Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Lol. I've just been kicked out of the Chariot Telegram group for refusing to believe that some of the people in there are having personal phone calls with AP - the CEO of Chariot - about the trading of Chariot shares, including the selling of those shares by 3rd parties.
No CEO is his right mind would be discussing the trading of company shares with random investors on a one-to-one basis.
Please don't be one of those people who believes someone, just because they tell you something you WANT TO believe is true.
Holding RNS was 3rd Aug.
On second thoughts, Covalis could have gone short on their CFD and sold real Chariot shares to help lower the share price, in which case they will have made a lot of money 🤷
Hard to know as we don't know if Covalis was long or short Re: their Chariot CFD.
Jimmy,
It looks like they have sold a 1.33% stake in the company to cash settle the CFD.
I suspect they took out a leveraged position on their CFD and it went against them, so they had to sell (real) shares in the company to cover it (and lost money in the process). Only a guess, but when a leveraged trade goes against you, you need to find the cash from somewhere to cover (cash settle) the negative margin position it creates.
Original 6.24% Holding RNS by Covalis
% of voting rights attached to shares = 2.79%
% of voting rights through financial instruments = 3.45%
Total = 6.24%
Latest RNS by Covalis
% of voting rights attached to shares = 1.68%
% of voting rights through financial instruments = 3.23%
Total now = 4.91%
Onshore snippet from presentation:
Widening gas supply/demand gap to industry at Kenitra:
2021: Industry Demand was 10mmscfd. Local Supply was 7.5mmscfd.
2022: Industry Demand was 10mmscfd. Local Supply was 5mmscfd.
2027: Industry Demand anticipated to be over 15mmscfd.
CNG Benefits to Initiate Development:
Lower CAPEX to suit an initial, smaller but scalable development.
Fast and manageable option with reduced permitting & construction.
Multiple financing solutions available (vendors, offtakers, local banks).
CNG Benefits for Loukos
High quality gas = simple treatment and decompression facilities.
Proximity to market at Kenitra with very high prices.
Modular contruction, enables rapid growth.
Assets re-deployable to other markets once pipeline constructed (Rabat & Casablanca).
The Stifel presentation puts a bit more meat on the bones from a business and monetization point of view.
As I suggested last month, the longer term plan must surely be to connect Loukos gas to the Kenitra pipeline using funds from trucking CNG at the initial stage of monetization, which the latest presentation appears to confirm is the plan.
Industry at Kenitra requires 15mmscfd, so if/once Loukos gas is able to exhaust the industrial market demand in Kenitra, it can pump any extra gas they find into the GME. By which time the CPF will be online (GME will require a slightly cleaner grade of gas than industry).
Currently Chariot is priced at Energean refusing to take the additional 10% and Chariot having to find alternative funding for offshore Loukos. i.e. it's very negatively priced. Onshore Loukos potential is not priced in at all.
Presentation also confirms that Vivo Energy can't supply the industrial sector at Kenitra with the volume of gas it needs and also suggests the gas assets feeding that region (Rharb) are also running out.
What's a small utility company (with its own in-house renewable electricity production capabilities and water treatment facilities) worth in a G20 country that's just opened itself up to the free market?
I'd figure it's a fair amount to the right group.
A quick back-of-the-envelope calculation on what Chariot have already spent on the renewables business to date;
$4.5m in capex (Purchasing of AEMP, ETANA and the water treatment business).
$1.7m in G&A (circa $565k per year).
$6.2m Total.
They've also added a few projects that they tended and won over the last 3 years, so hopefully there's a decent chunk of value that's been added as well.
Ajc,
Chariot have spent $5-$10m building the renewables business up.
To only receive $5-$10m for it would be beyond disappointing.
We've hopefully added a degree of value to it over the last 3 years.
Drilling foundations have been laid for Guafrette (drill 1) and they're now moving on to lay the foundations for Dartois (drill 2). Actual drilling will happen towards the end of Q1. 2-3 weeks.
Chill.
Agree Etana was a good add-on for the renewables business, but moving forward, surely all monetary resources must now be deployed solely on developing the Moroccan gas assets to production. No more buying small desalination water plant businesses that might be useful in 5+ years - Unless of course, that same water treatment business could be deployed to treat the waste water in Loukos at a fraction of the cost charged by a contractor? would be a shrewd cost-saving move if so, although they haven't told us it will, so got to assume not.
The initial number proposed was 3 wells, which they could still manage within current budget, although I think most investors would prefer them to wait for the Energean money to come in first.
You can kinda see what AP was trying to do with regards the other two pillars, build them up a bit before spinning them off into separate entities, but with very limited capital.
Fernan,
Onshore wells cost $3 million each. So it's going to be $6 million for the other 2.
The other two wells will get drilled, but will have to wait for the Energean money to come through. Also, having drilled the two wells with the highest chance of success, the data collected will be valuable in determining exact locations to drill the next two.
Loukos onshore is very much happening in stages. This was confirmed yet again in yesterday's technical presentation.
However, now that we approach the pointy end of the stick regarding gas development & production, I do agree with your wider point about the smaller company transactions that were being made by AP, they are going to have to stop as they will be a hinderance to creditability as we enter a critical development phase and any aquisitions, no matter how small, will put larger investors off. 100% concentration must now be on Moroccan gas, at least for the foreseeable future. I think this message has already hit home, but as a shareholder, feel free to write to AP in order to remind him that it's not something you want to see more of. If AP buys anymore minnow companies, without specific funding coming in for those separate entities, then I think there's going to be a lot of pushback from shareholders.
Thebold,
You said it in your post below.
Even if it's dry gas, wouldn't it still need a compressor? I presume these can be rented as ready to use platforms?
I also think it will still be a year or two before Chariot sees any revenue from Loukos, but the fact that they would already have a couple of production wells in place, as well as a plan for achieving cashflow in incremental stages, would make Loukos a lot more attractive, either to farm in partners and/or a consortium of banks. Taking developmental action now means Chariot either get to keep a lot more of the pie, or there'll be more competition to provide the debt financing based on a lowered risk profile (which would mean better terms/rates).
Fernan,
Chariot have already performed and received an Enviromental Impact Assesment (EIA)
https://www.lse.co.uk/rns/CHAR/eia-approval-received-for-loukos-drilling-campaign-sijdq5arme5jqnm.html
They wouldn't be using expensive production grade casings if theses two wells were exploration only.
Does suggest they are very confident that they already know exactly where the gas is located and in what quantity and in what quality/type of reservoir.
Thebold,
Yeah, a fraction of the price in Morocco.
Wouldn't a deal with Vivio for x% of all Loukos gas sales in perpetuity (in lieu of pipeline capex) be the more likely option to go down? Vivo then also responsible for all maintence and repair of the pipeline too. I think that's generally how they do it in North America. Anyway, probably won't even be up for discussion until Chariot are onto their 4th or 5th well (unless they were to hit that 300m reservoir Jimmy talks about :)
Was thinking similar for the first 2-3 wells, a very simple transportation set up. Kenitra looks to be about 75-80km away from Loukos.
Thebold,
Looking at Chariot's scaled map, the start of the pipeline network that feeds gas to industry in Kenitra in the South, looks to be approximately 15km away from our drill sites in Loukos.
As I'm fortunate enough to be in the ABC camp, I'm not interested in encouraging other investors to do more research or rather, I'm not interested in doing their research for them. I think investors will turn up post-drilling results and pump the price anyway, hopefully after Loukos, but might have to wait until post-AE. I don't really care either way as this morning I was able to buy another decent amount at 7.41p and I'm closing in on an average of 11p. Just a couple more top ups and I'll be there. Ultimately, I'm then just happy to wait for Anchois to unfold, as that's the real jewel in Chariot's crown.
Regarding Loukos, in the latest presentations Chariot have been indicating that they're most likely to CNG the gas from the first few Loukos wells, which would be the cheapest & quickest way to get the anticipated 10 mmscf/d to market. When asked about the $3 million per well cost and whether this was total cost per exploration well or per developed well, Duncan replied it's for both. In which case, they must be going straight in with production-grade casings.
A) You haven't put you & your families entire life saving into Char
B) Have regular spare income coming in
&
C) Can afford to wait for these Moroccan gas assets to progress through to production
The current share price is a gift.
imo.