Member Info for BouncyDeadCat

Surfit,

The political landscape in South Africa has changed significantly during the last month and since that interview with the CFO, lets see if BII is still willing to guarantee investment in a country that's been overtaken by extremists...

The problem is, and continues to be, listening to management and what they say hasn't matched up with reality. I have been guilty of defending the words of the BoDs myself and in all honesty, everything they have uttered up to this point has been hollow at best. They have said lots & lots and lots of things. None of which has ever come true.

Maybe this time is different...? Hope springs eternal.

Surety,

These things tend to happen in stages. I don't hold much comfort from the fact that as of last year Chariot were 'allowed' to drop down to a minority stake in the business. In a country that is seizing and redistributing white-owned assets at an increasing rate, there is no appeals board that Chariot could complain to if/when they come for their asset(s). There's no difference in confiscating 49% of an asset than there is 100% of it, other than the amount being confiscated.

You should probably take a closer look into what is currently happening in South Africa, it's pretty alarming. The regime is claiming any and all assets owned by whites are illegitimate as they claim everything contained within South Africa belongs to native South Africas who they classify as non-white.

As of recently, Chariot's South African Power Business was probably the only pillar worth anything that could have been sold to fund the other pillars, now any value ascribed to it looks (at best) to be in jeopardy. If it doesn't get stolen, then I'm not sure they'd even be able to sell it, as who wants to do business in a corrupt failed state that doesn't respect or adhere to property rights!?

Especially with regards to their power operation business in South Africa. There are growing numbers of white owned or controlled farms and businesses that are being confiscated in South Africa under the governments 'seize and redistribute' policy and it very much looks like the country is heading the same way as Zimbabwe did under Mugabe :(

As they didn't find any gas during the recent anchois 3 drill (apart from a thin sliver in the B sands), not sure if re-mapping the remaining prospects based on this new data will be all that useful in terms of re-through?

1. I was saying if ENOG let it lapse or give it back then it would be highly unlikely that Chariot could give the same contract to another company and expect them (new operator) to fulfil it on the same terms as ENOG.

2. Depends how much time lapses and if this affects Chariots own obligations on the licence. Or ENOG walk away and no other company is interested in becoming operator of the licence. The licence could lapse on Chariot's obligations too and go back to ONHYM.

3. Not really. For ENOG, the financial sacrifice so far has been minimal.

4. The language surrounding the seismic acquisition bit is rather woolly so I don't know if it's an unfulfilled obligation and/or if it were conditional on the A3 well result. We would have to see the contract to be sure. It says in the terms of the deal RNS that the $85m gross carry includes seismic acquisition capped separately at $7m. Presumably this means if ENOG went over the $7m for carrying out the seismic, then Chariot would be liable for the extra cost, regardless of the $85m gross carry.

Not sure what you're struggling so much with Whimax. Will put it in bullet points to try and make it easier for you.

* Never said anything about ENOG punting their share onto another company.

* ENOG no longer being interested in the project and time lapsing on obligations more likely.

* Chariot was betting big on more gas in A3 which was a massive failure. Based on their assumptions, yes, the deal (in hindsight) was probably a very bad one for Chariot.

* The $85m gross carry including seismic acquisition capped separately at $7m that was agreed between Chariot and ENOG is a cap on spend and part of the terms of the deal. I can't read anywhere where it says this cap needs to be fully spent by ENOG, just that $85m is the gross carry.

No, that's not what I said. I believe ENOG signed that contract in good faith. However, the result of the drill didn't go as expected. How are they supposed to fulfil the obligation of a flow test on a drill hole that has no gas?

If you look at the terms of the deal, nothing is really cast in stone until/unless ENOG decide to progress beyond FID.

Also, not sure if ENOG could sell their contract with Chariot to another company, so not suggesting that either, maybe try and read what is written more closely.

Whimax,

I don't think it's accurate to say that Chariot 'owns' the licence, at least, not outright. Chariot own the rights to the licence based on certain objectives being met. Regardless of it being farmed out or awarded to, ONHYM were the original holder of the licence. I'm not saying ENOG are owners of the licence either, however, as operator, they have more say than Chariot on how things progress with the licence, especially with regard to timelines.

'whoever bought it would still be responsible for fulfilling ENOG obligations under the original agreement' I don't think this is true either. ENOG the company signed the contract with Chariot based on a negociation between the two companies, no other company would be bound by that contract, a new contract with different terms would be written up.

It appears that you're assuming Chariot have more power over the licence than ENOG, even though Chariot are the minority partner and ENOG are the senior partner + operator.

Hi Whimax,

I'm not so sure. ONHYM was the original issuer of the licence. It had 100% of it, retained 25% and farmed 75% of it to Chariot, who in turn farmed 45% of it to ENOG (who became operator).

What happens if ENOG run out of time (or run down the clock) before fulfilling their obligations? Even if 45% of the licence were to be handed back to Chariot, how could they progress it with just $1m left in the bank and what if there wasn't enough time left on the licence to find an alternative partner?

Chariot put the licence and its time-limited obligations down as one of the main risk factors in the placing document for a reason.

I don't think we should just brush this concern away in favour of more wishful thinking just because it has been brought up by someone viewed as unsavory.

Does anyone have documentation showing the next obligation for the licence together with expiration date?

Hi Jimmy,

'if a farm in partner fails to complete its farm in obligations by a specified date that the licence interest is re assigned back to the original holder.'

Wouldn't that be ONHYM rather than Chariot then?

Chariot also has obligations under the licence by a specified date(s). It's also the smaller entity and not operator.

This is from the placing document when then took on the Lixus Licence. See P.26 under Licences:

"The licences held by the Group and the associated petroleum agreements impose certain obligations on

the Group to carry out an agreed work programme. If the Group is unable to deliver on its obligations through

lack of funds or as a result of other circumstances the ownership of some or all of the Group’s licences may

be put at risk. The licences are also valid for a limited period and although renewal of the licences is possible

in certain circumstances there is a risk that the licences may not be renewable."

It reads to me that, even if the licence is put at risk by ENOG then that could also become a problem for Chariot and it's timeline/commitments to the licence.

https://chariotenergygroup.com/app/uploads/2022/05/Chariot-2021-Notices.pdf

The thing with the Lixus satellites is we have no idea what's there, if anything. Could be full of water like Anchois East. If they were to decide to drill, then it would definately be a positive. Big if still at this point though.

Fernan,

Appreciate the thoughtful reply.

1. Yes, local high gas prices is certainly a positive, although I'm sure the Moroccan government were planning on the development of Anchois to bring these prices down. The US is rapidly developing its LNG market for export, so a balance needs to be struck somewhere between price, locality and sovereignty of supply, otherwise importing will win out.

2. Yes, a positive.

3. Neutral. Positive in the development case.

4&5. Currently neutral. Positive only if Energean are still interested in progressing in a timely manner. Good to know the carry includes other parts of the Lixus licence and not just Anchois, definately a positive.

I acknowledge that the agreement Chariot did with ENOG over Anchois has the potential for another drill in it.

Not sure if the agreement extends out of Anchois into other parts of the Licence though?

There's also the issue of costs. What's left of the US$85 million gross carry ? Enough for another drill + testing or will it require a renegociation of the contract to add more money?

Thebold,

I have held this dog for over 10 years. Clearly not a trader. Just unwilling to accept narratives from now on.

The latest RNS around the $100m in secured funding was pure narrative with little to no substance behind it.

I get it, you're just unwilling to accept my point of view, which is fine. But just because I have a different opinion to yours doesn't mean I have an 'agenda to drag the SP down further'. Let's be honest, most of us have all been looking at Anchois through rose-tinted glasses believing confirmation of 1Tcf was a mere formality and we were spectacularly wrong.

The bold,

375Bcf is the total estimate for A+B which are the main sands. We don't know what may or may not be extractable from C,M or O sands as there hasn't been a flow test and some of these deeper sands were very small (10m) and they weren't even drilled in Anchois A.

Thebold,

I got the capex numbers from Chariot's annual report, they happily reported that to build extra infrastructure to accomodate gas found in Anchois East would only cost an extra $100m, which is one of the main reasons they bet the farm on a larger sized project.

Starbanker,

The equity hasn't been placed in the Etana business. It's a guarantee to purchase new renewable power by providing developers with revenue certainty. Essentially, BII and GuarantCo are acting as guarantors to encourage the building of renewables in South Africa.

If Chariot were to build new renewable plants in South Africa (to sell power to Etana), they would still need to find the capital to actually build them.

Thebold,

"Chariot estimates that the Anchois B sand prospect has a calculated total net gas pay of more than 50m in two stacked reservoirs of similar thickness. The upper reservoir is a continuation of a reservoir drilled in Anchois-1, with the lower reservoir being newly identified. It suggests upside potential to the 247bn cubic feet (bcf) pre-drill 2C contingent recoverable resource estimate in the high-quality reservoir given it has a 3C resource estimate of 375 bcf."

Has this changed?

KnC,

Yes, theoretically, the deal is still intact for ENOG to drill another well in Anchois. Not sure the wider Lixus area counts though - depends on contract wording whether the wider Lixus area is included in the carry.

The $100 finance agreement is somewhat of a nothing burger. It's just a type of factoring agreement - i.e. a promise by the bank to backstop the purchasing of electricity produced by renewable sources. Chariot will see 2.5% of it through wheeling and it will take years to trickle down.