Member Info for Jimmy23

The Venus exploration well in southern Namibia started on 1st December.
If it was a dry hole they would have finished by now. Rumours of oil discovery.
Should get clarity on this soon.
An unexpected upside for chariot.
https://impactoilandgas.com/wp-content/uploads/211201_Venus-Spud-Press-Release.pdf

Jimmy

Hi geow.
My understanding is that when the anchois discovery was first made there was no pipeline system onshore to bring it to market. So it’s now economical to bring smaller quantities of gas to market.
We know they have 361bcf 2c reserves as it was audited.
The additional gas now proven was previously audited as a prospective resource , and chariot reported that results exceeded expectations, but your right this will need to be audited in order to secure the project finance they have received letters of intent.
With regard to the economics they previously appointed subsea completion experts and performed a scoping study which resulted in the previous estimate of free cashflow to chariot of .$1.5 b for its 75% interest in the A and B sands only . Obviously this now needs to be updated for the larger proven reserves.
This is all routine .
Lots to look forward to and I am sure they’re will be a lot of new information on wed.
Jimmy

It would remarkable to bring into production earlier
J

The reason it takes circa 2.5 years, which is remarkably quick is.
1. Detailed reservoir production modelled to be completed and most likely audited.
2. Final engineering and design
3. Procurement of processing site.
4. Ordering of long lead items such as production templates, pipe to shore, pipe to processing site
5. Complete project finance and legal due diligence
6. Complete gas sales contracts with take or pay option
7. Negotiate access to main transmission pipeline from onshore processing plant.
8. Secure rig and pipe lay barge for hook up and installations.

That’s a busy schedule.
Jimmy

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.
Obviously does not include O reservoir, so assumes that such reserves would extend field life.
Jimmy

The reference to cove being bought out for its 8.5 % interest in Mozambique for £1.2 b is only partially relevant because it was undeveloped but it was so remote and large it would need ten of billions to develop with an LNG plant to export worldwide and probably take circa 8 to 10 years to get to cashflow.
The chariot anchois field will be in cashflow in 2024, cost approx $300million to develop and its getting a gas price of circa $8 mcf, per Larry b on this site, the current price in Morocco is actually 10% of Brent price plus $0.50 so about $8.90 mcf.
With a major pipeline onshore with capacity to receive this volumes for both domestic and international buyers.
Chariot are likely to hold a gas field interest that will generate circa $3 billion in free cashflow, and the state oil company is supporting its rapid development which will reduce Morocco huge coal powered usage.
And then there is the value of the multi tcf exploration targets in the rest of the licence.
Jimmy

I thought around 300k per day for 35 days.even if it drilling cost circa 10 million it still leaves plenty of cash .
Share dilution is not expected.
Jimmy

So now what you ask.
1. Publish lab results off gas samples.
2. Update market on chariot analysis of well results and impact. Better than expected results they say. Estimate new 2c reserves.
3. Update market on well results impact on derisking anchois north and O footwall expected reserves of approx 450bcf.
4. Update market on rissana licence and potential jv partner to drill over 1tcf of derisked prospects.
5. Complete feasibility study for development.
6. Announce new debt financed gas production
7. Announce jv partner for green hydrogen
8. Announce next renewable project for Africa mining.
9. Prepare corporate presentation on Lowell results.
10 get revised 2c reserves audited and published.
And that’s just in the next two months or so.

Jimmy

hi Bdc
The most obvious low risk add on are anchois north and O footwall at circa 450bcf, this must surely have a chance of success at 65%
The critical success is that the seismic spectral decomposition was 100% accurate in predicting the gas reservoirs in anchois 2 . This obviously derisks the entire greater licence area.
The value here is just huge and will be appreciated by a farmout partner for the non anchois licence area. There is just so much good news in these results.
Jimmy

The chariot December presentation reported they expected free cashflow from from the proven A and B sands of 361bcf as $1.5 billion, we have reserves now of at least double that and confirmation from Morocco state oil company they look forward to a quick development.
Financing this will be the usual time consuming, but it’s very doable and with chariots strong reputation on low cost drilling there will be a lot of banks lining up to provide money.
A small farmout to get anchois north drilled and footwall O sand is all that should be considered at anchois. Farm out the rissana new licence for a multi well carry.
Very achievable.
Jimmy

Good point about pressure data from the O sand will confirm the O sand water contact.
I looked at the seismic cross section again and it looks like the O sand was pinching out at the Anchois 2 well location , if so then the pre well prognosis for reserves of circa 900bcf might still be valid.
Looking forward to a post well update. Lots to look forward to here.
Jimmy

The anchois 1 well previously found the gas water contact in the A sand and Duncan Wallace explained that A sand gas was sampled from the number 2 well.
I believe that the anchois 1 well will be recompleted by way of a small sidetrack away from the gas water contact to optimise future production
The key statement in the rns is by the director of the state oil company saying they look forward to the rapid development of the field.
All great with these well results, institutions will now start to look at this
Jimmy

So all successfully completed, and anchois well suspended as a potential producer.
Clear statement by chariot and state partners to rapidly bring into production.
Great news.
Jimmy

I expect next rns within a week.
Hopefully we get an updated corporate presentation
I don’t expect new reserve estimates as I think they will need to get them audited.
We know all zones found high qualify gas filled reservoir and importantly no water.
I calculate reserves at 700bcf based on the information published. But I expect chariot will want to get the revised reserves audited, so about 2 months.
The key information is that the recent well has validated the seismic direct hydrocarbon indicators particularly the spectral decomposition . This makes five wells in the block which validated the seismic gas indicators. Anchois north and O footwall with approx 450 bcf, as highly likely.
First production cashflow estimated by chariot in 2024.
Lots of really good news to look forward to.
Jimmy

Hi wizzard ,
It was SHC who suggested the 10% for $100m, I just commented on it.
We do not know the terms of the green hydrogen project, but it’s likely to be built in stages. Based on chariots current green energy deal, they are likely to have a small carried interest, an initial small participating interest and an option to increase its stake.
That option is important as chariot can wait for costs to come down as predicted.
The key issues for the green hydrogen project as I see it are
1. Reduction in electrolysis costs.
2. Secure jv partner with offtake contract for hydrogen
3. Secure long term debt for capex of circa 25 years
The location in Mauritania is one of the best in the world, particularly the offshore wind from the hot sahara desert to the colder Atlantic air causes high consistent winds, ideal for the new giant turbines which have come on the market.
The anchois field revenues are the basis to fund these projects with lots of project debt.
Jimmy

The green hydrogen project has huge potential that’s relying on the forecast drop in the cost of electrolysis materials, which will happen and in the meantime there is a few years work on feasibility studies and detailed engineering.
Chariot will be producing gas with a net profit of circa £90 million per year starting some time in 2024,
So that’s the funding source for green hydrogen and other renewable projects.
Jimmy

Fernan
I have tried to find a definitive answer to your valid question as to whether the onhym 25 share of capex is funded by them or initially by chariot.
Unfortunately that information is not specifically addressed in the onhym published fiscal, just that are entitled to a 25% working interest.
This would imply that they have to eventually fund exploration and production.
So either it’s paid from their share of production cashflow , which is ok as it would be repaid with first two years of production start, alternatively it’s paid when production concession licence is issued.
If the reserves are circa 700bcf as I estimate this will be easily handled.
Jimmy

Unfortunately the Morocco fiscal terms require that when farming out it must be in respect of the entire licence area.

Hi SHC
To further develop your suggestion of a 10% farmout for $100m
This reduces chariots 65% to a value of $650 m plus the $100 m farmout cash is $750million immediate valuation or approximately £0.70 per share for 65% of what I estimate reserves currently at 700bcf.
Or 455 bcf net to chariot, being a value of $ 1.4 m per BCF. $15 million to drill anchois north and O footwall for an increase of potential reserves, low risk, of 450 gross, or after such farmout would be 65% of 450 bcf x $1.4 per bcf= $409 million extra value or roughly another £0.40 per share. All back of the envelope stuff .
So from a farm out investor perspective they invest 100 million they get 10 % of 700bcf plus 450 being 1150 bcf being 115 bcf net to them valued at $1.4 m per bcf is an increase in value to $161 milllion plus all the upside of the block
Jimmy

Hi SHC
I think geological COS for anchois north and O footwall should rise to to 60 to 70% .
Chariot spent a long time logging and sampling the anchois 2 well which will derisk the surrounding acreage. Can be drilled by a single well per page 22 of October presentation seismic profile.

Interesting when I look at the chariot presentation there are some deep prospects also, below the mud salt diaper and obviously below the now validated O sand reservoir. Below anchois is deep prospect called Oursin with a number of similar targets in the lixus licence area. There are no reported prospect sizes for these leads but the presentation does show a good sand reservoir package below the mud salt top seal in an anticline structure above the source rock .
We are just at the beginning of a very exciting journey.
I am sure there will be lots of strategy decisions for the Bod to consider in these exciting times.
From my perspective, peel hunt and fin cap put a 50% discount to arrive at their 54p risked valuation. Priority is to address that valuation discount by securing the project finance, design the field facilities for extra capacity add on at a later date, go for a bigger pipeline, get to production cashflow generating £90 million profit and then add the extra reserves.
Small farmout to secure anchois north and O footwall drilling could be considered as it would increase chariot net reserves. A 10% farmout which proved up Anchois north and O footwall would increase chariot net reserves, assuming current reserves at 100 at 700bcf, would increase chariot net reserves by approx 42% . An interesting option.
Jimmy