Member Info for Fernan10

"Second, since the Attijariwafa debt is the lions share of the debt, Managem would be facing most of the same difficulties if this analysis were correct -- the concession would be only marginally profitable and I doubt they would be taking it on in that case."

ANSWER: That's not correct. Managem only has to deal with Attijariwafa bank debt. The problem with Sou is that, apart from that debt, it has its own loans to pay.

"Three problems with that assessment. First, the debt projection is considerably higher than Zeus's though I will leave others to argue the toss on that one."

ANSWER: SOU's different types of debt are in the public domain. Arguing that "Zeus numbers are lower" is not serious.

1.ASSUMPTIONS

Gross gas production (as informed by SOU). Source: March 25 presentation, pages 4 and 6

Phase 1: 10 mmcfd

Phase 2: 30 mmcfd

Total gas production (gross): 40 mmcfd

Gas sales price: US$ 8/mcf

OPEX: US$ 2/mcf

SOU´s G&A expenses: US$ 3 million per year

Cash flow from phase 1 production (before the commencement of phase 2) will be barely enough to pay for G&A expenses and interest payments on SOU´s debt until the start of phase 2, leaving SOU´s debt essentially unchanged.

2.EBITDA (phases 1 + 2)

Gross EBITDA for phases 1 + 2 : 40 mmcfd X 365 days X (US$ 8 – US$ 2): US$ 87.600.000

EBITDA (net to SOU): US$ MM 87.6 X 20% - SOU´s G&A expenses US$ MM 3= US$ MM 14.5

3.SOU´S NET DEBT

SOU´s net Debt forecast at the start of Phase 2

Project debt-gross (Attijariwafa Bank): US$ MM 237

Project debt (net to SOU): US$ MM 237 X 20%: US$ MM 47.4

Afriquia debt: US$ MM 18

Senior secured notes: € 25.3 million X 1.16: US$ MM 29.3

Total SOU´s net debt at the start of phase 2: US$ MM 47.4 + US$ MM 18 + US$ MM 29.3= US$ MM 94.7

Net/EBITDA ratio: 6.5

4.CONCLUSION:

I can´t see how an annual EBITDA of US$ MM 14.5 (net to SOU) will allow the repayment of US$ MM 94.7 of debt. Annual interest payments will be aprox US$ MM 7 per year, leaving only US$ MM 7.5 to amortize the principal.

Production should increase substantially to get a more reasonable Net debt/EBITDA ratio. But this is now out of SOU´s control.

CHAR´s announcement regarding the acquisition of a 10% back in right in Namibia´s southern offshore blocks (August 2017):

Back-in Option

"In exchange for facilitating the partnering programme to be undertaken by NAMCOR, Chariot has

agreed the framework of an option for the Company to back-in for 10% ground floor equity from the

remaining partners. This option can be exercised at Chariot’s discretion for no consideration following

the drilling of the first exploration well in each of the licences. The heads of terms of the option have

been agreed and the final contract remains subject to approval by both the remaining partners and

Chariot."

Larry Bottomley, CEO commented:

..."NAMCOR has requested that Chariot remain engaged in the partnering process through a zero cost option to back-in after exploration drilling in

recognition of the depth of understanding of the Chariot team of these licences and the quality of technical work performed."

IT´s clear for me that CHAR´s 10% back in right is already agreed with the namibian government.

"Isn't the data CHAR has from the drills and seismic highly valuable to anyone interested in exploring these blocks?"

Yes, the data is highly valuable, and this is the reason for CHAR being granted a back in right in the licenses, for no consideration, after the drilling of an exploration well in each of the 2 licenses.

See CHAR's announcement back in August 2017.

I don´t think like concepts as "gratitude" have any value in business.

HC has a point here, regarding the eventual awarding the license to CHAR.

Petrobas has already expressed their interest in exploring offshore Africa. Why would the Namibian government award the license to little cash starving CHAR, instead of Petrobras? (just go give an example).

Maybe the license could finally be awarded to CHAR, but not on the grounds of any "gratitude for past efforts" by the namibian government.

On the other hand, HC was wrong about CHAR´s 10% back in right in Namibia.

This was agreed by CHAR with the Namibian government, back in August 2017.

See here:

https://chariotenergygroup.com/app/uploads/2021/09/Namibia2714AB-Update_Chariot-Oil-Gas-Limited.pdf

Then, in my base case, I expect the Namibian license to be awarded to someone else, with CHAR executing their 10% back in right.

Post farm out, that CHAR´s 10% equity ownership will likely be reduced to a 5% interest, fully carried for the drilling of 1 or 2 exploration wells.

Regards

I know Anchois is mentioned in that article. But none of the proposed pipelines will connect it to the GME line or to consumer centres.

Look at the map of the proposed infraestructure in the same map.

Regards

KissnCuddles:

None of the infraestructure currently being planned by the moroccan government will benefit Anchois. And this is logical, since Anchois remains un unproven project.

We still need to build the offshore pipeline, the CPF and the 40 km land pipeline to connect to the GME line.

Regards

If a company enters Anchois to initially drill 5 or 6 exploration wells, CHAR´s equity interest will be reduced to oblivion.

That´s the reason why it´s better for us to execute exploratory drilling by reinvesting free cash flows

A US$ 30-40 million exploration well could find a prospect with ley say 200-300 bcf of gas , that will be valued a few hundred million dollars.

A few days ago, I estimated that “rescaled” (i.e., downgraded) Anchois still have 450 bcf of 2C resources. That calc was based on the assumption that sand B in A3 well will still be developed.

But, after reading that initial development will be based in A1 and A2 wells, it´s clear that any resources found in A3 won´t be part of the project.

Hence, I now think that 2C resources will be around 300 bcf (half the estimate pre A3 drilling). This is equivalent to 50 million barrels of oil.

“Rescaled” Anchois is now a very small prospect, especially when we talk about an offshore project. And, even with a smaller resource, we still need to build a 40 km offshore pipeline, a CPF and a 40 km land pipeline to connect to GME trunk line.

I understand why ENOG decided to leave the boat, and I´m sure that no major international company will be interested in the project. The eventual partner will likely be local, maybe a government-sponsored company.

The best hope to increase the resource is to achieve a decent production number, and reinvest the cash flow in exploring nearby satellite prospects.

If we can produce 70 mmcfd, at a gas price of US$ 10/mcf, annual revenue will be around US$ 255 million.

After providing for operating expenses, debt amortization and interest payments, we will still have c. US$ 100 million of annual free cash flow, that will allow for the drilling of one or two exploratory wells per year.

Maybe some of Anchois satellite prospects will be downgraded as a result of the failure of A3 well (for example, the south flank, that was presented as a “read-through” from the exploratory targets in A3 well). But there are other targets that may still be valid.

According to Dec23 presentation (page 9) these potential targets are:

Anchois west: 241 bcf

Plie: 202 bcf

Anchois NNW: 230 bcf

Regards

Klein:

I don´t buy your theory.

Was ENOG purportedly drilling in the wrong place, and/or lying about the results of the well, in order to have an excuse to leave the project and keep paying a dividend?

We were not the only ones anxiously waiting for the result of A2 well. ONHYM (and the moroccan government) were also interested . And it´s highly likely that the well logging was performed by an specialized company (almost sure Halliburton) that will not ruin its reputation for the benefit of ENOG.

As I said before, CHAR´s management need to explain what failed, and the implication of the results for the viability of nearby prospects.

I´m living in Brazil, I can not attend the meeting in person.

But, if I have the chance, I will make a few questions to our management, especially about their high salaries, taking into account recent failures and unfulfilled promises.

Regards

Klein57:

CHAR's management already said A3 well found gas only in the B sand.

Hence, all remaining gas sands poised to be appraised in the A3 well (A, C, M sands) were dry, along with the 2 "low risk" exploration targets.

They need to explain what failed.

Before thinking about "attracting new investors", management needs to explain what exactly failed in Anchois 3 wells.

I heard again July24´s presentation. They deemed the presence of gas in A3 as a "given". Adonis was all the way talking about "the question is not if we are going to find gas o not, the question is to see the scale and size of the development"

Well, they only found gas in the B sand, and not enough to justify the cost of a flow test.

Https://chariotenergygroup.com/app/uploads/2021/09/Namibia2714AB-Update_Chariot-Oil-Gas-Limited.pdf

"Subsidiary funding means a partner gets a share of the spoils for their investment"

So the plan is to find someone ready to pay for 100% of the investment to buy a producing asset (no money will be required from us), just to get "a share of the spoils".

I can´t wait to know that generous partner.

Regarding Namibia, he talked only about exercising their 10% back in right, that CHAR have had for more than 10 years.

what happened with the US$ 2 million raised in July 2024 to get a new license?

No mention of Loukos. getting to cash flow ASAP...talking about buying producing assets....more dilution coming.

His comments about funding the purchase of new assets "at the subsidiary level" mean nothing....how can you do that? I´m thinking about setting set up my own subsidiary and start buying assets by getting funding "at the subsidiary level", without investing my own money. Can someone explain to me how can I do that?

Ok Surety

But you can not add 1 + 2C resources. These are different estimates of the same resource.

Regards

Surety:

thanks for the info.

Regards

Ok Surety.

what is the "end of March position" you are talking about? is it a cash balance? I can´t remember reading anything about that in recent press releases.

Regards