Member Info for Fernan10

This could be bad or good news, depending on the way Adonis choose to fund a potential investment here.

He has repeatedly proved that he doesn´t care to dilute shareholders to oblivion.

I don´t think that, in the case of O&G production in Angola, EBITDA is the right metric to value a deal.

In order to make the right calcs, it´s necessary to take into account the heavy angolan income tax burden.

It´s amazing to see Wallace still onboard after his consistent 100% failure rate in exploration.

He not only failed exploring. Also his appraisal drilling of previous operator´s discoveries (i.e. Anchois) didn´t produce anything of value (with the only exception of a few thin additional gas sands "discovered" in the A2 well.

Those that have lost more of 90% of the money invested here are now "excited" seeing the share price going from 1.35 to 1.50

This is a management team that, after 18 years of failures trying to develop an o&g project of their own, decided to stop the bleeding and ask shareholder's money to invest in someone's else project, in order to secure their own survival, once and for all.

CHAR is not producing any barrel in Angola. It's simply a failed o&g company, that now had to pay to enjoy the economic benefit from other's success.

That's the real story. The rest is noise.

Share price lower on the announcement of the "transformative deal".

Absolutely no renowned institutional or industry investor participated in the last share placing.

Neither the CFO nor the technical director believe a word of what they say (hence their lack of any substantial investment in CHAR).

The only purpose of the Angolan deal was to secure management's salaries and benefits in the long term. No need to keep asking money once a year for "working capital needs".

They tried to discover or develop an oil@gas asset by themselves. After 18 years of failures, and an horrendous shareholder value destruction, they decided to buy into a third party project, in order to secure their own survival, dilluting shareholders to oblivion.

Management don't need shareholders anymore. Hence the lack of conference calls, webcasts, or any event to clarify this "new venture".

Nobody , absolutely nobody cares about CHAR anymore. Not even its managers.

As I said many times before: the CFO and the technical director have never bought a single share, no matter how low the price goes. The only exception is their investing of a few thousand dollars in each share placing, just to show the market that they are "confident" in the company's prospects.

It's not disgusting, it is what it is. Take it or leave it.

This is a convoluted deal.

CHAR is not part of the production license consortium. It will only have an economic exposure to ETU energia's cash flows.

If the consortium substantially increases CAPEX, CHAR could be exposed to negative cash flows, without the right to receive additional production (due to the cap).

There is limited exposure to high oil prices, due to the contingency payments to be done to the vendor.

Not sure a bond could be issued under those conditions.

After closing the angolan deal, Adonis wil start analyzing business projects to be funded (out of shareholders dilution, of course) in 2027.

Every african entrepeneur with a promising idea is encouraged to submit his/her proposal.

It could be in the areas of water desalinization, green hydrogen, renewable energy, oil@gas production/transportation, carbon capture, battery storage, rare earths, nuclear power, etc

Adonis will NEVER take the company private.

They need the the public market to keep selling his "projects" and issuing new shares.

As soon as he closed the angolan deal, he will start looking for his next "exciting new venture", just to justify yet another share placing in 2027

Just to clarify, if you are producing oil under a production sharing contract (PSC) in Angola, you pay income tax twice:

First, as per the terms of the PSC, the government is assigned a percentage of "profit oil" (normally, between 50% and 70%).

The remaining profit oil is allocated to the "contractor" (the petroleum consortium).

Second, out of profits allocated to the contractor, it is obliged to pay a 50% petroleum income tax.

Then, with a profit oil applicable to the specific PSC of, say 60%, the total government take on profits will be:

60% + (40% × 50%)= 80%

And the contract will receive 20% of the profit.

I suspect that, in spite of his big holding, Adonis is not here to get the best return for shareholders.

He's already a rich man. He had c. US$ 100 last time I checked.

So, maybe his goal with CHAR is to be in charge of a "growing business story". He maybe likes forging solid business relashionships in Africa, attending meetings with african presidents, etc.

Maybe he's here just to show himself and his family that he is capable of running a successfull enterprise ("successfull" meaning "growing")

If he has to keep funding his little precious CHAR out of his pocket, to stay in the game for longer, so be it.

He probably doesnt care if he needs to subscribe shares at 14p, 6p or 1.4p.

Surety:

Forget about Gemini (or CHAT GPT, by the way).

Perform your own due diligence on the angolan tax regime, and you will likely arrive to the conclusion that is a very expensive jurisdiction.

Regards

Surety:

Making all calcs based on taxes/CAPEX of just US$ 25/b is frankly irresponsible. It good be good for you to carefully analyze the details of the angolan production sharing contract before making any cash flow forecast.

Then, assuming:

Oil price: US$ 70/b

CAPEX: US$ 10/b

OPEX: US$ 15/b

Profit oil: US$ 45/b

Government take: US$ 36/b (80% of profit oil)

Contractor take: US$ 9/b (20% of profit oil)

We have:

*Free cash flow to be assigned to CHAR: 4.000 bopd X 365 d X US$ 9/b: US$ 13 million/year

*Repayment of Shell facility by Etu Energias

Shell debt: US$ 170 million (not including interest)

Etu energias WI production: 8.000 bopd

US$ 170 million / (8.000 X 365 d X US$ 9/b): 6 years

Numerical example from CHAT GPT:

Assume:

Production: 100,000 bpd

Oil price: $70

Gross revenue: $7 million/day

Cost recovery limit: 60%

Step 1: Cost Oil

60% × $7m = $4.2m → Contractor recovers costs

Remaining revenue = $2.8m (profit oil)

Step 2: Profit Oil Split (assume 60/40 Govt/Contractor)

Government: $1.68m

Contractor: $1.12m

Step 3: Income Tax (50%)

Tax on contractor share:

50% × $1.12m = $0.56m

Final Net to Contractor:

$1.12m – $0.56m = $0.56m

Government total take:

$1.68m (profit oil)

$0.56m (tax)

= $2.24m

In this numerical example provided by CHAT GPT, out of a total profit of US$ 2.8 million (profit oil), the contractor is entitled to only US$ 0,56 million (20% of profit oil). The remaining profits are taken by the government, through:

- profit oil assigned to the government, and

-petroleum income tax on the amount of profit oil allocated to the contractor

From CHAT GPT

An Angolan Production Sharing Agreement (PSA) (often called a Production Sharing Contract – PSC) is the standard contractual framework used by the Government of Angola for offshore oil exploration and production.

The State owns all petroleum resources.

Basic Structure of an Angolan PSA

The key components are:

(A) Cost Oil

A percentage of production is allocated to the contractor to recover costs.

Typical features:

Cost recovery ceiling: often 50–70% of gross production

Unrecovered costs carried forward

Recoverable costs include:

Exploration

Development

Operating expenses

B) Profit Oil

Remaining production after cost oil is split between:

The Government (via Sonangol)

The Contractor (in the case of our deal, the "contractor" is the petroleum consortium

The split is usually based on:

Production level (sliding scale), or

Internal Rate of Return (IRR-based scale)

Example profit oil split (illustrative):

Daily Production Govt Share Contractor Share

< 50 kbpd 50% 50%

50–100 kbpd 60% 40%

> 100 kbpd 70% 30%

C) Petroleum Income Tax (PIT)

Contractors pay income tax on their share of profit oil.

Standard rate: 50%

Tax is usually paid in cash (not in oil).

As soon as I have time, I will make a few comments about the economics of the angolan share production agreement, and the tax regime for oil production there.

Not near as favourable as the moroccan oil &gas tax treatment.

I explained the same issue again and again.

And you insist on....I dont´know what exactly is your argument now.

But, ok, if you are happy with the deal the way it is structured, then....enjoy

If Gross free cash flow turns negative (because of an increased CAPEX, a lower oil price, or both) of course CHAR will be "forced" to pay.

Read the news release:

CHAR will be "exposed to the economics associated with material production from the working interest to be acquired equivalent to up to 4,000 bopd"

"Chariot will subsequently share future cashflows with Etu Energias equivalent to up to 4,000 bopd"

If cash flows are negative, who is going to "share" them, instead of CHAR? you?

You wrote:

You’re suggesting the Etu/the consortium can increase CAPEX, force Chariot in to paying 10% of it and then NOT increase their share of output accordingly."

Nobody will "force" CHAR to do nothing.

Etu will simply say to CHAR: "this year the members of the petroleum consortium increased CAPEX by XX. So, gross free cash was YY. Here you have your 10% of YY

And you think CHAR's managers are not capable of such stupidity?? Have you ever heard of something call :"Energean farm in deal"?