Member Info for Fernan10

Nelsonthedog:

I appreciate your optimistic view, but it´s clear from the article that ENOG is leaving the country:

From the article: "according to our information, arrangements have already been made in Rabat with the departure of some executives and employees involved in the joint Energen and Chariot project"

It´s game over for ENOG.

On the other hand, ENOG´s departure doesn´t mean Anchois is unprofitable. A small project, yes, but it can still be developed.

From ENOG´s CEO: "it´s better to use a smaller company to continue and operate the project".

I think CHAR will ultimately follow the same path of Sound Energy (SOU).

SOU cut an MOU in 2022 with a Middle East oil&gas company to develop their Tendrara gas project in Eastern Morocco. The definitive joint venture agreement was never signed, and then SOU made an agreement with a local mining company (owned by the moroccan crown) to develop the field.

The moroccans still need the gas. They are currently paying US$ 14/mcf (plus transportation cost) to receive the gas from Spain. They will be very colaborative to help CHAR develop Anchois.

Our problem, as usual, is the lack of cash. If ENOG´s departure means more delays in getting Anchois producing, we will have to issue more shares to keep the company afloat until first revenue. That was SOU´s problem too.

Regards

I can´t see CHAR selling its gas to Europe at the same time that the moroccans import the gas they need. It´s not politically viable.

I don´t think this is technically viable either, given that both physical movements (exports and imports to and from Europe) will have to use the same pipeline.

EOG/CHAR need to secure a fixed price for part of their production, in order to get the funding for the project. We signed an MOU with the local power company to sell (from memory) 60 mmcfd at an undisclosed price.

The price agreed by CHAR with the local power company should be around US$ 8/mcf (similar to the price agreed by Sound Energy, read my previous post on the subject).

Gas price in Spain is around Euros 46/mwh, equivalent to US$ 14/mcf now. This is what the moroccans are paying right now (plus transportation cost).

https://www.mibgas.es/es

So, there is room to negociate a higher fixed price, in order to get the project economically viable and bankable. The 10 year tax holiday will also help.

In order to entice ENOG to keep onboard, maybe CHAR could give up their right to receive a royalty should the selling price exceeds a certain (undisclosed) threshold.

Regards

Regards

It seems our directors only buy at the time of fund raisings, in order to show confidence to the market, and encourage others to buy.

This is a negative RNS. Its most relevant significance is that, even we are not in a closed period, none of the directors are buying at these low prices.

Having the new chairman purchasing shares in the open market is not good news, for the following reasons:

1. his purchase is very small, almost insignificant

2. It means we are not in a closed period, hence no significant, game changer negotiations are taking place behind the scene.

3 the fact that neither the financial nor the technical director are buying at these low prices is not a good sign

Regards

The "near term tangible project" you mencioned was the testing of the Loukos gas discovery well. It would have provided revenues as soon as next year, according to Adonis.

Unfortunately, after spending money in building a water desalination plant in Zimbawe and other extravagant projects, they suspended the testing indefinitely, in order to preserve capital.

That's what it is.

"The initial excitement surrounding low-carbon hydrogen has faded due to high project costs, regulatory uncertainty, and weak demand."

"Only a small percentage of hydrogen projects in North America and Europe have reached final investment decisions."

"Major energy companies like Shell and Equinor have paused green hydrogen plans in Europe, citing poor project economics and unclear regulatory frameworks."

"Investors are not rushing to invest in backing green hydrogen projects, either, due to poor economics and potential returns."

“Green hydrogen is still not investable. It’s rubbish in terms of investment,” Mark Lacey, head of thematic equities at UK asset manager Schroders, told the Financial Times."

https://oilprice.com/Alternative-Energy/Fuel-Cells/Hydrogen-Stocks-Crash-as-Hype-Faces-Reality-Check.html

We are spending money in a product that is expensive, that has no buyers, and that nobody is willing to fund.

"The long-suffering hydrogen sector is still struggling to take off. According to Bloomberg New Energy Finance (BNEF), just 12% of hydrogen plants have customers with offtake agreements. Even among projects that have signed offtake deals, most have vague, nonbinding arrangements that can be quietly discarded if the potential buyers back out. The big problem here is that many industries that could potentially run on hydrogen require expensive retooling to make this a reality, a leap that most are unwilling to take. To complicate matters, green hydrogen made by electrolyzing water using renewable energy costs nearly four times as gray hydrogen created from natural gas, or methane, using steam methane reformation but without capturing the greenhouse gasses emitted in the process. Quite naturally, it's hard to build hydrogen infrastructure when the demand may not materialize for years."

“No sane project developer is going to start producing hydrogen without having a buyer for it, and no sane banker is going to lend money to a project developer without reasonable confidence that someone’s going to buy the hydrogen,” BNEF analyst Martin Tengler notes.

https://oilprice.com/Energy/Energy-General/Why-Is-Smart-Money-Betting-Against-Renewable-Energy.html

I can´t see a management buyout here.

The company will be hemorraging cash for the foreseable future.

The future of 2 out of the 3 "business pillars" (natural gas and green hydrogen) is in the air after the last failure in Lixus.

If they buy the company, theyl will have to fund the expected upcoming cash deficits with their own money.

For them, it´s better to have others readily available to fund the operations via share placings.

Both the financial and technical directors have been reluctant to buy significant amount of shares in the last placings. They have shown that are not very excited about CHAR´s prospects.

It seems the ultra-low share price has prompted Adonis to do all the rights things: as per yesterday´s new release, he´s currently looking for alternative options to fund the renewable energy and green hydrogen business "pillars", he´s cutting overhead costs, etc, etc.

All of these actions, if successfull, will provide shareholder value in the long term.

As soon as the share price goes up, he could be tempted to go the easy way to resolve his problems, by doing another share placing.

Surety:

You can read whatever you want in relation to the change of the company´s chairman.

Maybe the previous chairman got an offer to sell the unprofitable and futuristic green hydrogen division, AP refused to sell his beloved "business pillar", and that prompted the chairman to resign.

By the way, the new chairman was the CEO of IOG PLC. I understand that company bankrupted a few years ago, after failing to pay its debt

Regards

This is what our technical Duncan Wallace wrote in 2020 about the prospectivity of the Lixus license:

"Well-to-seismic ties demonstrate that these gas-bearing sands, mapped as soft (trough) events, show increase in full-stack amplitude response and strong class III AVO anomaly on offset stacks. These properties, along with other qualitative attributes such as flat spots, velocity push-downs and low frequency wavelets, are found in mapped prospects, but absent in proven water-bearing sands. The well-seismic calibration of proven gas-bearing sands at the well location has proven invaluable in de-risking remaining basin prospectivity."

https://geoexpro.com/understanding-the-true-hydrocarbon-potential-of-the-lixus-offshore-licensing-area-morocco/

His excesive optimism about supposedly having found the key to identify gas prospects based on some seismic signals led us to a great failure.

Let´s hope next time he do better.

This are the typical numbers after the announcement of a substantial oil or gas discovery.

Something big is going on behind scenes.

Regards

This is not a problem of having a CEO that is not aligned with shareholders.

This is a problem of having a CEO that makes the wrong decisions (even if he's trying to do the best for shareholders). He spreads the business too thin, destroying share holder value in the process.

The decided to invest in a water desalination in Djibouti, and now they don't have the money to test the Loukos well, being its more important source of potencial short term revenues.

"Tensions in the Middle East are escalating as Iran has issued a stern warning against Israel, threatening to target its energy and gas infrastructure if Israel initiates an attack"

https://oilprice.com/Geopolitics/Middle-East/Iran-Aims-at-Israels-Gas-Assets-if-Conflict-Ignites.html

Hi Jimmy

any idea about how much is the onshore Loukos well flow test going to cost?

How many days of testing are necessary to have a reliable potential production number?

Https://www.youtube.com/watch?v=V41ZM4tTlMY

He mencioned that his company works with Halliburton in all their projects.

Interestingly, Halliburton was part of the drilling team in Anchois-2 (they provided CHAR the technology to evaluate the reservoirs, identify gas-bearing intervals, take rock and gas samples for laboratory analysis, etc).

I´m sure ENOG consulted with Halliburton before entering the farm in deal with Chariot, due to their close business relationship and mutual trust.

The technical teams of both ENOG and Halliburton should be jointly analyzing the results of Anchois 3 now, in order to evaluate the prospectivity of both licenses (Lixus and Rissana) and decide the next steps. Duncan Wallace will be put in the back seat now.

ENOG made their decision to enter Morocco based on:

-favourable fiscal terms (10 years income tax holiday)

-route to existing markets (Magreb-Europe pipeline)

-security of supply (for local industry and power plants, existing and to be built)

See their June 20th presentation, page 8.

I suspect they won´t walk away, and will give another try to Lixus and Rissana

Regards

ENOG´s CEO has already stated that, in order to evaluate the eventual develop of Anchois, will have to renegotiate the gas price with “the Moroccan government”.

I understand that he´s talking about the gas sales principles agreed by CHAR with the Office National de l'Electricité et de l'Eau Potable ("ONEE"), the Moroccan electricity company. CHAR agreed to sale “of up to 0.6 BCM per year (c. 60 mmscf per day) on a take or pay basis for a minimum of 10 years with gas to be delivered via the Maghreb-Europe Gas Pipeline” (see press release on December 12th, 2022).

CHAR never informed the gas selling price agreed with ONEE.

I suspect that price is not very different to the one already agreed by Sound Energy with ONEE for the commercialization of their Tendrara gas project in eastern Morocco (US$ 7.93/mcf).

“The MOU includes a fixed unitary price for a minimum annual volume of 0.3 bcm per annum (approximately 29.0 MMscf/d or 10.13 MMbtu per annum), which will, once implemented, result in first year gross revenues attributable to the Tendrara concession (100%) of US$84 million”

US$ 84 million / (29 mmcfd X 365 days) = US$ 7.93/mcf

See Sound´s press releases here:

https://www.lse.co.uk/rns/SOU/tendrara-gas-sales-agreement-signature-of-mou-fsnd93u8g3ie3yv.html

https://www.lse.co.uk/rns/SOU/gas-sales-agreement-phase-2-tendara-development-e3qvzzki3znghkf.html

On the other hand, during 2023, SDX Energy was selling gas to seven industrial customers in Kenitra, northern Morocco, at an average price of US$ 13.29/mcf (SDX 2023 annual report, pages 8 and 9).

So, in principle, there is room for the Anchois partnership to start negotiations with ONNE, in order to get a higher gas price, more in accordance with prevalent market conditions in Morocco

Maybe the Moroccans will say that they have already provided support to the economics of the project, by granting a 10 year income tax holiday. So there is no reason for them to make another contribution.

But, if the government is currently importing expensive gas from Spain, there is a chance to talk.

The partnership could agree to reinvest any additional revenue coming from a higher price in the drilling of more exploratory wells, to increase the domestic resource in the Lixus area, for the benefit of Morocco.

CHAR can also make its own contribution to keep ENOG onboard, by giving up the 7% royalty payment on Energean’s gas production revenues in excess of a base hurdle on the realized gas price.

If ENOG walks away, we will be in big trouble. We don´t have neither the time nor the cash to look for another partner.

Time for our idiotic managers to do the right thing for the first time. Stop dreaming about new green hydrogen projects or water desalinization plants, and solve this issue ASAP.

One year ago, they asked shareholders to put more money (via a share placing) to fund drilling in the Loukos "new venture", because it would be a faster way to return cash to shareholders, in management´s view.

Now, after spending money in ventures like a water desalinization project in Djibouti, and a green hydrogen pilot project in Morocco, they can´t test Loukos because they need to "preserve capital".

They are clowns, to say the least