a result I would expect the SP to start the climb towards analysts targets of 71p because its just simple math from that point. At this point there's still risk involved albeit the market has overplayed that risk somewhat...

Redeyemines,

It's all about the next drill. Everything else is irrelevant, including gas sales agreements etc.

Everything gets unlocked post a successful drill.

Sniper,

No. They had quite a lot of differing offers. They feel this offer best represents the value Anchois holds (longer term), although there is still a risk present which I'm surprised people haven't spotted and it's the reason Chariot is down this morning.

De-risking is underway.

Could you just imagine what the whinging babies on here would be saying if the company had not issued said timeline?

"Whhhaaaaaaaa!!!! Why won't they give us a timeline of when the company expects certain milestones will be reached. Whaaaaaaa! We won't hold them to these exact timelines, we just want a picture of what the timeline looks like. Whaaaaaaa! Why won't they just issue a timeline of when they expect certain things will happen!?! Whaaaaaaaaa!"

Lol. This type of person will never ever be happy :-)

Investors are putting weight into the longer term Moroccan gas story and Chariots positioning within it (as we can see from the two recent stakes of 6%).

Short term traders won't put any weight into this stock until there's either big news and/or SP momentum.

Why should the company care what short term traders think when they're working towards longer term business goals for the company?

If you're here waiting to sell up on the next big spike, again, why should the company care about you or what you think? To them, you're currently just a waiting seller.

If you don't believe in the coming development of the Moroccan gas industry, then I'm not sure why you would be invested in Chariot. I personally think there will be many spikes, not just one.

Henry,

I think that's a bit nit-picky. They stated ballpark production for Anchois as being 2024/25 throughout.

Surfit,

I don't think Chariot or Morocco see it like that. The processes don't need to be so separate as you have stated them to be.

For example, the EIA RNS states onshore and offshore environmental and social baseline surveys have all been conducted and the EIA covers all aspects of the development including future wells and offshore infrastructure, the onshore Central Process Facility and link to the GME pipeline.

I've often mused on here as to whether the onshore would be included as part of a greater farm-in/partnering agreement for the whole of Rissana.

If the onshore, following exploration, is deemed commercially viable – then it just makes the entire Licence area more valuable.

AP underwrote some of the placings himself to the tune of $5 million. Quite a ballsey move for someone who's not aligned with shareholders wouldn't you say? ;-)