Member Info for Fernan10

Yes

The US$ 9 million (gross) raised in July/August won't last much.

And, as I said in a previous post, I can't see Adonis selling Anchois before waiting for ENOG's next steps (due to the carry, all expenses until FID will be met by ENOG,up to US$ 85 million).

I suspect Adonis will try to show something exciting to the market before year end (new license in Namibia, Loukos flow test, transitional power farm out) and then make a new share placing, at a price higher than the current one (5 or 6 cents).

All in my oppinion.

I can't see CHAR selling Anchois (or the whole Lixus license).

As long as ENOG stays in the partnership, all expenses until FID (up to a cap of US$ 85 million, of which only US$ 25-30 million were spent so far) will be met by ENOG.

By staying in the license, CHAR will benefit from future exploration, flow tests, etc, carried by ENOG

"after the cash raised in July goes dry"

GG:

I fully agree with you.

Near term funding could be a critical issue in a few months, after the cash issued in July goes dry

Management said that it´s possible to monetize some of the South African transitional power assets before year end.

That will help.

GG:

I´m just trying to show that Anchois could still be an interesting project to develop, with or without ENOG.

You are talking about a totally different issue: how CHAR will be funded until an eventual go ahead with Anchois.

ENOG won´t put any of their own money if they decided to take the 10% additional equity, I can assure that to you.

They will fund the project as follows:

* 75% with project finance debt (non recourse to ENOG) provided by local banks

* 25% with ENOG credit lines (those lines will all be cleared after the selling of their egyptian, italian and croatian assets).

This is the reason I assumed that the project is funded 100% with debt.

If ENOG decided to stay, I don´t think they will change their approach re CHAR.

As their CEO already stated, they will try to secure a gas price high enough to make the numbers work for them.

The 10 year income tax holiday provokes that each additional US$ 1/mcf in the gas price will be 100% directed towards the partnership members (less the 3,5% royalty, of course)

Regards

ENOG made a profit after tax (from continued operations) of US$ 116 million during 1H 2024 (annualized after tax profit of US$ 232 million).

In my own calc, Anchois could bring them an annual after tax profit of US$ 111 million: (10 year total profit of US$ 2.016 million (gross) / 10 years) X 55%: US$ 111 million

It could still be interesting for them

I know, I thought that, but I decided to be conservative in the numbers

Assumptions:

Reserves: 450 bcf

CAPEX: US$ 870 million (similar to the total gross carry agreed with ENOG)

Gas price: US$ 10/mcf

Royalty: 3,5%

Operating cost: US$ 50 million/year (estimated)

Average cost of capital: 11%

Income tax: 0% (10 year income tax holiday)

CALCULATION OF PROJECT CASH FLOW FOR A 10 YEAR PERIOD

Gas sales: 450 bcf X US$ 10/mcf: US$ 4.500 million

Royalty (3,5%): - US$ 157 million

CAPEX: - US$ 870 million

Operating expenses: US$ 50 million/year X 10 years: - US$ 500 million

Interest (11%): US$ 870 million X 11% X 10 years: -US$ 957 million

NET CASH FLOW FOR THE 10 YEAR PERIOD (AFTER DEDUCTING COST OF CAPITAL): US$ 2.016 million

I think the moroccan 10 year income tax holiday makes a lot of difference. There are jurisdictions where the "government profit share" (equivalent to the income tax rate) is as high as 80% (by memmory, this is the case with Kurdistan).

If ENOG walks away, there will likely be other O&G companies willing to invest here.

Regards

I think the remaining carry by ENOG is a little higher than that.

Carry agreed for Lixus: US$ 85 million (in addition to US$ 7 million for Rissana license).

Cost of drilling Anchois-3: US$ 25-30 million

Remaining carry (should ENOG stay in the game): US$ 55-60 million

Regards

But I agree that ENOG should not have spent more than US$ 25-30 million in Anchois 3. If they decided to stay, there is a lot more of cost carry available for CHAR.

Regards

BDC:

When Anchois-2 was drilled, rates for drillships and technical services were substantially lower than now (due to the pandemic).

Regards

Ok, I typed ENOG´s percentage of equity interest wrong (30% instead of 45%) but the number of Anchois´resources net to them (45% of 75 mmboe) was right (33.75 mmboe). Still immaterial to them.

Regards

BDC:

the drillship will have made aprox 50% of the total cost of drilling the well.

The other 50% are made of technical services (logging, sampling, etc) provided by the likes of Halliburton, etc.

So, maybe US$ 30 million will be a more reasonable number for the cost of drilling Anchois 3.

Regards

Legalwolf:

I doubt ENOG will stay in the game.

See my previous post about ENOG´s gas reserves.

After the latest flop, Anchois became immaterial to them

Regards

Sound Energy, a small AIM company with a gas project in the eastern Morocco, made a non binding agreement with Calvalley Petroleum (a private company with interests in the Middle East) in June 2022 to develop the field.

After waiting almost 2 years for Calvalley to sign the definitive farm out agreement, Sound cut a deal with Managem, a mining company owned by the Moroccan royal house.

"Managem is an international mining group with resolutely African roots, with a presence in 7 countries across the continent. Initially present in metals such as cobalt, copper and zinc, it has since diversified into precious metals, with silver and gold. Today, Managem employs 5,009 people of 22 nationalities in 13 mining operations and 22 industrial units, all on the African continent."

If the moroccans are so interested in developing their own gas resources, maybe it´s time for CHAR to explore this alternative source of funding for Anchois.

Regards

After completing the selling of their egyptian, italian and croatian assets, ENOG will have proforma reserves of 965 mmboe (ENOG June 24 presentation, page 4).

If Anchois´resources have been reduced to, let say, 450 bcf (gross), that would be equivalent to 75 mmboe (gross), or 33.75 mmboe (net to their 30% equity interest).

If there is nothing more of interest to them, I don´t think they will be willing to perform additional exploration/development activities in Anchois.

Hi Jimmy.

Do you have an estimate of how much will be Anchois annual operating cost?

I understand that the most important item of cost will be the CPF´s expenses (energy, labor, etc)

I´m trying to figure out what will be the value of c. 450 bcf of gas, to be produced tax free for the first 10 years of operation.

Thanks in advance

Fernan