Member Info for Fernan10

We need ENOG to perform the flow tests on A1&2, out of the US$ 85 million (gross) carry still in place.

After flow testing the wells, they can leave if they want.

But we need that info in order to know if we still have a viable project.

Regards

I agree that current management (especially technical director Duncan Wallace) has lost credibility.

But the loggings and measurements of gas pays in A2 were taken by Halliburton.

We need to know if today´s results have any bearing in the previously informed 637 bcf of 2C resources (I suspect that amount will be reduced, but we will have to wait to know the answer).

Regards

A3 was essentially all water, nothing to do about that.

But we still have A1 &2. Management has already said that "simulated INDIVIDUAL WELL PRODUCTIVITY in the base case is 100 to 200 mmcfd"

Assuming 50 mmcfd per well, A1&2 will jointly flow for a total of 100 mmcfd. At a selling price (negociated with the government, as per ENOG CEO´s words) of US$ 10/mcf, it will provide (gross) revenues of US$ 1 million per day, or US$ 365 million per year (basically tax free).

It will still be a respectable project to be developed by a mid tier O&G company.

We agreed a carry from ENOG of US$ 85 million (gross). They should have spent substantially lower than that in A3. I thinks there is enough money left to flow test at least A2.

Regards

"If b sands had nothing then it doesn’t matter what the government negotiate".

Read again.

I haven't said B sand has nothing.

Hi Jimmy.

I have a question about the B sands, as follows:

According to CHAR, A&B sands are “key for the Anchois development” (Dec 23 presentation, page 1).

ENOG´s CEO said that volumes drilled so far in Anchois 3 are “lower than expected or hoped for”. He didn´t make clear if he was referring to the footwall prospect, B sand, or both of them.

One poster here said that ENOG´s CEO was talking only about the failure of the footwall prospect, because, at the time of ENOG´s conference call, it would have been impossible to measure the thickness of the B sands:

“…pre drill estimates have already not been met at that time they commented.. ( ie only footwall known) B sands will take lengthy wireline analysis which we know as yet have not been done, only preliminary conforming gas reservoirs”

Is that correct? Is it possible that ENOG´s CEO was so “disappointed” only because of the footwall prospect flop? Could it be that B sands also came in lower than expected?.

On the other hand, another poster here interpreted ENOG´s comments about “volume found lower than expected” as a clear reference to the B sands:

“If you read what ENOG stated in their RNS (below), they referred to volumes found being lower than pre-drill estimates. I assume this must relate to the MAIN HOLE B sands as they are talking about volumes being found and not the water-bearing footwall.”

Here is what ENOG said in their press release:

“Anchois (Morocco) drilling operations continue, with preliminary analysis indicating volumes found in the Anchois-3 well are lower than pre-drill estimates. Further updates to follow once Anchois-3 ST drilling operations and ongoing technical evaluation are complete.”

I understand that, if there is only an issue with the footwall prospect, there is no reason to worry (at least for now). It could be a very different situation if there are problems with the B sand too.

I would like to know your thoughts on the subject Jimmy.

Thanks

Fernan

You are right.

My only doubt is: if A3 find no gas at all, the previously informed 637 2C resources are still valid?

Does that number include some extension of the gas sands into A3 sunsequently proved to be wrong?

Jimmy: one poster wrote here the following:

"A2 drilled couple of years ago, then proved up Anchois to be near 650bcf, which was the volumes seen in the sands in A1 + A2. This is now deemed fully commercial as clearly advised.

A3 ongoing , any volumes proved will bolt on to volumes from A1 and A2 .

As such any proven gas in A3 will increase the Anchois volume."

Is that correct? Even if A3 is a total failure the previously calculated 637 bcf of 2C resources will remain valid?

Thanks in advance Jimmy

Regards

Ok Jimmy.

Thanks very much.

A clear and brief analysis, as usual.

Regards

Hi Jimmy

Energean exactly said:

"Anchois (Morocco) drilling operations continue, with preliminary analysis indicating volumes found in the Anchois-3 well are lower than pre-drill estimates. Further updates to follow once Anchois-3 ST drilling operations and ongoing technical evaluation are complete."

Regards

"If A3 is a total flop, then heads will have to roll".

I agree with that too.

If Anchois 3 is a failure, all of Duncan Wallace's thesis about seismic signals guiding his choices of exploration targets will be put into question.

"The bit that had concerned me yesterday was the Enog statement about volumes being lower than pre drill expectations. It seemed an odd thing to say about the pilot hole being water bearing (why not just say the first target was water bearing), and therefore I assumed it was a reference to the B sands/sidetrack which in turn might have a bearing on the previously discovered volumes."

I agree 100% with that reasoning.

What do you tinhk Jimmy? Has any eventual lower than expected volume of gas in the B sand any impact on previously informed contingent resources (2C) of 637 bcf?

I couldn't find any diagram making a difference in the appraisal of A and B sands in the A3 well.

"A sands on A3 were not a target for appraisal"

How do you know that?

CHAR's press release talks about the presence of gas in the B sands.

It didn't mencion the A sand, that was also planned to be intersected by this well.

Suspicious, to say the least.

Another water bearing reservoir?

The spent millions in FEED.

They made a partnership with Vivo to sell the gas.

They signed a pipeline connection agreement with ONHYM, and a non binding gas sales agreement with ONEE.

If they can't get commercial flow rates, the moroccans will look at them as a bunch of idiots.

Time will tell.

My question for CHAR's management would be: will the US$ 85 million (gross) carry by Energean allow the drilling of a secomd well, right after the current one?

I will be grateful if you can ask that question

Regards

I will try to calculate how much money we need to invest in Anchois, should ENOG decides not to exercise its option to buy an additional 10% equity stake from us.

Total project cost: US$ 900 million (US$ 870 million gross cost informed by Chariot, plus some estimated cost overruns)

Bank debt: 75% of total project cost. This percentage of bank debt is similar to the financing provided by the Moroccan Attijariwafa bank to Sound Energy, for the development of the onshore Tendrara gas project, in the Eastern part of the country. See Sound Energy press release on June 23, 2022.

Then, we have:

Total project cost: US$ 900 million

Bank debt (75%): US$ 675 million

Equity (25%): US$ 225 million

Investment by Energean pre FID (to be included in the equity component of the financing): US$ 85 million

Equity to be funded post FID: US$ 140 million

Chariot´s share (30%): US$ 42 million

Payment to be received by Chariot from ENOG at FID: US$ 15 million (see farm out agreement)

Net amount to be funded by Chariot from other sources: US$ 27 million

In the last conference call, Julian said that one potential source of funds to be applied to this would come from the upcoming renewable energy deal in South Africa.

Comments?

I was also thinking about the funding of this eventual additional well to explore the South Flank.

Anchois-2 was budgeted at US$ 21 million (see May 24, 2021 press release).

Energean will pay all Lixus costs until FID, up to a cap of US$ 85 million.

That amount should be enough to provide for the drilling of an extra well, even after giving consideration to inflation, and the cost of the deviated hole and testing of the current well.

Regards

Correction:

We are currently drilling into the Footwall and North flank prospects. The South flank prospect, to be eventually de risked, has 372 bcf of prospective resources.

I think Energean will want to maximize the resource before FID.

Then, it's likely we will be drilling another well right after the present one.

I suspect that, if both exploration targets in the current well (North flank and Footwall) are successfull, Energean will likely drill the North flank as part of this drilling campaign.

By memmory, the North flank is located below the Anchois-1 well, have c. 400 bcf of prospective resources, and, according to Duncan, its chance of success is a direct read-through from the South flank and Footwall prospects currently being drilled.