Member Info for Fernan10

https://oilprice.com/Alternative-Energy/Fuel-Cells/Scientists-Successfully-Split-Seawater-To-Produce-Green-Hydrogen.html

Shortly (probably as soon as next month) there will likely be a share issue to pay for overhead expenses.

Hi Jimmy:
I don´t think a gas price of US$ 19/mcf is sustainable in the long run.
Gas prices forecast for 2024 mean nothing for us, we won´t be producing any gas in 2024.
There are lots of LNG projects under construction now, that will supply Europe after 2026/27, thereby reducing future prices.
I think a long term gas price US$ 12/13 per mcf will be more reasonable to take into account in the forecast of Anchois´future cash flows.

Regards

Fernan

The “leading international energy group” with whom CHAR signed an MOU last year, for gas offtake and partnering, vanished from the scene without previous notice.
We don´t have any “third party validation” of Anchois, by the way of a farm in partner willing to invest his money to develop and/or explore the remaining prospects. So far, we have only CHAR management´s word and opinion about the potential of the project.
After so many months of waiting, ending the year with just a “gas sales principles agreement” is clearly disappointing.
This is not the kind of “transformative news flow” for shareholders that Julian has been touting in the media for the last 6 months.
If they take all this time just to get a “gas sales principles agreement”, the schedule to get to FID and first gas will slip well further into the future.
After the increased offtake for the Moroccan market announced today, substantial gas sales to Europe won´t take place before 2.028 at the earliest (see indicative production table on page 9 of the presentation). By that time, lots of LNG projects currently under development will probably reduce European gas prices.
Future gas prices for Europe for winter 2023/24, regularly cited here by some posters, don´t have anything to do with Char´s business.
Just my opinion

For those anxiously waiting for the highly anticipated farm out news of block 3B/4B.
Sintana Energy (ticker: SEI in the Toronto Exchange) last month announced the farming out of one of their projects in the namibian Orange Basin to Chevron. Even taking into account that their block sits adjacent to the Venus discovery, their share price barely moved on the news.
Regards

Hi Jimmy.
Of course, I would have not expected CHAR to name any potential farm in partner. But, if they were planning to farm out their equity interest in the project, I´m sure that would have been part of the discussions in the meeting.
I don´t think there is any harm to say something in the lines of "regarding the funding of the project, CHAR is currently in discussion with a number of interested parties, in order to farm out part of their equity interest"
The fact that nothing was said leads me to believe that no farm out will take place.

Time will tell.

Regards

Fernan

Hi Jimmy.
On the negative side, it seems CHAR didn´t make any comment about a potential farm out deal.
Nothing about "advanced negotiations", "multiple expressions of interest", or similar.
I would have expected that, if CHAR were going the farm out route, it would had talked about that to their 25% partner (ONYHM), and the ministers present in the meeting.

Regards

Fernan

Hi Jimmy.
Very interesting to know that we have Younes Maamar hired as an external consultant. He´s an important figure in the energy sector in Morocco, being an ex CEO of the "Office National de Electricité (the moroccan integrated power utility).
His involvement adds a lot of credibility to the project.

Regards

Fernan

Thanks Jimmy, Very informative posts regarding the schedule to get to FID and first production.
One issue that is sometimes forgotten, is that the project should have yet to pass through the red tape of both out partner ONHYM and the moroccan government, before final approval.
Even after taking into account the importance of Anchois for the country of Morocco, we could still have delays on that front. Something that is not entirely under the control of Chariot.
Regards
Fernan

Maybe it is the same seller offloading both moroccan based natural gas developers
Regards

Maybe it is the same seller offloading both moroccan based natural gas developers.
Regards

Hi Surfit
Someone posted a link to the Auctus´ report in this board early September.
Regards

For those looking to get some info about the current status of the Project, I think they have to look at last Auctus advisors´ report (issued on early September).
I understand that CHAR´s management can not inform the market about issues that are still under analysis and/or negotiation with third parties.
But nothing prevents an “independent analyst” to issue an “external” report on those same issues.
More likely than not, the following pieces of info in the last Auctus advisors´ report are based on what Chariot´s management informed to its author:

1.Timeline to FID and first production
"A final investment decision is expected to be taken in early 2023. The development of Anchois is expected to be based on 3 subsea wells to achieve first gas in early 2025 and production of 70 mmcf/d (gross) initially increasing to 100 mmcf/d by the end of year 2.”

2.CAPEX
“The overall remaining development cost for the A and B sands to first gas is estimated at ~US$350 mm (gross) based on the re-entry of the Anchois-2 well and most of the capex associated with the subsea infrastructure and a 100 mmcf/d onshore processing plant. Additional compression could also be required after 3-4 years of production, estimated to cost ~US$50-60 mm (gross). "

3.Debt funding. Participating banks
“70% of the project cost to first gas is likely to be funded with debt (~US$245 mm). Société Générale has been appointed as lead bank with the potential participation of Moroccan banks.”
Note: a moroccan bank with close ties with the monarchy is currently arranging the debt funding for Sound Energy

4.Equity funding. Potential investors
“The balance of the cost of the project is likely to be funded by a combination of pre-pay and industry participants”

5.Terms currently being negotiated for a potential farm out
“we have assumed that the company would secure a farm-in partner, where a stake (we have assumed 25% WI) in the company’s licences would be sold in return for a carry and a refund of past costs (~US$40 mm). The overall net equity funding exposure of Chariot post farm-out and pre carry and past costs refund is only US$55 mm.
Note:
After farming out 50% of the equity, CHAR´s exposure (before the carry and the refund of past costs) will be:
CAPEX (1-% debt) X (1-% farm out) = US$ 350 mm (1-70%) (1- 50%)= US$ 52,5 mm

6.Production profile
"We are forecasting 70 mmcf/d gross production at Anchois from 2025 increasing to 100 mmcf/d in 2027.”

7.Conclusions:
Of course, one or more of these assumptions could change over time. But overall, I think they provide a comprehensive overview of the current status of the project.

Regards
Fernan

Continuing with my previous post, they plan to fund the license commitment for the new period (drilling of one exploration well) by getting a farm-in partner, as it was previously announced:

"The work commitment for the first extension period comprises the drilling one exploration well with a Triassic objective. The Company expects to fulfil this commitment by the planned subsalt drilling opportunities within the Trias Argilo-Gréseux Inférieur ("TAGI") gas reservoir as announced by the Company on 9 August 2022. "

Regards

F

PS:
In relation to the Tendrara exploration permit, it´s standard industry practice for the oil company to relinquish the less promising parts of the license at the time of entering into a new exploration phase.
Regarding the Sidi license, it´s clear for me that the industry finds that the potential rewards of any exploration campaign don´t justify the risks. Hence we have no partners willing to invest here. I understand that, different from Tendrara, so far there isn´t any discovery in the Sidi license, in the exploration horizons that the company think are more promising.
I wouldn´t be worry if we relinquish the Sidi license once and for all, and concentrate our scarce resources in exploring/develop the more promising Tendrara and Anoual licenses.
Regards
Fernan

The lack of progress in the Sidi license doesn´t have anything to do with Covid. I think it´s more related to the lack of interest from third parties to fund any exploration activities, due to a perceived unfavorable risk-reward profile, in spite of the current tighteness of the gas market.

Hi Jimmy.
I understand that the MOU signed last year has 2 parts:
1. a minimum (take or pay) 40 mmcfd production designed to support the repayment of the future debt funding. The banking consortia will lend the money based on, among other things, the credit rating and reputation of the gas offtaker.
All terms for this take or pay quantities (including price) should have been agreed last year and included in the MOU. The arranging bank (Societe Generale) should have been working on the terms of the debt, based on what was agreed on this part of the MOU

2. a "long term partnership", relating to the way the excess gas (above the take or pay quantities) will be commercialized. This is what the signing parties of the MOU should be discussing now. Undoubtedly, the war in Ukraine and the interruption of the flows of algerian gas to Europe through the GME pipeline have substantially changed the outlook for this part of the MOU, increasing the advantages of selling any excess gas to Europe.

Regards

Fernan

Thanks Jimmy.
Excellent analysis as usual
Fernan

Hi Jimmy
I noticed yesterday´s announcement by IOG PLC (IOG.L), informing the market (among other issues) about a substantial downgrade of production and reserves in 2 of their North Sea gas fields: Blythe and Elgood.
In the case of the Blythe field, “Latest analysis of production and reservoir pressure data from the first six months of H1 production indicates that the well is located in a reservoir compartment which is materially baffled from the central and northwest areas of the field and will ultimately recover an estimated 29 billion cubic feet (BCF), compared to the management estimated reserves of 1P/2P/3P 25.4/42.5/55.8 BCF”.
Regarding the Elgood gas field, “production rate recently fell below 10 mmscf/d and is expected to decline further by year end. The decline in flow rate has been faster than anticipated given the pre-production estimated reserves range of 1P/2P/3P 9.7/14.1/18.3 BCF. The latest analysis indicates that gas is not flowing across the NW-SE oriented intra-field fault to the wellbore as expected”. As a result,“…Elgood is a smaller structure than previously estimated”
By the way, IOG´s CEO (Andrew Hockey) is one of our non-executive directors.
The company´s share price went down by about 57% on the news, and it´s down again today.
Both fields were given the go ahead (FID) in 2019, after the drilling of a few exploratory/appraisal wells.
Is there any chance of something similar happening in Anchois? Have you already evaluated those risks, taking into account the info available?
I would like to know what you think Jimmy
Thanks in advance, as always.
Fernan

I noticed the scope of the FEED that is being carried out by Schlumberger/Subsea 7, as follows (June 20th, 2022 press release):
"o offshore components including well completions, subsea production systems ("SPS"), and subsea umbilicals, risers, and flowlines ("SURF") that will be delivered by Subsea Integration Alliance, and
o onshore components including a central processing facility ("CPF") and flowlines and controls from the CPF to the shore crossing that will be delivered by Schlumberger."

The announcement doesn´t have any reference to the onshore pipeline required to transport the gas to, for example, the GME pipeline, or to local customers in Morocco.
Does it mean that we are going to sell the gas on a "FOB CPF" basis? If that´s the case, then our selling price will be lower than prevailing gas prices in Morocco ( around US$ 11/mcf), in order to account for transportation costs from the CPF to the GME pipeline or, alternatively, to the local customer.
who is going to build the necessary pipeline connections to the GME or, alternatively, the local consumers?
On the other side, I noticed that CHAR signed a "pipeline tie in agreement" with ONHYM, in order to have access to the GME pipeline (September 7th, 2022 press release).
I find it strange for CHAR to sign that agreement, without executing at least the FEED required to connect the CPF to that pipeline.
was that "tie in agreement" required by a potential "gas offtaker", as a previous step before signing the "gas offtake agreement"?

Comments?

Regards

Fernan