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Oops, typo $44 million in cash total.
Price is now in ludicrous territory Lol 😅
Cash position: $19 million (raise) + $10 million (Energean) + $15 million (at FID) = $49 million.
20% share in 1Tcf of gas with a 10yr tax holiday.
Finance & production engineering partner secured.
Company carried to production for their portion of Anchois costs up to $170 million in CapEx.
Own 75% stake in the large onshore Loukos licence (x3 wells soon to be drilled within the next couple of months). Licence has high chance of success (CoS) at 80-85%.
All for a valuation of £92 million! Quite extraordinary really!!
Thanks for the inbox message but I'm not a premium subscriber either, so wasn't able to access it.
Please could someone send the link to: bouncydeadcat@gmail.com
Thanks
Jagua,
Please could you also send me the link
An increase in shorting activity would at least give a reason for the sell off.
Having short positions open on the stock would not necessarily be a negative either, for in order to close their shorts, these trading houses would have to buy the stock.
I guess they don't want to be short the stock prior to drilling, for if/when they find more gas, they would need to buy back during a pump phase.
DealBreaker,
Whilst I agree that the eventual outcome of the deal is still pending (FID), your statement that there is no current deal in place is false. At a minimum, there is a baseline deal. See below.
Quoting directly from Energean's own RNS
"If the (additional 10%) option is not exercised, subject to FID, the partners agree to progress the Anchois development with an ownership structure of Energean 45%, Chariot 30%, ONHYM 25%. All amounts carried by Energean on
behalf of Chariot would be recoverable from Chariot’s future revenues under the same terms as above."
https://www.energean.com/media/5612/morocco-country-entry-and-farm-in-to-gas-development.pdf
Not for LLOY, it's a perpetual dog of a share. Hasn't gone anywhere in 14 years.
Jimmy,
Okay, so if Predator's 10 mmcf per day Moroccan onshore project is being valued at over $71m net to the company (Predator's valuation is only 18% behind this today), then 4x this for Chariot at 40 mmcf per day would equate to a net value of $280m which pretty much equates to the additional 27p per share.
Predator Oil & Gas value their Moroccan onshore project (which is 1/10th the size of Anchois at 10 mmcf per day) at over $71m net to the company. And even without a farm out / development partner, Predator the company is valued at $58 million. Although Predator have a couple of other assets in other countries, onshore Morocco is the only asset of theirs that is being actively progressed.
Chariot's valuation by broker Cavendish
Assuming Energean exercises its option to acquire a further 10 per cent stake in Anchois, broker Cavendish values the total unrisked valuation of Chariot to be 71p per share for the entire company. They value Anchois alone at 44p (unrisked), this means they are putting a valuation of 27p per share onto the other parts of Chariot's business (Onshore, Hydrogen & Renewables).
As the hydrogen and renewable businesses are still in their infancy, I assume (rightly or wrongly), that the majority of the 27p for other parts of the business is what Cavendish is applying to the unrisked valuation of Chariot's 75% stake in onshore Loukos.
The results of onshore drilling (Jan/Feb 2024) if successful, has the potential to surprise many.
Jimmy,
$8 mcf was the price pre-russian invasion.
Post-invasion, the rate for Moroccan industrial gas has been between $10-$12 and it currently remains above $11 mcf.
Gooner,
On spud day Anchois East, I bet you we're above 18p.
To clarify, when I say immediately sell them, I mean immediately sell them at first gas (when the lock up period ends).
If Energean elect to proceed and acquire the further 10% of Anchois, Chariot will receive one of the following:
I. 5-year, $50 million of convertible loan notes with a GBP20 strike price and 0% coupon; or
II. 3 million Energean plc shares, issued immediately upon exercise of the option but subject to
a lock-up period until the earlier of first gas and 3 years post FID
If they opted for the non-lock in period of 3 million Energean shares (currently valued at $36 million) they could, in theory, immediately sell them and pay back a chunk of the $170 million in carried cost early. Interestingly, these shares also come with a 10% dividend.
SP reaction has little to do with absent flowtests. Reservoir quality is excellent with excellent porosity. Flowtesting is more of a formality at Anchois.
The terms for this great farm out deal are dependent on the next drill. This is what the market doesn't like. Is the read-through data going to be as accurate as everyone thinks? Next drill will confirm as it's in a different location.
'planning to halt lending to some new oil and gas projects'
Choosing to employ such strategies as defunding oil & gas developments makes my mind boggle. It's only going to make the stuff more expensive and the companies that produce it more profitable.
Correction, I meant to say high yielding commercial bonds, not paper. i.e. B grade or junk bonds that yield about 8.31%.
Hi Jimmy,
I'm not so sure. High yielding commercial paper is currently being issued at around 6-7% and what Chariot were offered from Energean was a better deal than what the banks lead by SocGen could offer them under a debt finance agreement (which would have also come with recourse clauses).
Fernan,
The RNS states that the cost has a coupon of 7% over the SOFR rate, not in addition too.
With regards the 7% royalty, we don't know any other details other than what it states in the RNS. Like I said, there's no mention of a price difference for when the 7% royalty kicks in. It just says there's a hurdle rate to exceed. With such vague language it's difficult to know.
Fernan,
That doesn't make much sense to me. Firstly, 7% over what if not SOFR?
Secondly, at 12.3% you're almost talking credit card rates, so we'll have to agree to disagree on your interpretation.
Also, nowhere in the RNS does it state any 'difference' in price. It simply states, and I quote “7% royalty payment on Energean's gas production revenues in excess of a base hurdle on the realised gas price (post transportation costs)” This to me implies that if Chariot can sign the GSAs above any such base hurdle rate, then the 7% of Energeans revenues apply. Also, when looking at other O&G deals structured this way, the hurdle rate usually represents the minimum required rate of return set by the partner who's making the investment in the project. i.e. if you can deliver above contracted rate 'X' we will return 'X%' revenue back to you. It's an incentive mechanism. Not only does this kind of structure help protect the farm in partners invested capital, it also secures the minor partner as a continued & active participant in the project negociations and administration rather than being a post farm out free rider who's not going to do anymore work on it.
Jimmy,
The more you look at the structure of the deal you see drivers for incentivising both parties throughout it. Chariot will need to keep working hard on the administrative, technical and exploration side in order to achieve the additional 7% revenue particularly with regards to the GSAs it signs.
I've generally been working on the assumption of 1Tcf @ $10 per mcf for the project, which is somewhat due to these figures simplifying my own calculations as well as what I think it'll take for Anchois to be a viable and thus attractive project to develop (1Tcf).
I also fully accept the entire Anchois/Rissana project could end up being priced anywhere from 7.5Tcf @ $15 per mcf to 638 Bcf @ $8 on a final outcome basis.
I therefore think 1Tcf @ $10 per mcf is reasonably conservative.
For the onshore gas going to power and industry, I'm going to assume a slightly lower rate of $8 per mcf (for the slightly lower grade of gas). Will wait to see what kind of quanitieis they find (or don't) in February before I start to put any revenue forecast together for onshore.