Member Info for Jimmy23

Aljimon,
We have proven and probable gas volumes,
Technically you are correct they are not reserves till everything everything is in place to economically develop them. The value is in the gas volumes discovered by the drilling.
That’s what I am trying to convey.
Jimmy

We have 637 bcf of 2c reserves and 754 bcf of resources with at least a 50% chance of success,so the risk weighted reserves for the anchois field are 1014 bcf of which chariot 75% is 760 bcf.
With a market capitalisation of less than £200 million the current value is £260k per bcf,
Crazy low market value for these assets
Jimmy

The increase in 2c gas was certainly expected.
Within that number is a big increase in the 1c gas reserves to 365 bcf, and that’s important as it’s used by the banks for loan calculations , making the debt financing so much easier.
At $10 mcf that generates undiscounted gross revenues $3.6 billion which is more than adequate to cover capex and opex, and can easily fund an increase in the gas pipeline size and hence daily production and hence project npv.
Strong buy.
Jimmy

I remain very enthusiastic about chariot.
We have a sold reserve base to secure customers and project finance. The npv of the 2c reserves is probably over $1.5 billion net to chariot, and the derisking of the anchois area has been huge.
This is very valuable with a fina l investment decision to get the production licence in 2022.
I think real value is still over £1.
Jimmy

Hi snott
The term contingent describes the fact that production licence has not issued and the project funding not in place yet to develop the field. When this occurs at Final investment decision then the classification moves to proven reserve.
The cenkos report valuation applies a 50% discount in value till these events are progressed.
Chariot report that the Fid will occur in 2022
Jimmy

In previous days the cpr results would have announced anchois field proven and probable contingent reserves of 1.4 tcf.
That’s massive.
Huge value here, if the share price does not reflect the value an acquirer will.
Load up
Jimmy

Obviously great news in the Rns to increase the proven 2c reserves, not as much as I had hoped. An 82% increase will definitely support the economic case to develop the field, the unrisked npv should be increasing substantially also. The really exciting news here is the huge increase in the anchois sattelite prospective resources and a massive derisking. The 49 to 61% chance of success in a cpr is almost a certainty,
There are two options
1. Go straight to development and drill out low risk adjoining prospects from production cashflow.
2. Farm out for a multi well drilling program
Great news, still studying the detail.
Jimmy

The npv of $900 million for the a and b sands only appears to have been based on 70 mmcf per day, and if that’s increased to 250 at plateau production then we can expect a further substantial increase in npv value.
Jimmy

Hi Larry,
I presume that with so much data gathered in the anchois 2 well that the individual reservoir pressures can be tied back to the anchois 1 well to confirm reservoir communication between those wells. I think a third production well will required to produce the attic reserves above the c and m reservoirs in the anchois 2 well.
With regard to compartmentalisation , I agree that this could be detected after a years production and a production well drilled to address the risk at that time. However the a and b sands in the anchois 1 well had a gross reservoir thickness of over 50 meters each and I would have expected that any faulting in such thick reservoirs could be seen on the 3 d seismic . We know that vertical seismic profiles were taken in all reservoirs in the anchois 2 well so hopefully that will help calibrate the seismic and identify any minor faults so that production wells are optimally placed.
I think drilling anchois footwall would add a lot of reserves at little risk
Jimmy

Kingbilly, we must certainly be a target at the moment with a market capitalisation of less £200 million and consider the following facts.
1. Chariot stated they are to make a final investment decision to develop the anchois field in 2022, and to that they must have in place the gas offtake contracts which in turn secures the debt project finances which in turn allows the construction contracts to be signed which in turn allows the government of Morocco to issue a production licence.
2. First gas production scheduled for 2024.
3. Npv of cpr proven gas of 361bcf for just the anchois A and B sands only at $900 million
4. CPR for increased proven gas following anchois 2 well discovery , to issue “shortly” per the annual report issued in late June 22.
5. I am estimating new 2c reserves to increase to circa 900 to 1000bcf with adjoining prospects substantially derisked.
So if anybody is going to make a takeover bid they will need to move in the next few months,
I don’t think Adonis will go for it , but obviously everybody has a price.
We know that the unrisked value, before the last equity raise , reported by cenkos was £3.21 per share which is probably now about £2.50 after the dilution, so a purchaser is going to buy at a discount to that, I would guess they would need to bid over £1 .
Will it happen, I simply do not know.
But I think Ap has an ambition to grow chariot into a multi unicorn platform.
A lot will happen in the next 5 months

Jimmy

You can be sure that cash rich oil companies like serica are looking at chariot, particularly with proven gas next to Europe and huge follow on potential
Jimmy

A key cost component to generate green hydrogen is the cost of electrylsers which are reported to be coming down in price by 85% ,see
https://www.rechargenews.com/energy-transition/exclusive-enapter-eyes-83-cost-reduction-for-its-unique-aem-hydrogen-electrolysers-by-2025/2-1-1256489

Jimmy

Hi fernan
Good questions.
Firstly the chariot annual report states they are expecting initial production at 70,000 mcf per day and they have identified two power stations in Morocco to take the gas.
You are correct it’s important to maximise production as quickly as possible and chariot report initial production will be from two wells followed by a further two wells in year 2, obviously financed by production cashflow in year 1 and 2.
I agree it’s important to drill out the 2tcf of gas at anchois as quickly as possible and get it intro production and I believe that’s chariot plan also, this will need an upgrade to the processing plant by year 3, which should not be a problem. That can be done from anchois production cashflow.
The alternative is to farm out now and get anchois and lixus licences drilled now to prove up the low risk 4tcf which chariot identified. I recently posted a discussion point on what the farm out deal might look like, I think chariot will go for the farm out option as it maximises net reserves/resources and provides chariot with a lot of cash.
Either way this is a really very valuable asset, with a final investment decision to start development in 2022, with production cashflow by end 2024.
Very fast.
Jimmy

Newktb
My view on subordinated debt is that it is clearly linked to the development of anchois , obviously chariot would not get any debt.
Chariot previously reported that the A and B sands gas production previously had an npv of $500 million and reported by chariot to produce $1.5 billion in free cashflow after capex is paid, that’s plenty of cashflow to secure subordinated debt.
Since then more gas has been proven, npv increased from $500 to $900 million and a final investment decision to be made in 2022.
Lots of financing options here.
Jimmy

Sonatrach in Algeria is revising all its gas sales contracts “
Algeria is reviewing gas sales deals with all its buyers in order to reflect the current heightened prices.”

So the question is how much of a cash payment or carried costs should this be.
The starting point is the $900 million npv for chariots 75% of 361 bcf of proven gas, one third of that which is 25% is worth $300 million , and that’s not taking into account the extra proven gas from anchois2.
There are many permutations here, we are certainly looking at a large cash payment and a multi well exploration carried interest
What’s really interesting is that the current market capitalistion of £182million is less than one third of the current npv farm out value in respect of only the original 361 bcf reserves.
So a farm out would not only result in a major re rating but also a very exciting multi well exploration program of 4tcf prospects which have been substantially de risked.
That’s one hell of a great story and incredible value, starting with the cpr which will be announced shortly according to the annual report.
Don’t sell.
Jimmy

My farm out thinking is as follows, we know the anchois hub area has prospective resources of 2tcf, of which it is believed approx 1tcf is located at the main anchois field, anchois central we will call it. With a 75% interest chariots net reserves are 750bcf for anchois central.If chariot farm out 25% for cash and a multi well programme to drill anchois sattelites, which if successful would result in gross reserves of 2tcf and net reserves to chariot of 1tcf. Not only is this more valuable than what we have now, it reduces capex funding, gets third party validation of value for the stock market and the extra gas could be brought into production quickly.
With an 85% success rate onshore for the same geology there will be lots of farm in interest.
An alternative would be to use subordinated debt to achieve the same results with no dilution of the 75% interest.
The report posted above did indicate that the gas purchaser might also farm in, as an alternative.
Just my thoughts, other suggestions welcomed.
Jimmy

Hi BBB
You are correct that an increase in reserves will result in an increase in npv , particularly if there is an increase in daily production.
The chariot development plan in the Annual report states there will be two initial production wells followed by a further two wells , which will increase production I suspect in year 2 or 3 .
Assuming the pipeline has the capacity then there would be a significant increase in value . In addition if the two extra production wells were from an anchois satellite prospect it would have tax free status for 10 years, so in these circumstances a 3x increase in reserves could be roughly estimated at 3x the npv.
Jimmy

Great analysis, I liked the statement.
“ At a more conservative gas price scenario of USD 15/Mscf the asset is estimated to deliver a NPV of USD 1.4 billion and a government take as low as 29%.”

Jimmy

Hi snott,
Chariot actually have 3D seismic already in the south of the rissana licence where they identified a large prospect, so it will be quick to work it up into a drillable prospect. You are correct the priorities are anchois and the nearby prospects.
Jimmy