Member Info for Jimmy23

I hope they give an update on their oil assets, particularly the options to farm back in to southern Namibia and c19 in Mauritania. Also what’s happening in Brazil.
I appreciate that the focus has to be on getting anchois to production asap.
Jimmy

Hi bbb
I do not expect the cpr reserve report to address the rissana licence has area as its still early stage exploration stage. We know there are large Cretaceous targets in the very south of the licence with approximate prospective resources of nearly 6bcf. I suspect, based on a published geology paper that there maybe a large neogene prospect north west of the lx well in the rissana licence which also reported gas shows, and I suspect the area needs needs 2D seismic which is the exploration work programme. Early days but good potential.
Jimmy

The most important thing in farming out is to be in a strong negotiating position with lots of financial options to progress business plans. The recent placing achieves that.
The next stage is the reserve report cpr, vital for project finance but not vital for farm out as oil companies will quickly form their own views.
So what could a farm out deal look like you reasonably ask. Well first it depends on whether it’s anchois discovery or an exploration area farm out such as rissana or a farm out of the lixus licence including rissana.
A. Rissana licence farm out is likely to be a standard exploration licence farm out, pay for additional seismic and a well , possibly on the Lk 1 prospects or there is possibly a thick neogene reservoir area north west of the LS well which found gas in the rissana area.
B. A farm out of the lixus licence excluding anchois sattelite area, a bit complex legally but possible, would most likely be for circa 25% for at least a two/three well carry as the area is expected to have an 85% success. May be possible to get more wells carried but costs would probably be repaid from future production success.
C.farm out of the lixus licence including anchois is more difficult as we are combining both proven gas, probable gas and low risk exploration gas. So we know that chariot reported 361bcf as having an npv value of $900 for 75% that’s the starting point . It’s highly likely that chariot will report proven and probable gas reserves of between 1000 and 1300 bcf.
So a10% interest would have an unrisked npv of $332 million, so allow for risk and profit on the deal value it at 50% say $115 million, payable as 90 million cash and $25 million to drill the anchois 3 well which will target the Plié prospect anchois b probable gas reserves and the deeper sub nappe exploration prospect Oirsin , my very rough estimate of prospective resources at 700 bcf for Oirsin, plié is 500bcf and anchois west 400 bcf. Hopefully chariot will provide more accurate prospective numbers, but the concept shows how a farm out could be a real win win for all concerned.
A possible alternative to cash element of the farm out is to acquire a producing interest elsewhere . A great problem to have.
Just my thoughts, others will have different views but it indicates the possible shape of a farm out.

Jimmy

If new med were taking out a new licence they would likely have got the new exploration licence by now. A farm in takes a lot longer, so chariot still a prime candidate for farm by new med.
Jimmy

Hi sf
It takes many months to do a farm out. The reserve report will be a catalyst
J

Looks like an exploration farm in opportunity.
Could they also be looking at selling some gas production chariot as part of the deal?
J

They have got to be looking at chariots acreage. Great find schlemiel.
Jimmy

The prospect has a seismic direct hydrocarbon indicator which is encouraging, but unlike other successful discoveries in the area this prospect is a stratigraphic trap, which is high risk, perhaps that’s why it was farmed out.
I will be looking for a rise in share price on exceptional high volume to indicate likely success.
J

There are certain industries that are high emitters of CO2 when they use fossil fuels, and they have to pay carbon fees for their emissions. Yes the current price of hydrogen is substantially higher than the price of natural gas , firstly because the main source of hydrogen currently is from natural gas and there is a cost to convert it to hydrogen along with the cost of the CO2 emissions. So the $4.6 per kg is the current market price for hydrogen made from natural gas, and that’s the market that chariot would be selling into with its green hydrogen with a cost of manufacture reported by irena at $1.8 currently .

Hi medlar,
Just giving your comments further thought and one of the big issues is transportation of green hydrogen and ammonia to end user markets.
In that context the comments of the minister for energy in Mauritania are interesting whereby they envisage the use of green power and hydrogen and ammonia for the following industries which they are planning to establish in Mauritania for the African market.
1. Fertiliser manufacture, using ammonia
2. Cement manufacture
3. Steel manufacture
4. Power for iron ore mines
5. Local power demand
All of which would substantially benefit from close proximity to low cost hydrogen
Jimmy

Hi medlar.
Thanks for your comments. It would great if could elaborate a little further on the H2 economics obviously it requires huge capex , most of which will be debt funded and chariot will dilute down its equity in the project. I have looked at the power output of wind power at 10 meters per sec and it’s highly efficient. The irena report indicates that because of strong pv and wind power capabilities they are assigning a 70% hydrogen equipment utilisation, which I understand is high, which contributes to the low cost.
What other issues do you see.
Jimmy

Chariot have just issued a corporate presentation last week, which shows 1tcf of gas for the anchois field comprising 361 bcf in respect of A and B sands and balance to 1tcf of gas arising from the anchois 2 well, which has yet to be audited.
Given the fact that chariot have an open offer to shareholders it’s highly unlikely these numbers will change as a result of the CPR report
Jimmy

The current market price of hydrogen is reported at $6.4 per kg as reported at
https://www.cleanenergywire.org/news/rising-gas-prices-make-green-hydrogen-cheaper-gray-hydrogen

Chariot has completed its pre feasibility report for project nour for green hydrogen which reported that it was expected to be one of the lowest cost green hydrogen producers in the world.

This has been validated in a report published by IRENA which states a current cost of production in Mauritania of green hydrogen at $1.8 per kg dropping to $1.10
See page 36

https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/May/IRENA_Global_Hydrogen_Trade_Costs_2022.pdf

Chariot feasibility study is to produce 600,000 mt per year or 600 million kg
If chariot keep a 15% interest and only make $1 per kg that makes $90 million per year profit. Apply an ebitda multiple of x 9 and we have a value of $810 million.

A unicorn is born
Jimmy

Bigguboi,
Corrib has to pay 25% corporation tax , so the pre tax cashflow should be adjusted accordingly.
Jimmy

Corrib has a 20 inch pipeline and the onshore processing facility has a capacity of 353,000 mcf per day
Pipeline capacity increases exponentially with diameter with increases
I suspect we will move to a 14 inch pipeline
Jimmy

Hi snott.
You are correct they will need a bigger pipeline or in time a second pipeline. Please note don’t have all the information to fully calculate the pipeline capacity.
I suspect they are re examining pipeline capacity.
Jimmy

I estimate a 12 inch pipeline would have a capacity of 83,000 mcf per day, so phase 2 development will need another pipeline , I guess.
Jimmy

Hi snott.
My reading of the diagram on page 7 is that the black diamond is the main anchois field seabed template to which three wells at anchois and 1 well at plié / oirsin are connected. The red diamonds are the follow on templates with one for anchois west and another for anchois north.
I don’t know the maximum capacity of the 12 inch pipeline. I will see if there is enough information to roughly calculate it.
Jimmy

Green hydrogen in Mauritania to have cost of production of $1.1 kg of h2
See page 36

https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/May/IRENA_Global_Hydrogen_Trade_Costs_2022.pdf

Jimmy

Page 12 of the presentation shows the timelines for gas. Interestingly above the gas timeline is a long line described as strategic partnering. Now I would normally expect that strategic partnering would commence with the independent audited reserve report which is then followed by gas sales agreements. However, the strategic partnering starts with “gas new venture” .
Now I know I am joining dots and there is a risk I am wrong, but this looks to me like chariot giving up some of anchois development and exploration in exchange for current gas production or development.
Jimmy