Member Info for BouncyDeadCat

I think you miss the point.
+48% up today :)

What I got from the conference call is that they are going to start running Chariot in the interests of Shareholders rather than a lifestyle business for board members. Adonis is the largest Char shareholder and he's now calling the shots.

What do they mean that they won't do a deal that doesn't fully value Anchois?

Pretty obvious isn't it. They aren't willing to give the asset away on the cheap, regardless of the current global conditions. Why would giving away a chunk of the asset away for pennies on the pound be good for shareholders? They know what they have is valuable and they have the cash to wait for sensible offers.

'We have a massive gas discovery within 75km of a major gas pipeline extending from Algeria into Europe which also feeds two local power stations that have grown their gas usage by 15% per year.'

Sounds like they've had partnership offers already. But they aren't willing to sell off a stake for too cheap.

'There is a consortium of potential partners'.
'We have not accepted any of the current partnership offers as we feel they don't yet offer enough of the significant value of Lixus back to shareholders. The recent upgrade in reserves will improve this.'

Julian Maurice-Williams
Chief Financial Officer

Larry was a geologist with a skill set geared towards exploration. With Lixus being a discovery, at this stage of the game, Chariot need a proven deal-maker to farm out a percentage of the licence and to negiociate terms for debt financing.
Based on previous experience, Adonis could be the man to do this.

In terms of future opportunities, Morocco wants and needs gas, so this is about the ONHYM working with experts and deal makers who can deliver that for them. If Chariot can get the Lixus project financed and ultimately built, then other opportunities (Licences) within Morocco could be offered to them on preferential terms, especially if their gas pipes run close by.

Risk/Reward
Lixus has a decent amount of gas. It's a viable project given Moroccan gas prices.
Morocco needs gas.
Money is cheap, but fear is high.
COVID-19 has been extremely disruptive. Globally, 2020 has been a very unstable year.
A lot of potential partners will be waiting for global conditions to stabilize before deciding to deploy capital.
Chariot needs to cut costs (which it's done) and remain a going-concern whilst it negociates project development with potential partners. With $9.6 million in the bank (probably somewhere closer to $8m now), they hopefully have enough time to negociate a good deal.

Downside risk would be if they try to rush a deal and give away too much for too little. Shareholders need to be patient and give Adonis some time to broker deal(s).

"$3.5m free cash. What sort of ‘opportunity’ does Adonis think he’ll get for that?"

They purchased the Lixus licence for $1m, so maybe three and a half of those :))

Not half a billion.
Let's not continue to peddle that falshood.

https://www.proactiveinvestors.co.uk/companies/news/922093/chariot-oil--gas-continues-to-advance-work-to-unlock-morocco-gas-project-922093.html

They have a meaningful quantity of gas.

I guess I just don't understand the moaning mentality. Why spent everyday coming onto a bulletin board to moan about a company you're supposedly invested in? If I don't like a company or the way it's run, I sell up and move on. I don't spend everyday moaning about it. It's actually quite sad.

It's funny how people read the same text and reach completely different conclusions.
There are some here (who I suspect are the same person using different avatars), who will never see or acknowledge anything in a positive way and will always want to complain and moan. Chariot could drill Anchois north and find x5 times the expected gas and they'd still be negative towards the company :)

'So if the expected revenue is US$150m and the payback for development costs 2-3 years, we are talking about an investment of US$300m to US$450m.'

That's not true. Not every penny generated via revenue will go to paying debt. Have you ever run a business? That's not how it works. Expect cost of build to be closer to $200m.

They have gas and are ready to create a gas business:

“Development Feasibility Study completed. Results confirm technically feasible with the potential for either a single phase or a staged development to commercially optimise access to different parts of the gas market.”

Going for two wells rather than one:

“Subsea-to-shore development, two wells tied back to a subsea manifold, from which a flowline and control umbilical connect to an onshore Central Processing Facility ("CPF"). All current, off-the-shelf technology. Numerous examples of this development scheme being implemented. “

Anchois + Anchois North?
“Anchois Satellites offer material tie-back opportunities with 588 Bcf 2U prospective resources. One of these, Anchois North, confirmed as the low risk priority satellite with 308 Bcf of 2U prospective resources and probability of geologic success of 43%.”

Drill bit is ready to go:

“Drilling Environmental Impact Assessment ("EIA") completed and approvals received.”

Designing and costing the build to present to interested parties (of which there are several, from different parts of the sector) as well as to unlock debt financing:

“Progressing pre-Front End Engineering Design ("FEED") work programme to optimise and reduce uncertainty in project cost, volumes and price to deliver potential partners and unlock debt financing.”

More like time to design the build and cost it all up. Although it's a relatively easy build, it's not going to be a quick tunaround. It's the cost of building a small skyscraper.

Reading the report, they seem to already have a preliminary agreement on the debt financing, but it appears the condition on acquiring it, is to put two wells into production rather than one.

Morocco Ministry of Energy are administrators, not sub-sea drill/infrastructure experts.
For the project to be viable it needed decent gas prices (Morocco now has those) and a company willing to develop it rather than sit on it for 10-20 years.
Although 70mboe would make a nice business for Chariot, it probably wouldn't be of much interest to a major, super major or a large scale independent global player. The risk is in proving the satelites surrounding Anchois have similar reserves. Farm out will come if others conclude that gas is also contained in the satelites and it becomes a bigger project than the Anchois discovery which is still a viable stand-alone project.
Markets be markets and sometimes they present fantastic opportunities and sometimes they make no sense at all (Hertz) :)

There is already a 70mboe discovery. Combine this with off taker supplier agreements to purchase at $x and you have a viable business.

Well they have...
They drilled the cheapest deep water well in the last 7 years. That means they are pretty good with costs, planning and sourcing supplies.

Their track record for delivering low cost drills is very good though.
Lixus shouldn't be confused with needing a farm in partner (although that would be nice for validation purposes).
Lixus is a ready-to-go large scale gas supply business with high off taker prices - it could be debt financed.
Money all over the world is quite cheap right now and Lixus is a reasonably straight-forward play that can be developed using off the shelf components (Low cost drilling and sub-sea infrastructure is where the Chariot BoD has proved it can obtain value for money).
If debt financing produces much better economics than partnering with a major or large independent could, then I wouldn't see that as a failure. Quite the opposite. The BoD are also significant shareholders now that they have agreed to take even more of their salaries in options as opposed to cash. They'll want the value on their shares maximised like the rest of us.