Member Info for Jimmy23

CeoB.
I think you should spend some time reading reading the chariot rns over the last few months.
Chariot have signed an MOu for the sale of gas,
With regard to the development and operation of the anchois field this is covered by the agreement with the subsea alliance.
Buying in the talent to manage operations in due course is not a big issue .
Jimmy

Also, it’s a standard condition for project financing deals that offtake contracts are in place. I do not see this as an issue and the recent cpr now supports such negotiations.
Jimmy

CeoB.
The terms of the deal with the subsea alliance include the commissioning and operation of the field for the first few years I believe. This will be enough for chariot to recruit its own staff.
Jimmy

Interestingly, serica used to also have acreage in Namibia and Morocco .
With 4.5tcf of proven and low resources in the lixus licence area, I firmly believe that chariot will be another serica.
All the ingredients are lined up to make this happen just got to be patient.
Jimmy

I agree that Morocco has to be the key focus.
But with so much drilling by others nearby in Brazil it might prompt a farm in offer.
Jimmy

Remember chariot has some very interesting acreage in Brazil.
The area is finally to be drilled by others.
See
https://12ft.io/proxy?q=https://www.upstreamonline.com/exclusive/petrobras-prepares-to-resume-exploration-drilling-in-frontier-barreirinhas-basin/2-1-1232893
Jimmy

Chariot have stated they will make final investment decision to develop anchois in 2022 so there is going to be lots of news in the next five months.
First gas in 2024.
Don’t sell, these are very valuable assets
Jimmy

Simon.
A good post.
I agree it’s important to diversify one portfolio,
Yes there may be problems along the way, but the key questions are does chariot have the technical and financial capability to handle an unforeseen event.
From a technical perspective chariot are working with world experts in subsea development and the project does not appear to have any technical challenges.
From a financial perspective, the project will generate $6.3billion in gross revenues over its life time and have relatively low opex as it’s a subsea development. That results in huge borrowing capability if something goes wrong.
I am a long term holder so short term issues don’t bother me.
Jimmy

That’s approximately $56 mcf of gas for the current price of gas in Europe.
Chariot npv economics prepared on an average price of $10 mcf.
Chariot have audited 2c proven gas of 635 bcf with a 75% interest and it has a market capitalisation of less than £190 million.
Bonkers.
Jimmy

Kingbilly,
There are lots of risks ahead which I believe are all very manageable particularly when working with world experts on subsea completions. Underpinning all of this is the 635 bcf 2c resources which at an average gas price of $10 per mcf , way below current and forward market gas prices, will generate $6.35 billion in gross revenue to cover capex, and opex , which is a huge amount of contingency financing capability.
Jimmy

Hi kingbilly
The biggest risk I see is that there is a peace agreement with Ukraine and Russia and Eu and that eu agrees to be dependant on cheap Russian gas, in which case chariot would be dependant on the moroccon gas market at $8 mcf compared to $10 mcf used in the last npv calculations.
A takeover risk has to be quite high after the cpr report on the proven and probable gas volumes.
Chariot is approximately 18% of my portfolio, and I have the highest expectations for it .
Jimmy

The previous development plan for the anchois field was to produce 361 bcf of gas at a rate of 70000 mcf per day which would have resulted in a field production life of 14 years , of which the profits from the first ten years were tax free and which resulted in an npv of $900 million as reported by chariot.
The new audited cpr is 637 bcf , excluding the O sands and which if produced at 70,000 mcf per day would extend the gas field life to 25.5 years.
The logical strategy is to plan to double production capacity to maximise the tax free earnings and npv,
This would typically done from production cashflow in the first two years or an increase in the debt financing which is also highly likely.
At least double the npv in my view.
A farm out of the 735 bcf low risk O sand prospects is also a major value catalyst.
Jimmy

A £ 1 a share target seems reasonable to me for a risk weighted proven and probable resource of 1000 bcf.
For clarity that’s the 2c resource of 635 plus the risk weighted prospective resources in respect of the three derisked O sand resources.adjusted by a 50% chance of success.
With a final investment decision due on the development by end of 2022 there is huge value here.
Time for Julian to take out his drum.
With such audited resources time to show shareholders the value of a phased development with initial production of 70,000 mcf per day and then doubling within two years, all very do able under reserve base debt financing. Lots of banks in USA do this everyday, and it’s Soc Gen basic skills set.
This is very valuable and don’t let the market shake you out during low volume summer trading.
Jimmy

Red eye mines,
You are present the case well for a soft share price.
I would add a few counter arguments.
1. With a cpr of c2 resources of 637 bcf this has substantial value along with the 735 contingent resources with a risk of 49to 61% . This makes chariot a takeover target.
2. The low risk contingent resources are ideal for a farm out, a three well exploration programme would add a lot of value and interest.
3. With such proven gas chariot are an ideal target for venture debt.
Any of these would result in a major re rating which could happen soon.
This is where the brokers should be actively pushing this oppportunity to their clients. A Canadian listing would not see chariot at such crazy low prices.
Jimmy

BBB
If AP can secure private equity to buy out chariot as you speculate then getting debt funding for the development would be straight forward as an alternative.
Certainly chariot is definitely a takeover target after the recent cpr and a market cap of less than £200 million and no debt.
Jimmy

CeoB
Soc Gen are putting up the debt finance for the capex, so they will be sure to make sure that market prices are paid. For capex
Jimmy

CeoB
I upped the development costs because with 1.4 tcf of gas at anchois they can increase the daily production rate from 70,000 mcf per day to 150,000 to 200,000 mcf per day which requires a bigger pipeline, but also re#ults in a big increase in npv and hence the debt finance.
All great at chariot except the share price.
Jimmy

CeoB,
The moroccon state oil company has an obligatory 25% interest in all exploration at no cost, and that’s in law, and the licence agreements
Jimmy

I too think a farm out is coming that will provide cash to chariot, and a three well carried drilling program to prove the “low to very low risk” additional resources that will increase 2c contingent resources to 1.4tcf
There is huge value here that is not being recognised by the market but a farm in will certainly do so.
I think this could be a farm out to a non traditional party such as a gas offtake partner who would need to see an independent cpr before proceeding .
Expect this to be done before the Agm.
Jimmy

Sparma
The newly audited proven gas volumes are more than sufficient to debt finance the development at an average gas price of only $10 which is well below both the current and forward market gas prices
The audited proven gas volumes are 637 bcf, that generates undiscounted gross revenue over the life of the field of $6.37 billion , more than enough to debt financ e the payment of the initial capex of $300 to $500 million, assuming a bigger pipeline.
Not sure investors have fully grasped the value of what we have that’s been audited, and then there is additional resources nearby of 754 bcf which Duncan described as low risk and very low risk
Jimmy