Member Info for Jimmy23

With regard to geopolitical risk this needs to be balanced against market price risk and now security of supply via underwater pipelines.
Morocco is currently importing gas from Spain for its power generation requirements. As Spain is a major importer of lng it’s likely that the gas price is linked to the Spanish lng price.
The current price of lng in Spain works out at approximately $25.8 per mcf equivalent price, converted price per kWh to mcf at 3.41
So if chariot are to sell for moroccon power generation they they can offer Morocco a very good deal at $10 to 12 per mcf and it will cost Morocco a lot of money for any delay.
In addition, I suspect chariot may be involved in negotiations to sell gas to the kenitra power station which if converted from oil to gas would require 40 k mcf per day.
These are win win situations for chariot and Morocco so there is every incentive for both parties to make this work.
With regard to the development plan the last corporate presentation shows that this will be a three well production plan , of which two wells are drilled, the third well likely to also test deeper exploration targets and the pipeline and process facilities to produce up to 100 mcf per day.
The engineers to perform the detailed engineering were appointed in June so getting this done by year end or early 2023 is doable .
Clearly the current share price does not reflect the value that’s here. We are in a bear market so investors need to be patient for this.
I do think that a farm out deal would provide strong third party validation and increase exploration drilling of the very low risk prospective resources.
Jimmy

Chariots project nour for green hydrogen in Mauritania has been reported by chariot in its recent interim results statement that it could be one of the lowest cost hydrogen producers in the world.
Chariot state that one of the uses of its green hydrogen is to produce green steel
Now Thysonn Krupp have announced they can use hydrogen and low grade iron ore to make high grade steel.
Interestingly, Mauritania is a large producer of iron ore.
See.
https://reneweconomy.com.au/german-steel-giant-tech-breakthrough-to-steer-industry-away-from-coal/

Jimmy

Chariot now have a market capitalisation of £147 million, how does that compare to the expected ebitda from anchois.
Firstly, the important news from the Agm presentation is that anchois pipeline and processing facility are designed for 100 k mcf per day.
We all have different gas price assumptions, and currently predator oil reported that the price of gas to industry in Morocco was $16 mcf, we know that power stations in Morocco will pay less, so let’s use $8 mcf for the revenue assessment as follows.
100k mcf x $8 x 365 days = $292 million gross revenue.
$292x 96.5% to pay royalties = $281.780 million x chariot 75% = $211.335 million less opex say $35 million = $176.335 million ebitda net to chariot. /1.06 fx rate= £166,353 million ebitda.
The first ten years of production are free of corporation tax, the capex payback is 18 months net production cashflow, so increased interest rates not a particular problem.
The audited proven gas volumes of 637 bcf would support a gas field life of approximately 17 years.
Even if you think chariot will farm down 25 % of its equity interest in the field there is incredible value here for those that can withstand the volatility.
Strong buy
Jimmy

Hi Larry,
I agree the anchois economics look robust, and with three wells from first production I expect they could achieve 100 mmcf per day which $1million gross revenue for the 100% project at $10 mcf, that production volume is within chariots control.
With regard to future european prices the Average forward price for gas for 2026 on the ice Dutch TTF MARKET works out at $16.78 mcf., quoted to day.

So I do think there is room for a re rating of anchois based on the gas price. I acknowledge that because chariot is pre revenue it’s necessary to be cautious regarding gas pricing. That’s why I think chariot should focus on the production volumes as $750 k per day gross revenue to chariot at $10 mcf is nowhere near priced into this share price.
Jimmy

For comparison , the current price of lng converted to energy equivalent of gas in Spain results in an equivalent gas price of $23 mcf,
It’s likely the Spanish lng price is determing the market price of gas as Spain has a number of lng terminals,
Anchois economics in nearby Morocco prepared on a $10 mcf gas price
Jimmy

Predator oil have updated the market on their plans to produce compressed natural gas from the drilling due to start shortly onshore morocco.
Page 7 of the report states that the gas price to industry is estimated at $16 mcf.
Chariot prepared it’s npv calculations at $10 mcf
See.
https://wp-predatoroilandgas-2020.s3.eu-west-2.amazonaws.com/media/2022/09/Proactive-Presentation-Final-8-September-2022-LATEST.pdf
Jimmy

I think any time a director buys shares it’s good news.
It’s a small deal in a terrible market so obviously ignored by the market.
Jimmy

The recent directors buy of shares in the mkt requires that he hold the shares for three years to get the incentive shares.
That’s good news,
Jimmy

Hi snott,
Great that you posted the third party valuation of anchois.
Important to point out that this report predated the 70% increase in proven gas volumes.
I expect the planned production rate of 100 mmcf per day will start from three wells as per the latest agm presentation.
My rough estimate is that the npv valuation referenced in the report can double to take account of the extra reserves and higher initial production volumes.
Jimmy

The fall in sterling by approx 20% against USA dollar since February is good news for chariot which will generating dollars from anchois field, yet the share price goes down, don’t sell.
Jimmy

Chariot reported that their project nour in Mauritania will be one of the lowest cost producers in the world.
It could be even lower cost with new electrolyses from China.
See.
https://www.rechargenews.com/energy-transition/cheap-chinese-hydrogen-electrolysers-likely-to-become-popular-worldwide-during-2025-30-bnef/2-1-1304666
Jimmy

Hi surfit
Thanks for posting that link which is an interesting comparison to the anchois field.
It seems to me that the Argentinian development is much more complex, as they are drilling three horizontal wells to produce and using an unmanned platform to do this, this indicates to me that the reservoir is not high quality and needs horizontal wells to get a high flow rate and probably needs gas compression, hence the need for a platform and a very much higher cost.
The anchois field has two of its three wells drilled and has high natural reservoir pressure and hence can be completed as a subsea completion, hence much lower capex.
Despite the complexity of the field development in argenta they expect to complete it within 2.5 years , so a two year development for anchois looks reasonable.
Jimmy

The green hydrogen project in Mauritania will require huge debt financing.
The Eib are now well placed to provide it.
See.

https://www.zawya.com/en/projects/utilities/mauritania-and-the-eib-to-strengthen-renewable-energy-and-green-hydrogen-cooperation-i83ofix2

On chariots website they state the green hydrogen will be one of the lowest cost producers in the world.

Jimmy

Just had a quick look at the chariot website and I had not noticed the following statement previously.
“World-class commercial contract terms with high gas prices in a developing market with growing energy demand offers a potentially high-value project”

Looks like gas sales agreements are progressing
Jimmy

One of the advantages of total eren farming into project nour is that total eren already have started to develop a similar project in chile which will be in production in 2027 three years ahead of chariots planned production in Mauritania. So there will be huge benefits to learn from that project that can be applied to project nour.

https://www.rechargenews.com/energy-transition/total-eren-chilean-wind-plus-hydrogen-energy-megaproject-starts-engineering-scope-out/2-1-1202193

Jimmy

Hi snott
The key issue here is to lock in the gas sales contract and pricing, as that secures the revenues and hence either debt or farm out terms
Jimmy

From other sources.

Hi Kingbilly.
I have been thinking about the limited and restrained publicity regarding the anchois field development and how investors have to join the dots frequently to figure out what’s happening, and as you enquire why has the market not taken this investment opportunity with higher trading volumes.
On reflection, it appears that the state oil company onhym have to approve all press releases and until matters are finalised they do not allow publicity in respect of such matters.
Hence shareholders have to join the dots, but so far chariot is delivering on increased reserves and a detailed engineering design underway.
I do think that the development plan to produce at 100 mmcf per day is a substantial value enhancer and warrants publicity
Jimmy

Average gas price for anchois is calculated as follows,
1. The current gas power requirements in Morocco is 100 mmcf per day
2. Sound energy have announced long term contract to sell a minimum of 30 mmcf per day to these power stations
3. Assuming the remaining local demand of 70 mmcf per day is satisfied by chariot at $8 mcf the previous price advised by chariot
4. The chariot initial production rate is now listed at 100 mmcf per day, of which 70 mmmcf per day is for the local market and 30 mmcf per day for export. Using the 2027 forward price of gas in Spain it’s $25 per mcf
5. Which works out at a blended average gas price of $13.10 per mcf
6. Assuming chariot reduce to a 50% working interest then annual revenues after royalties are $230 million
7. Chariot reported at the Agm the gross profit margin would be 85% so that’s
$196 million per year gross profit.
Jimmy

Hi fernan
Unfortunately I did not get to the meeting but my understanding is that chariot will have a combination of guaranteed take or pay quantities that is sufficient to secure the debt finance with the banks, the balance of gas sales would not have long term fixed prices. The gas price $ 13 is what chariot had been using internally in its economic model, I understand .obviously and forward prices in Europe are very much higher than $13 mcf
Jimmy