Member Info for Fernan10

We were previouly informed that Lixus had a NPV of US$ 1.2 billion (net to us).

We have given up 60% of that value, or US$ 720 million (our equity in the project is down from 75% to 30%) in exchange for:

o US$10 million payable on completion of the transaction

o US$15 million payable on Final Investment Decision ("FID")

o US$85 million gross carry (US$ 34 million net to us)

Total consideration to be paid to us: US$ 59 million

In addition to that, if Energean don´t exercise their option, we will have to contribute our share of future development costs (more dilution coming).

No wonder the share is down on the news

I remember Jimmy´s previous calculations of potential payments to CHAR at the closing of the farm out deal. This is a long way from that.

Regards

Here is my calc of SOU´s funding requirements for 2024, after the successfull restructuring of the bond, and under the following assumptions:

1. current cash position dries up by the end of this year

2. phase 1 first revenue delayed until the end of 2024

3. phase 1 CAPEX continues to be fully funded by the Afriquia Gas debt

4. the eventual reimbursement of phase 1 pasts cost by Calvalley must be applied to a partial repayment of Afriquia gas debt, and then can´t be used to fund G&A expenses, and/or bond interest payments.

FUNDING REQUIREMENTS FOR 2024

G&A expenses (£1.25 million per semester, similar to 1H 2023): £2.5 million X 1.26= US$ 3.15 million

Interest on bond payable in cash: €25.32 million X 2%: €0.5 million X 1.08= US$ 0.55 million

(only 40% of the 5% annual interest rate is payable in cash)

Total funding needs for 2024: US$ 3.7 million

Regards

Fernan

Https://oilprice.com/Alternative-Energy/Wind-Power/Djiboutis-New-60-MW-Wind-Farm-Boosts-Green-Energy.html

The Meskala gas well to de developed by ONHYM is adjacent to our Sidi Moktar exploration license.

It produces gas and condensate from a subsalt Triassic reservoir, the same type of geological horizon pursued by us.

Regards

_______________________________________

"It is intended to allocate a large part of the investment to projects such as the "development of the Tendrara operating concession, the maintenance of the Maghreb-Europe (GME) gas pipeline, the Office's participation in the Nigeria-Morocco gas pipeline and the development of the MKL-110 (Meskala) gas well"."

https://www.atalayar.com/en/articulo/economy-and-business/morocco-boosts-energy-investment-with-26-billion-dirhams-for-mining-and-hydrocarbons/20231029090000192721.html

In addition to that, after been processed at the central processing facilities, the onshore gas should be transported through the still to be built 40 km pipeline to connect to the main GME gas pipeline.

Those waiting to monetize the onshore gas in the near term forget that the gas should be processed before being sold to market.

And, to do that, it´s necessary to build the required pipelines and central processing facilities.

Previous to building them, it`s necessary to obtain enviromental permits, rights of way for the pipeline, basic engineering, funding, etc, etc.

I doubt all of this will happen in the 12-18 months timeframe mencioned by some here.

Regards

I´m talking about funding requirements for 2024.

Regards

Fernan

Ps200306:

Here is my calc of SOU´s funding requirements for 2023, should phase 1 revenues are delayed until the end of next year:

FUNDING REQUIREMENTS FOR 2024

G&A expenses (£1.25 million per semester, similar to 1H 2023): £2.5 million X 1.23= US$ 3.1 million

Bond amortization due June 2024: €25.32 million X 5%: €1.25 million X 1.06= US$ 1.32 million

Bond amortization due Dec 2024: €25.32 million X 5%: €1.25 million X 1.06= US$ 1.32 million

Interest on bond payable in cash: €25.32 million X 2%: €0.5 million X 1.06= US$ 0.54 million

Total funding needs for 2024: US$ 6.3 million

This calc was posted here on Sept 22th

Regards

One issue that can be inferred from last presentation is that, after the end of the exclusivity period with Calvalley, and as Calvalley completes their due diligence, SOU`s management has reactivated the analysis of alternative equity funding options.

These options include: mezzanine debt, subordinated debt, and partial vendor financing (slide 5 of the presentation).

This is confirmed in slide 7, where management informed that near term next steps include "close equity financing-partner or vendor"

It´s clear that having Calvalley on board to fund the project development is by no means a sure thing.

In that scenario, I think SOU´s management wants to have these alternative funding options well advanced, in case Calvalley finally decide not to participate in the project.

Regards

Lots of people here that dont understand the renewables side of the business.

But it's not their fault. Management haven't provided any clarity so far.

Yes, that's exactly what I think.

Surfit has been consistently asking management for more clarity about the funding side of these projects.

I couldn't agree more.

Regards

I think you are wrong. These projects will be developed and funded by Chariot and Total Eren.

From 2022 final results report:

"Partnership with Total Eren extended from January 2022 with Chariot having the right to invest up to 49% into the co-developed mining projects.".

Management said (more than a year ago) that they will try to fund these projects by partnering at the subsidiary level. But so far no partnership was announced.

Then my questions:

How much is CHARIOT going to spend in this project? How is it going to fund it? More dilution coming?

What is the amount of our equity contribution to this project?

how are we going to fund it?

more dilution coming??

Ok Jimmy.

Thanks very much.

Regards

Hi Jimmy:

I have the following question: if the onshore acreage has such gas production potential, then why did SDX abandon it?

Regards

Fernan

Don´t forget that £1.4 million of the cash balance is held as collateral for a bank guarantee against licence commitments.

In addition to that, management stated the following:

"Subject to the draw down in full of the Convertible Notes, the Company is now funded for its near-term working capital requirements until year end 2023."

I assume that, absent any injection of cash, cash balances (net of restricted cash) will be close to cero (0) by the end of the year.

Regards

I still have some doubts in relation to the terms of the Afriquia loan.

If SOU reduces its equity interest in the project, from 75% to 35%, it could be possible that the loan must be proportionately reduced. In that case, Afriquia could ask that the US$ 8 million of back costs to be received from Calvalley be applied to the partial repayment of the loan.

Regards

One of bonds outstanding is in euros, not pounds.

Here are the current calc of funding required for 2024, should the phase 1 revenues are delayed until the end of next year:

FUNDING REQUIREMENTS FOR 2024

G&A expenses (£1.25 million per semester, similar to 1H 2023): £2.5 million X 1.23= US$ 3.1 million

Bond amortization due June 2024: €25.32 million X 5%: €1.25 million X 1.06= US$ 1.32 million

Bond amortization due Dec 2024: €25.32 million X 5%: €1.25 million X 1.06= US$ 1.32 million

Interest on bond payable in cash: €25.32 million X 2%: €0.5 million X 1.06= US$ 0.54 million

Total funding needs for 2024: US$ 6.3 million

Regards

Management has stated that, after the issue of the convertible bonds last June, our liquidity needs are met until end 2023.

If phase 1 revenues from Tendrara are delayed until the end of 2024, we will have a funding gap of c. US$ million 6.9 next year, as follows:

G&A expenses (£1.25 million per semester, similar to 1H 2023): £2.5 million

Bond amortization due June 2024: £25.32 million X 5%: £1.25 million

Bond amortization due Dec 2024: £25.32 million X 5%: £1.25 million

Interest on bond payable in cash: £25.32 million X 2%: £0.5 million

Total funding needs for 2024: £5.5 million X 1,25= US$ 6.9 million

It seems management plans to fund these expenditures with the receipt of US$ 8 million of phase 1 past costs from Calvalley (US$ 8 million net to Calvalley):

From the 1H 2023 report:

“In June the Company raised up to £4.0 million by way of a senior unsecured convertible bond instrument. The proceeds will, if fully drawn, provide funds for the Company to continue to execute its Phase 1 development of the Tendrara Production Concession and bridge group working capital liquidity ahead of receipt of a receivable as disclosed in the year end results and/or receipt of Phase 1 back costs from Calvalley if a partial divestment is ultimately completed.”

One expenditure that is still unfunded is the drilling of a mandatory exploration well in the Anoual license. We need to drill that well by January 2024 (see company´s news release on Dec 22, 2022)

The fact that Calvalley took a conservative approach in the farm out process (agreeing to fund only development expenditures and the drilling of the TE-4 exploration well, close to the planned infrastructure, and in both cases subject to a certain cap) was clearly a disappointment to management´s exploration plans. I´m sure SOU´s management had hoped to see the farm in partner funding the 3 high graded exploration prospects ready for drilling (SBK-1, TE-4 and M5 in the Anoual permit) instead of just 1.

This lack of interest in funding the M5 prospect (in spite of its attractive economics in the success case) also cast a shadow over the real value of the remaining prospects in the Tendrara and Anoual licenses.

Regards

Fernan