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He spent US$ 1 million in 1H in the hydrogen project (first revenue for the next decade, if ever) instead of preserving cash to test Loukos (first revenue for 2025, according to his own words in the last conference call).

He performed one of the best ways to destroy value: spread too thin, spend too much, don´t care about near term cash flows, keep investing in "jam after tomorrow" projects, all funded by shareholders dilution.

The result: a 1.5p share price

Selling gas assets (Anchois, Loukos) without flow testing is a sure way to secure a low ball offer.

Instead of flow testing at least one of them, they are planning to sell both untested.

What a bunch of idiots

They are idiots Surety. Don't make a mistake about that.

They've just screwed the testing of Loukos up. It was their only chance to get to cash flows ASAP.

No income forecast for the near future, just more expenses (funded by more share placings, of course, if they have the chance to do that).

Time to get realistic and stop dreaming here.

Balances on June 30 (in million US$ dollars)

Cash position: US$ 3.6 mio

Trade and other receivables: US$ 2.2 mio

Accounts payable: (US$ 7.3 mio)

+ share placing in July/August: US$ 8.5 million (net of placing expenses)

= cash available to keep running the company: US$ 7 mio

At the current rate of expenses (more than US$ 1 million per month), cash will run dry by December.

If they finally spend the previously informed US$ 2 million to get the new license in Namibia, cash will disappear by October. I´m sure they will do anything to get that license, in order to show the market a new “jam tomorrow” project, to justify future placings.

No wonder the testing of Loukos was suspended “until further news”, in order to preserve cash.

This is what happens when you have a company run by a bunch of idiots: they spread too thin, and now they don´t have the money to test a previous “discovery”.

They spent US$ 8 million in 1H 2024 (in green hydrogen, G&A expenses and, of course, share bonuses) only to find some gas and a lot of water. Terrible value destruction has happened here

I´m not selling, but I don´t expect any significant price recovery either.

Hi Surfit.

I expect 3 mmcfd from Loukos will generate a monthly operating cash flow (net to CHAR) of around US$ 540.000 per month, or US$ 6.5 million per year

3 mmcfd X US$ 6/mcf X 30 days: US$ 540.000 X 12 months: US$ 6.480.000 per year

I know that natural gas prices in Morocco are around US$ 12/mcf. But part of the income will go to the midstream operator (Vivo). Without any available cash, I don´t expect CHAR to participate in an eventual midstream partnership.

And then you need to pay for Loukos´operating expenses. That´s why I think the price of CHAR (net of expenses) will be substantially lower than US$ 12/mcf.

If Adonis finally decides to make a serious dent in G&A expenses (including his own salary) this cash flow will allow CHAR to thrive until the development of one of the projects in the portfolio.

Regards

Hi Surfit

Your doubts along the way bout the financial strategy of the company were justified. You know I have written a lot about that here.

But now, I doubt there will be any management take over here.

I suspect Adonis will try to find something else to entice the market (Namibia, farm out of a renewable project in South Africa) and make another share placing next year, in order for management to keep receiving their salaries, bonuses, etc.

They make me remember of a priest that keeps talking of "hope tomorrow", all the while receiving expensive donations from the loyal members of his church .

Those who participated in the 2022 share placing at 18p (to fund Anchois FEED, among other things) are more than 90% down. The value destruction here is of epic proportions.

CHAR´s management have executed:

- 55.000 hours of FEED, woth millions

- a pipeline tie-in agreement with ONHYM

- a gas sales partnership with VIVO

- a non binding gas sales agreement with ONEE

- a project finance advisory contract with Societe Generale

- a partnership agreement with ENOG

In addition to that, they presented the project to potential investors, the moroccan ministry of mines, etc, etc.

If Anchois fails, everybody in the O&G industry will be laughing at them. The moroccans will look at them as if they are a bunch of idiots.

I would like to know what the parties agreed to be included in the US$ 85 million (gross) carry by Energean, pre FID. Likely a second well, together with additional seismic reprocessing.

The diagram in page 13 of December 2023 presentation implies a distance of around 2.000 metres.

But I´m not sure that´s correct

After spending a few months analyzing the data from Anchois 1 &2, CHAR stated that "Simulated INDIVIDUAL well productivity in the base case is 100 to 200 mmscfd" (December 23 presentation, page 14).

Then, even after Anchois 3 dissapoints, A1&2 still could make for a profitable project

Regards

I would like to know what exploration/development activities where planned to be completed as part of the US$ 85 milliion (gross) carry by ENOG pre-FID.

IF, as Adonis already said, FID was anticipated to be taken next year, then all those works should have been planned to be performed in the next few months.

After spending US$ 25-30 million in Anchois 3, there is more than enough room to drill at least another weill.

Regards

As I said in a previous post, after the last share placing, an even after eventually spending the estimated US$ 2 million to get the new Namibian license, they will still have c. US$ 10 million in the coffer.

The right thing for CHAR to do will be:

1. immeditely sell the "green hydrogen" business. It makes no sense for a minow 1-pence-a-share company to keep experimenting with a technology that is not proven to be economically and technologically viable yet, and that will not make any income for the next few years

2. farm out and self fund at least one transitional power project, to stop spending money in that division

3. cut salaries and overhead, to reduce G&A expenses to no more than US$ 5 million per year

By doing that, the US$ 10 million cash balance will allow the company to continue as a going concern for the next 2 years, enough time to give another try at Anchois (with or without ENOG).

I still think that Anchois is the most important asset that the company has in the portfolio.

Of course, I don´t think any of this will happen. Adonis will keep spending almost as usual (with minor cost cuts here and there), and make another share placing when need be, no matter the price.

Regards

"each dollar of pre-tax profit in Morocco"

Another critical issue that ENOG will surely take into account in their decision making process is the moroccan 10 year income tax holiday.

Comparing this with a jurisdiction with, say, a 50% income tax rate, each dollar or pre-tax profit in Morocco should be worth 100% higher in comparison with the other jurisdiction.

Regards

The whole project was thought as having 3 producing wells.

So I think A3 was part of the FEED.

I would like to know what activities were planned to be executed within the US$ 85 million (gross) carry by ENOG. Drilling of additional wells? A FEED update?

They need to put the company in a "surviving mode", until at least ENOG decides if they stay in.

They need to cut salaries, bonuses, G&A expenses, etc, and become aware that they are running a sub-2 pence company, not a business empire.

As at 30 June 2024, the unaudited cash balance of the Company was US$3.5 million (July 19 press release).

They raised US$ 9 million (gross) in July/August (August 12 press release).

Then, even after eventually spending the estimated US$ 2 million to get the new Namibian license, they will still have c. US$ 10 million in the coffer.

Should they decided to firmly control monthly expenses, that US$ 10 million will provide financial runway until middle of next year.

"They can't sit around and wait for enog they don't have the cash to do that even if they start making cutbacks immediately ".

I agree with that. If they do nothing, cash will go dry in a few months.

But Adonis is trying to "build an empire" in Africa. He enjoys the recognition and relationships associated with that.

He would prefer to loose an arm rather than selling one of his beloved "business pillars".

Then my thesis that he will try to find something enticing to the market before year end (Namibia, Loukos flow test or transitional power funding), make a new share placing and keep doing "business as usual".

I doubt Adonis will try to sell any asset.

Re Lixus/Rissana, the best for CHAR is to stay in the partnership, as long as ENOG keeps paying the expenses until FID.

The other assets will be difficult to sell, especially the "green hydrogen" futuristic dream.

Adonis will try to solve its forecast shortfall for next year the way he has always done: via a share placing.