Member Info for Fernan10

Hi Jimmy.
I was reviewing your numbers and I have a few comments.
Proven resources are about 900 bcf. At a daily production rate of 70 mcf, it will take 35 years to produce them.
The low initial production rate (in comparison with the volume of already proven resources) substantially reduce the NPV of the project, because of:
a) the lengthy period to monetize the resources
b) the exposure of a significant proportion of the resources to the Moroccan income tax rate, after the 10 year holiday.

In order to overcome those issues, I think they need to redesign the project, to produce at maximum capacity during the first years of production.
I´m sure the proposed drilling of a 3rd well is a step in the right direction.
I will not be surprised if they review the project, to include the drilling of more wells, in order to maximize production during the first few years.
In that context, I think that, after initial production, the reinvestment of operating cash flows into drilling of additional wells should have priority over the repayment of the project loans and the return of cash to shareholders.
Project loans should have a long life (ideally a bond with a bullet payment at the end of the loan period) to accomplish that.
Project facilities should be designed to accommodate a significant increase of production during the first few years of operation.
The 10 year holiday in the payment of income tax rate is something that we need to take maximum advantage of.
do you know what is the cost of drilling an additional well?

Regards

Fernan

Thanks Larry.
Regards

Fernan

Thanks Jimmy.
I imagine that most of OPEX will be connected with the operation of the onshore gas processing facility.
how are we going to send the gas from the facility to each individual industrial and/or power generation customer? do we have to build additional pipelines? are the cost of those pipelines already included in the forecast CAPEX?

Regards

Fernan

Thanks Jimmy.
I imagine that most of OPEX will be connected with the operation of the onshore gas processing facility.
how are we going to send the gas from the facility to each individual industrial and/or power generation customer?

Regards

Fernan

Hi Jimmy.
A few days ago you analyzed Anchois potential annual revenue, as follows:
"Chariot previously reported in June 2019 presentation that daily volumes from A, b and c sands would be 90,000 mcf per day.
So the revenue number is 90,000 x$8 x 365days x 75% x .96.5 % (royalty of 3.5%) = $190 million net to chariot per year."
Do you have an estimate of annual OPEX (gross and net to CHAR)?
After so many years, I reopened a position in CHAR yesterday.
I closely followed your comments on the "old Chariot" almost 10 years ago. It seems your thesis of oil offshore Namibia is finally proven with Shell´s discovery published today.
It´s a pleasure to have the chance of learning from you here again.

Regards

Fernan

https://www.reuters.com/business/energy/exclusive-shell-hits-oil-gas-namibian-offshore-well-2022-01-25/

We can argue at large about how much a potential discovery in Canje is worth.
Reality is, our indirect equity interest in the block (on a dilluted basis) is c. 2% (17,5% X 11,4%).

Regards

Fernan

On the other hand, I expect that an eventual 500 million oil discovery in the Canje block, in the current oil price environment, will be valued much higher than US$ 800 million

Regards

You wrote:
"After the latest transaction and the exercise of the warrants, eco will hold 20% oj jhi.
A discovery of the scale of jabillo/or sapote will value jhi at around 800m$, thats 150m$ of value to eco, not bad for a 70m$ mc and 12 wells campaign planned by exxon."
I have diferent numbers, as follows:
JHI equity interest in Canje block: 17,5% (see ECO´s June 28, 2021 news release)
ECO equity ownership in JHI (on a fully dilluted basis): 11,4% (see ECO´s yesterday press release).
ECO´s indirect equity interest in Canje block: 17,5% X 11,4%= 1,995%

Then, an eventual US$ 800 million oil discovery in the Canje block will have a value of US$ 16 million net to ECO.

Regards

Fernan

Ok Jimmy thanks for your comments.

Regards

Fernan

Dir sirs:
I have 2 questions about the subject:
1. Do we have to carry ONHYM (i.e., to contribute their share of project costs) until FID (covering only mostly exploration expenditures) or until first gas (including development costs also)?
2. After first production, do we have the right to recover those expenditures paid by us due to the carry obligation?

Regards

Fernan

From the press article talking about Tullow´s intention to reduce their capital exposure in 2022, through farm downs:
"In the emerging basins of Guyana and Argentina, “Tullow is focused on limiting its capital exposure from historical work commitments of c.$50 million in 2022, through farm-downs. These include the Beebei-Potaro exploration well on the Kanuku Block in Guyana which will target the prolific Cretaceous light oil play of the Guyana-Suriname Basin, as well as a seismic acquisition over Block MLO 122 in Argentina…”

https://www.guyanastandard.com/2021/09/23/tullow-announces-moves-to-limit-capital-exposure-in-guyana-blocks/

Not a single comment about a potential capital commitment in Orinduik in 2022, that eventually will need to be reduced through a farm down.
Is that a hint of Tullow not planning to drill any single well in Orinduik in 2022?

Fernan

Harel:
You wrote:
"They are commited to drill the next well in orinduik no later then november 2022, so its just a metter of time for an official drilling update.
If tlw is to farm out then they wouldnt want to do it with their back against the wall, so i guess it wont be long now.."

where did you get the timeline to drill a well from?
I understand the there is not obligation to drill a well in Orinduik until June 2.026 (the date of the end of the petroleum license´s 2nd renewal period).
See most recent MD&A report (page 10):
"As of the date hereof, the remaining Exploration activities and the aggregate expenditure of such activities as estimated by management based on current costs for the Guyana License is as follows:
Exploration Activities Expenditure US$ Company’s share of Expenditure US$
By June 2026
• 2nd renewal period – Drill one further exploration well (contingent)"

Regards

Fernan

Good evening.
Anyone know if JHI has the required funding for the upcoming drilling programme in the Canje block in 2.022?
12 gross wells X JHI equity interest 17,5%= 2.1 net wells to JHI
If not, either JHI will have to farm out their equity interest in the block, or to increase their capital (dilluting ECO in the way). If ECO decides to participate in an eventual raise of new equity by JHI, then ECO will be required to issue new shares, dilluting us in the way.
In either case, we are subject to the risk of dilution in 2022.

Regards

Fernan

Hi JH77.
Regarding the cash balance at the end of June, yesterday I sent the following question to Gil:
_____________________________
Dear Mr Holzman:
I have a question about the last financial report, as follows: On June 28th, the company announced the subscription of 14.945.013 shares, through a private placement, for a total amount of approximately 6,1 m CAD (equivalent to approx US$ 4,9 m).

Reading the Quarterly Financial Statements for the period ended on June 30th, I noticed that, at June 30th, the company only had received US$ 1.940.021 (accounted for as “Receipt on account of shares”, in the statements of financial position and of cash flows for the period).

Does this amount correspond to the 5.945.913 shares to be subscribed by Africa Oil?

What about the proceeds from the 9.000.000 shares to be subscribed by Charlestown Energy? Were those proceeds received in July, after the end of the period covered by the financial statements?

Waiting for your comments
_________________________________
Gil quickly answered my email, confirming my interpretation.
That is, the proceeds coming from the shares subscribed by Charlestown energy (approx US$ 2,9 m) were received in July, after the closing date of the financial statements.
For that reason, cash balance at the end of August was US$ 6,7 m, higher than the balance at the end of June (see page 19 of the MD&A report).

Regards

Fernan

Company informed a cash balance of US$ 6,7 mio at the date of issue of last MD&A report (page 19 of the report).
This amount won´t clearly be enough to pay for:
- operating and G&A expenses in the next few quarters
- provision of a shareholder loan of up to US$ 6 mio to Eco Atlantic Renewables (I understand that so far we have lent aprox US$ 1,3 mio to them)
- equity interest of 15% on the drilling of a well in Orinduik (aprox US$ 5 mio net to Eco)
- diverse contractual obligations relating to 3D seismic interpretation, etc, in the Namibian blocks.
I´m not including the amount required to subscribe for approx 9 millon shares of JHI (Canje block) at an excercise price of US$ 2 per share, in case we decided to do that.

It´s clear to me that, in light of all those already assumed compromises, having invested in the renewable energy business doesn´t make a lot of sense. This investment will have to be financed through the issue of additional shares, thereby dilluting our participation in the results of the promising Orinduik block.

Comments?

Regards

Fernan

You forgot that, after the irrational moves of investing in the solar business and buying a 1,12% effective interest in the Canje block, we now have funding for only one well in Orinduik.
Our CEO spent US$ 10 million to buy a 1,12% interest in the upcoming drilling of 2 wells in Canje. The same money would have given us a 15% interest in the same number of wells in Orinduik.
Regards

Thanks for your comments IJWT.
Regards

Fernan

https://www.jhiassociates.com/guyana-basin

As shown in the map, Sapote is much closer to previous oil discoveries than Jabilllo.

Regards

Fernando

Good morning .
Eco talked today about significant accumulations of "biodegraded heavy oil in the lower Tertiary" in both the Jethro and Joe discoveries.
does this "biodegraded" feature tell something about the quality of the oil discovered, in addition to what was already known?

Regards
Fernan