Member Info for Fernan10

This management team is a nightmare....no funding for power (or green hydrogen), total failure to appraise a gas discovery....but they keep issuing free shares to themselves

Thanks.

How can I block this guy??

Any idea?

Extract from the Upstream online article:

“We found gas, but we didn't find enough for us to justify development,” Rigas told Upstream on Friday.

"Rigas told Upstream previously that Anchois would have to house at least 500 billion cubic feet of gas to be developed but that field development would come down to negotiations on gas prices with the Moroccan government."

2 ways of interpret it:

1. Anchois has less than 500 bcf of gas, so its development is not justified for ENOG

2. Anchois is a small prospect, slightly higher than the minimum threshold of 500 bcf of gas, but in order to develop it, we need to renegotiate the selling price with the moroccan government, who refused to do that.

From Upstream online:

"But while Rigas confirmed the partners are still finalising the technical assessment of the appraisal well, the project will “not move forward, at least not under our management.”

"Energean does, however, remain optimistic about further gas opportunities in Morocco due to its “co-operative government," stability and some of the “best” tax regimes in the world for oil and gas development."

The second paragraph could also be interpreted in the way that ENOG is going to completely exit the Lixus and Rissana licenses (fully dissapointed by the Anchois drilling result) but will keep looking for other business opportunites in Morocco, given the country´s stability and favorable fiscal regime.

Time will tell

If ENOG keeps being a member of the Lixus license partnership, I understand that they will remain committed to the US$ 85 million gross carry (even if they withdraw from developing Anchois).

According to CHAR´s presentation of the farm out agreement, CHAR will receive from ENOG:

"US$85 million gross carry including:

All Lixus costs up to FID, including the additional Anchois well with a gas flow test

Planned Rissana seismic acquisition costs separately capped at US$7 million"

It´s clear that the carry oblitagions were agreed in relation to exploration and development expenditures in the whole Lixus and RIssana licenses, not only the Anchois project.

FIRST:

Moroccan fiscal policy: income tax holiday for the first 10 years of production, FOR EACH INDIVIDUAL PRODUCTION CONCESSION. That is, if Anchois gets FID, it would be a granted a production concession for the area of Anchois, cut out from the remaining Lixus exploration license. That production concession will be tax free for the first 10 years.

If, later on, another prospect in the Lixus area gets FID, it would be granted an individual production concession area (apart from Anchois´) and that new area will be given another 10 year income tax holiday.

SECOND:

In addition to the benevolent moroccan fiscal policy, there is the attractiviness of the local price for natural gas.

The moroccan gas market is 100% connected to the european market. Morocco is currently importing gas from Spain, paying US$ 14/mcf (plus transp).

SDX is selling its gas in Morocco to local industries for US$ 17/mcf (see their last semiannual interim report).

Compare that with a price of US$ 3.23/mcf in the USA (Henry Hub price).

Regards

Maybe ENOG is starting realize that Morocco could be an easy way to access the lucrative european gas market, tax free for the first 10 years of production.

As a comparison, their Tax expense for the israelian operations during Q3 is US$ 88 million (see note 6 to their financial report)

They could be looking to see if they can find more gas somewhere else in the Lixus (and Risanna) licenses, before making a decision regarding staying on board or not.

Regards

By the terms of the farm out agreement, ENOG is obliged to pay the first US$ 85 million of exploration and development expenses.

What happens if ENOG cancels the contract after spending less than US$ 30 million?

Any compensation for CHAR?

SDS is selling its gas for US$ 17.29/mcfd.

OPEX for their onshore wells are US$ 10.63/boe. This is equivalent to US$ 1.77/mcf

See those numbers in last SDX´s semiannual interim report, page 4

If the Loukos well produces say 5 mmcfd, at a selling price of say US$ 12/mcf, the economics of the well would be as follows:

Selling price: US$ 12/mcf

Royalty: 3.5%

OPEX: US$ 1.77/mcf

Production: 5 mmcfd

Annual cash flow from 1 well: 5 mmcfd/1000 * ((US$ 12 X (1-3.5%))-US$ 1.77) X 365 days= US$ 17.903.250

That would be more than enough to cover annual G&A expenses.

I still think that natural gas production in Morocco could be a profitable operation, given the country´s need for gas, and prevailing local prices. We need to sell/farm out the renewables and green hydrogen divisions, and concentrate the efforts in the most profitable "business pillar"

Regards

SDX (a company that is already producing some gas in Morocco) reported a G&A cost of US$ 2.1 million in 1H 2024 (see their interim report, page 6).

CHAR informed a G&A cost of US$ 5.1 million during the same period (in addition to US$ 2 million of share-based payments). And that was in a period of 0 (cero) production.

THAT is our problem. Not the economics of Anchois or the likely departure of ENOG

Regards.

We have a commodity that can be produced for less than US$ 3/mcf (CAPEX + OPEX), is currently being imported for US$ 14/mcf + transp cost (see prices in Spain) and is being sold locally for US$ 17/mcf (see last SDX semiannual interim report). An it will be produced income tax-free for the first 10 years.

Our biggest problem is not the economics of Anchois, but the financial vialibity of CHAR, given the rate of spending in G&A and other "ventures".

Regards

Regards

I understand we still have a valid license in the Barreirinhas basin, located in Brazil´s Ecuatorial margin, in the northern coast of the country.

Petrobras plans to drill up to 15 wells in that area until 2029. The Ecuatorial margin is a continuation of the prolific Guyana-Suriname oil basin. Estimates are for a multi billion barrel potential. I personally think there is a lot of oil there, waiting to be discovered.

https://www.poder360.com.br/poder-energia/petrobras-investira-us-3-bi-na-exploracao-da-margem-equatorial/

By memmory, we have a multistacked oil prospect in our license, with c. 900 million barrels of prospective resources.

If Petrobrás´upcoming drilling campaign achieves some success, we can initiate a farm out process there.

But it´s a prospect for the next decade.

Regards

See Sound´s precedent.

Because of SOU´s lack of cash, they have extended their gas exploration licenses in Morocco on multiple times (and they are still extending some of them) until they finally got an investor.

Regards

I agree with BCD and others here that our managers are idiots.

But if they can put a minimum intellectual effort to develop Anchois, we can still have a viable business here.

SDX sold their gas locally for an average realized price of US$ 17.21/mcf during 1H 2024 (see page 4 of their Interim report).

That price would be an absolute game changer for Anchois.

So I think there is room to make Anchois profitable, even in a small scale, with all the gas being sold to local end users.

Regards

I still think Anchois will be developed, albeit at a small scale, with all production being sold locally.

There is a big economic incentive for the Moroccans to exploit its domestic resource. They are currently importing gas from Spain, paying US$ 14/mcf (plus transportation cost). The public electricity company has already agreed to buy domestic gas from Sound Energy at US$ 8/mcf. We have likely agreed a similar price in the MOU already announced by CHAR to provide the local power company with 60 mmcfd.

We will likely farm out the project to a local investor, similar to SOU Energy´s.

PROJECT CASH FLOW

ASSUMPTIONS

Gross resource: 450 bcf

80% of the resource is produced during the first 10 years, tax free

This is equivalent to a daily production of c. 100 mmcfd (450 bcf X 80% / 10 years / 365 days= 98 mmcfd)

Gas selling price

We sell the first 60 mmcfd to the local electricity company, at US$ 8/mcf (similar to Sound Energy´s price). The remaining 40 mmcfd are sold to local industries, at US$ 12/mcf (similar to current market prices):

Average selling price= ((60 mmcfd X US$ 8/mcf) + (40 mmcfd X US$ 12/mcf)) / 100 mmcfd = US$ 9.6/mcf

Royalty: 3,5%

OPEX: US$ 1/mcf

CAPEX: US$ 600 million

Leverage: 75% debt / 25% equity

Interest rate: 10%

Char´s equity interest (after farm out): 25%

CASH FLOW (GROSS):

Gas sales: 450 bcf X 80% X US$ 9.6/mcf: US$ 3.456 million

Royalty (3.5%): - US$ 121 million

OPEX (US$ 1/mcf): 450 bcf X 80$ X US$ 1/mcf = -US$ 360 million

CAPEX: - US$ 600 million

Interest payments: - US$ 600 million X 75% X 10% X 10 years: -US$ 450 million

Project cash flow for the first 10 years: US$ 1.925 million

Project cash flow (net to 25% CHAR´s equity interest): US$ 481 million

Regards

I think that, after ENOG´s departure. we still have options to develop Anchois.

As I said in a previous post, as usual, our main problem is the lack of cash, and the timing required to follow another path to development. Farm out agreements always take time, and that is something we don´t have.

Regards

Surety:

I still think the moroccans are our best option to develop Anchois.

Taking into account gas import cost, if they can save, por example, US$ 4/mcf on 100 million cf/day, that is an annual saving of around US$ 150 million annually. They will be willing to invest say US$ 500 million to develop the resource.

And by doing that they will achieve "energy security". They will be no longer exposed to any eventual gas shortage or chance of energy policy in Europe.

Regards

Regards

As in the case of SOU, we will likely have to develop Anchois as a minority partner in a project controlled by the moroccans (with our most important client being the local public power company, and our majority partner being a company controlled by the government).

By the way, the credibility of our technical director should be questioned by the board. After more than 10 years in the E&P investment business, I can´t remember such a failure in the drilling of an "appraisal and future producer" well.

Regards