Member Info for Fernan10

MIBGAS currently at EUR 113,29/Mwh (equivalent to US$ 36,5/mcf).
This will likely be the reference price for a great percentage of CHAR´s future gas sales to Europe, once the domestic market demand was met.
https://www.mibgas.es/es

Regards

Fernan

Ok thanks Jimmy.
It was me who asked the question.

Regards

Fernan

Hi Jimmy. I have a question about the amount of Anchois proven gas resource informed by Cenkos in their recent report (page 28), as follows:
Cenkos informed that the total amount of recoverable gas from Anchois ( 2C contingent + prospective) is 1.051 BCF.
Around 50% of that amount comes from the "O" sand. The problem I see is that the "O" sand reservoir intercepted by Anchois 2 well was very thin at the drilling location (and the first well didn´t even drilled this reservoir).
The estimated resource from the "O" sand seemingly comes from seismic interpretation, according to which, the sand becomes thicker in other locations.
My question is: do you think the resource from the "O" reservoir will be included as contingent (proven) resource in the upcoming CPR? or do the independent evaluator wait for another well to effectively prove the thickness of the sand in those other locations? Depending on the outcome of this interpretation, the amount of the contingent resource to be informed by the reserves evaluator will materially change.

Regards

Fernan

Hi Jimmy.
Thanks for your response.
The Ukraine crisis, and all the issues around the supply of gas from Russia to Europe have radically changed the fundamentals of the project.
We now have the opportunity to supply unlimited amount of gas to Europe, at substantially higher prices than originally forecast, tax free during the first 10 years of operation.
Time to review the design of the project, I think.
With all the required adjustments, we can easily double or triple the net present value of the project.
Regards
Fernan

Hi Jimmy.
I have a question about Chariot´s production profile.
Looking at the production forecasts in the recent Cenkos report (page 16), I find the numbers too low, in relation with the amount of the contingent and prospective resources.
For example, for the 1.051 bcf of contingent resources (page 28 of the report), Cenkos forecast a maximum production rate of 90 mmcfd.
The rate of contingent resources to production is: 11.678 days (it will take 11.678 days, or c. 32 years to deplete the resource at the maximum production rate)
In the case of the Anchois and Anchois satellites case (page 28 of the report) the 1.639 bcf contingent and prospective resources will have a maximum production rate of 180 mmcfd.
Here the rate of resources to production is: 9.105 days (it will take 9.106 days, or c. 25 years to deplete the resource at the maximum production rate).
I understand that, normally, the rate of resources to production that makes a project economic is aprox 13-15 years (5.000 days is a reasonable approach).
Why do you think that production numbers forecast are so low, in relation to the amount of the resources? Management commented that both porosity and permeability numbers are good. Do you think that the numbers are low because they are projecting to produce from a limited number of wells? does it related to the projected demand for the gas? I understand that we will be able to sell all the gas we produce to Europe.
I would like to know your view on the subject.
Regards, and thanks for your informative posts. I keep learning from you.

Thanks Phoebus.
I was particularly interested in the change of sucess of the upcoming drilling in Block B in South Africa.
Regards

I can not find the full report in ECO´s website nor in the SEDAR filings.

Regards

Fernan

The deal valued the Canje block at US$ 211 million (US$ 37 million/ 17,5%).
Sounds cheap, even after taking into account the exploration risk.
Regards

Hi Jimmy.
Is it possible that the market is waiting for third party confirmation of gas flowing rates, before starting to recognize the true value of Chariot?
All the remaining elements of the investment case (gas offtaking agreement, financing agreement, offshore pipe diameter, CAPEX, etc) will be based precisely on those flowing rates.
Could the presence of water on some of the reservoirs substantially reduce the gas flowing rates in the long term?
Regards
Fernando

I´ve reviewed all CGX´s press releases in relation to the Kawa discovery. They have always talked about the logging data showing the presence of "hydrocarbons".
In the case of ECO´s discoveres on Orinduik, the same logging data was informed as indicative of an "oil" discovery.
Not a crystal clear behavior in my oppinion.

Regards

From CGX's today news release:
"Preliminary results from the Santonian interval indicate the presence of liquid hydrocarbons in the reservoir. Results from the Campanian and Maastrichtian intervals are pending."
So, they are still not certain about what they really found??
Regards

After acquiring the highly promising South African petroleum licenses in the Orange Basin, I sent an email to Gil, asking him to reconsider the merits of continuing investing in the solar business.
I suggest for him to get away from it, for the following reasons:
"I think the solar business is a distraction for management. We don´t have enough cash to execute all of our planned oil exploration activities. I´d like the company to preserve that precious cash for our most promising prospects, instead of developing solar projects that will (hopefully) earn us just a few hundred thousand dollars."

"A quick monetization of solar investments is not always a sure thing. If we invest, for example, a couple million dollars in a solar project, maybe we will be subsequently required to raise that money, in order to drill the next well in Guyana or South Africa, diluting shareholders in the way."

"As a shareholder, I want to maximize my potential return from our current oil prospects, instead of having a reduced equity interest in them (via shareholders´ dilution), just because we have previously made an investment in a solar project."

Gil haven´t so far repplied to me.

Regards

We don´t have the money to farm into their blocks, do we? We have enough opportunities to go after I think. Don´t need to over expand ourselves.
Building "empires" is alway good for management (more power, higher salaries, etc), but not so often good for shareholders.
Just my humble oppinion.

Ok Thanks Jimmy.
Under management assumptions (see my post yesterday), the 40 mmcfd "take or pay" agreement will provide US$ 82.7 million of gross operating cash flow:
(40.000 mcf/ x US$ 8/mcf x 365 x (1-3,5%))- US$ 25.000.000 OPEX- US$ 5.000.000 G&A= US$ 82.712.000
This amount will surely be applied for the repayment of the debt. Remaining cash flow to be distributed to shareholders and/or reinvested in exploration of other prospects in Lixus license
Regards

It seems the gas sales agrement(s) will be the catalyst that will unlock the debt funding and the FID.
Regards
Fernan

Julian said yesterday that the 40 mmcfd "take or pay" agreement, with a contract term of 20 years, will underpin the financing of the project, and that all "excess gas" will be sold to Morocco or Europe. He also mencioned a potential partnering with the gas offtaker.
I understand that the "take or pay" agreement will have a lower than market price (maybe a fix price), in order to compensate the offtaker for the minimum quantities he is asked to pay for under the "take or pay" clause.
It´s also likely that the gas marketing company doesn´t want to restrict its involvement in Anchois just to the low quantities of the "take or pay" contract. They likely want to be part of a much higher project. Then they will likely sign another contract, at market (variable) gas prices, with unlimited quantities of gas, subject only to production capacity. Finally, I won´t be surprised seeing them making an equity investment in the project.
Time will tell.
Regards
Fernan

Here are the numbers, based on management estimates (in US$ dollars per thousand cubic feet-mcf):
Production (base case): 70 mmcfd
Selling price: US$ 8/mcf
Royalty: 3,5%
OPEX: US$ 25 million/year (informed by management in last conference call). With an initial production of 70 mmcfd, OPEX will be aprox US$ 0,98/mcf
G&A expenses: US$ 5 million/yr (my own estimate). Equivalent to US$ 0,20/mcf
EBITDA per thousand cubic feet (mcf): US$ 8 (1-3,5%) – US$ 0,98 – US$ 0,20= US$ 6,54/mcf
CAPEX: US$ 300 MM for initial 361 bcf resource (see December 21 presentation). Equivalent to US$ 0,83/mcf
Free Cash Flow (FCF) (gross): EBITDA – CAPEX= US$ 6,54/mcf – US$ 0,83/mcf= US$ 5,71/mcf
FCF (net to Chariot)= FCF (gross) X 75% equity interest= US$ 5,71/mcf X 75%= US$ 4,28/mcf
For the initial contingent resources management estimate of 361 bcf, FCF (net to Chariot) will be US$ 1.545 MM (very similar to management number of US$ 1.500 MM. See December 21 presentation, page 24)
For Jimmy´s resource estimate of 750 bcf (post Anchois 2 well), FCF (net to Chariot) will be US$ 3.210 (close to Jimmy´s projection).

Regards

Fernan

Hi Jimmy.
Yes, another 33,7 million shares to be subscribed by Magna Capital (a company controlled by Adonis P.) at the Jun21 share issue price of 5,5 p per share.
I think this will be qualified as a director deal.
After this imminent share issue, Adonis P. will have invested c. £ 7 million in CHAR since Jun21. Before that, I understand he hadn´t bought a single share of CHAR for 10 years.
I take it as a great vote of endorsement for the Anchois project.
Regards

Fernan

https://twitter.com/Robin25461631/status/1494221032433061889/photo/1

Hi Jimmy.You wrote:
"2. Chariot stated 361.bcf would generate $1.5 billion of free cashflow for its 75%, following the anchois 2 well and the additional 5 reservoirs, i estimate reserves at circa 750 bcf, so approx $3 billion of free cashflow, pro rata, and they need to finance 75% of $300 million capex. Why equity finance from shareholders when some sub ordinated debt is the obvious answer, add in say $20 million to drill anchois north and add an estimated 600bcf with a. very high chance of success."

1. Is it possible to fund 100% of the development costs with debt (senior and subordinated)?
2. don´t the banks usually ask project developers to make their own contribution, in order for them to share project risks?
3. is there any examples of oil & gas projects funded 100% with debt?

Regards

Fernan