Blencowe Resources: Aspiring to become one of the largest graphite producers in the world. Watch the video here.
Hi suresh.
Predator put out detailed economics for its cng project in morroco,and based on that capex for 20 mmcf per day for cng is $33 million, payback in less than 6 months.
My understanding is that chariots partner vivo for retail sales in Morocco will likely put up the funds and be repaid from production cashflow.
Jimmy
Hi o and w.
Predator numbers for cng net revenue would result in chariot generating $89 million per year from 20 mmcf per day cng production and sale.
I don’t expect chariot to have difficulties with perforation and hopefully they use the correct mud to deal with glauconite in the deeper reservoir.
Jimmy
It’s the 20th February rns which is important
“ Mobilisation of the Sandjet crew and equipment will occur shortly after Petroleum Agreement Amendment #4 has been ratified and all necessary regulatory approvals for Sandjet rigless testing have been received. The time framework for the Phase 2 rigless testing programme will at that time be updated.”
Waiting on that update now.
Jimmy
The recently referenced 1tcf is for anchois offshore after drilling anchois east.
However, I also estimated some time ago 1tcf for the potential onshore of the secondary deeper target now called Navette by chariot.
The primary target onshore has been reported at 10.5 meters by SDX and chariot have reported it as similar to the B sand offshore.
Offshore we had nearly 190 meter of sand in anchois 2, in lnb 1 nearby onshore in loukos 3D seismic area they found 300 meters of gross sand reservoir with high gas readings , which if gas bearing up dip would be very exciting.
This extra 1tcf Navettevreservoir in the 3D seismic area is clearly higher risk, and it’s great it’s going to be drilled.
We might get a pleasant surprise.
Jimmy
KB.
I would add that uk oil valuations are now very much based on near term net revenue generation. So loukos is important as it will have a quick route to cashflow generation via the jv with vivo. This should sustain chariot till anchois is in production in 2-3 years.
I am expecting anchois east to be successfull including proving up the O sands, increasing gross reserves to 1tcf.
The cash generating capacity of loukos and anchois is substantial and will provide capacity for large dividend payments quickly. When the market recognises this then share price will move up quickly.
I have had to be much more patient than I expected all those years ago .
Jimmy
Hi Kingbilly.
I was excited about Namibia because I was convinced that oil source rocks were present. More than ten years later over 12b bbls of oil have been found. Not a good business model to wait that long for a discovery and chariot has suffered huge equity dilution as successive high impact exploration wells failed. The farm out model of financing for exploration did not work.
Till anchois.
The development of anchois is not dependant on equity financing, however, it likely that chariot will need equity to fund overheads if the loukos onshore drilling is not successful.
Hence the most likely reason for such a big discount in share price.
I like loukos, because they are using the same geological model that worked well offshore and which has been repeatedly proven onshore Morocco.
Renewables are a long payback project, but needs third party finance.
Hydrogen is currently uneconomical and needs a change in technology.
Jimmy
Kingbilly,
Actually, I am excited about chariots drilling in loukos as I believe it will rapidly lead to production cashflow and negate the equity dilution discount that the market applies to chariots valuation.
There is a reasonable chance that the deeper Navette reservoir is gas bearing also , that would be transformative, but its exploration risk. We will know soon enough.
Jimmy
Prd previously prioritised flow testing of mou fan in mou 1 and 3 which would then facilitate a production concession licence. They also suggested testing of the very shallow unlogged reservoir in mou 3.
Interestingly, the last announced flow testing did not include the 50 meters of shallow reservoir in mou 4, yet it’s recently referenced as gas bearing, so who knows if it will be tested.
With regard to the mou 4 Jurassic 2 meters of likely gas, I would flow test it, because if it did not flow I would not drill mou 5 updip.
Jimmy
I have re read the mou 4 rns
“ As previously announced the culmination of the Jurassic carbonate target lies 2.6 kilometres to the southeast of the MOU-4 well location and significantly higher than at the MOU-4 well location. Therefore a positive rigless testing result in this zone would help to de-risk the larger Jurassic structural closure in respect of reservoir development and migration of gas. These were two of the most significant pre-drill exploration risks.”
A flow test would validate the gas, which nuetech reported as likely, not certain, and would hopefully establish the gas water contact. Possibility of a gas condensate contact which would be interesting.
Jimmy
The mou 4 rns stated.
“ As previously announced the culmination of the Jurassic carbonate target lies 2.6 kilometres to the southeast of the MOU-4 well location and significantly higher than at the MOU-4 well location. Therefore a positive rigless testing result in this zone would help to de-risk the larger Jurassic structural closure in respect of reservoir development and migration of gas. These were two of the most significant pre-drill exploration risks.”
A flow test would validate the gas presence. If not present save the cost of drilling mou 5.
In addition, a flow test may establish either a gas water contact or a more unlikely gas condensate contact.
Jimmy
Thanks Keith.
Hopefully a good flow test will result in a re rating of the share price.
I hope a long flow test occurs sufficient to prove gas below the structural spill point and hence help to proove a stratigraphic trap closure.
Jimmy
Keith .
Thank you for your summary and views,
We know that mou 4 encountered 2 meters of good carbonate reservoir with very high gas saturations, and that in the shallow zone 50 meters of reservoir was gas bearing , per neutech.
So it seems to me that source rock in the area has been proven and is not the factor behind the it’s gcos of 12% for mou 5.
You stated.” As an aside, these recent source-rock studies greatly increase the gcos over that suggested in the January ITR“
Can you please explain your point further.
Jimmy
Ijt.
The average success rate in the rharb basin is circa 80% for prospects that Avo seismic signatures, which is one reason why I invested in predator as it also has Avo seismic signature.
It will be interesting to see whether chariot or predator achieve an onshore gas flow test first.
Predator report potential gas reservoirs of over 175 meters, which need validation by flow testing, then I am expecting the market to substantially re rate predator.
Chariot onshore primary targets are two wells with a reservoir thickness of 10.5 meters each, so a lot less production potential. Both companies need to flow test.
Jimmy
Clearly chariot could use the rig to perform a flow test but it’s at a much higher day rate, previous operators have flow tested after the rig has moved off location, got to wait and find out.
I believe there will be two wells drilled by chariot sequentially.
Note the large deep structure in the second well called Navette, which is suspect may be similar to the O sand offshore.
Jimmy
I guess it will take 2 or 3 weeks to encounter the first target.
Drilling the deeper target may take another week if they have to change the mud system to avoid drilling problems encountered in the deeper reservoir at lnb 1 nearby.
I expect flow testing will occur after the rig has moved off location, using a coiled tubing system. I expect that will be within 1 or two months thereafter. Just a guess though.
Jimmy