Member Info for Jimmy23

Sf
The drill analysis is known, 100 meters of proven gas in seven reservoirs which exceeded expectations.
We know that the pre drill prognosis was for reserves of 900 bcf if all zones came in as predicted.
We do not yet know the new reserve figure.
The reason being to declare a proven reserve figure it’s based on the economic production profile of the field, that requires the full reservoir engineering and production designs to be completed and modelled and audited. That’s a lot of work hence the delay.
Long term price of gas in Europe and Morocco has increased,
Just got to be patient.
Jimmy

Lenders firstly look at the asset , in this case proven reserves, then look at the cashflow secured on offtake agreements, look for price protection from gas buyers or hedged gas price for loan repayment period, capex and contract in relation thereto are examined for both cost and competency of the contractors, then the lenders look for contingency in case something goes wrong and this is where the the market capitalisation of the borrower becomes important, as the ability to raise funds for unforeseen events becomes important.
Now this could possibly be covered by Jv partners as the generally speaking the liabilities of the jv are joint and several and that might be a way of addressing that risk as an alternative.
Jimmy

I agree with professional, the audited reserves are the key certification from which everything else follows. This takes time as it involves a recalibration of seismic and the completion of the reservoir engineering model based on the planned well completions. With seven reservoirs and seven gas water contacts and three production wells this is a lot of work.
However, news flow is required and the gas and fluid analysis could be released soon. There is a small probability that some of the gas water contacts could in fact be gas condensate, unlikely.
Jimmy

BDC
The chariot pre drilling prognosis was for approx 900 bcf of proven gas. Chariot report that the results exceeded expectation, so I think a 750bcf proven gas calculation is reasonable at this time.
Obviously both lenders and offtakers will want to get the new reserves audited . This requires the well results to be integrated to the seismic and mostly likely to recalibrate the seismic to get a good fit. Unfortunately this takes time. Hopefully like predator we will get a major re rate on the back of such audited reserves.
The higher gas price is now reflected in the forward market, so more upside.
This is where a broker note would be helpful, a higher market capitalisation strengthens negotiations with lenders and contractors, it’s not just to keep investors happy.
Jimmy

Hi fernan
You asked about the presence of water inhibiting gas flow rates.
This question was asked at the webinar presentation and Duncan stated this would not be an issue as the well production completions would isolate the water bearing zones.
Of course initially this will work but over time as the reservoir is depleted the gas water contact will move higher , so generally speaking it’s better to produce as far above the gas water contact as possible to minimise water production which could potentially reduce pipeline capacity.
Fortunately, chariot are now proposing to have three production wells and and they should be able complete each reservoir optimally from one of the three wells to minimize water and optimise production. You can be sure they are running reservoir simulation models to plan for this.
Jimmy

Hi fernan,
It’s hard to know what the market wants. I think they are looking for some third party validation. In the case of predator oil and gas they increased substantially after the release of a third party competent persons report on the audited proven gas, followed by a brokers report which indicated the value attributable thereto.
It looks like chariot need to follow that route.
I understand our new broker is due to issue a report shortly.
Jimmy

There are two gas pricing formulae that are relevant to the value of chariots 750 bcf of proven gas.
1. Gas price in Morocco based on Brent oil price x 10% +0.50 cents, = $112 Brent oil x 10% = $11.2 +0.50 = $11.70 per mcf., and for export to Europe
2. The forward price of gas for winter 2025 on the ice commodity market is £87.5 / 10= £8.75 per mcf x $1.32=$11.55 per mcf.
So despite the drop in gas and oil prices for current delivery the forward price of natural gas has just declined slightly, indicating that the market see a long term shortage of gas in Europe.
In terms of value what does this mean ,
In terms of present value,
1, 750 bcf x $11.00 x 96.5( adjusting for revenue royalty ,= field revenue of $7,961 million, less say opex $40 x 20 years = $800 = undiscounted ebitda of $7, 161 million, first ten years tax free next ten years tax at 31% so average of 15.5% so undiscounted after tax = $6,051 million less capex of say $400 million = $5,451 million undiscounted x 75% chariot interest = $4,088 million undiscounted net to chariot.,@ fx rate $1.32 = £3,097 million net to chariot.
Each investor can decide what the present value of these cashflow would be. Typically I would reduce to current value by 50% , but taking into account risk or delay, I would reduce by 2/3 to be cautious so current value is approx £1,032 million = £1.24 per share
I have tried to use high costs and high opex and high discounts to be cautious so lots of upside in these numbers, particularly the additional gas nearby.
The anchois north prospect is estimated to have an additional 600bcf , with an 85% probability based on success rate in the basin onshore is equal to an additional £ 0.84 per share risk weighted.
A lot to look forward to for a long time,
Strong buy.
Jimmy

I think that our value should be in excess of £.00 per share, I was just doing a comparative analysis to another quoted company that has only just had a broker update. I was not using the broker valuation of predator but the actual market valuation of predator as a comparison.
If you use $11 mcf gas price, which is the current price in Morocco then we should easily exceed £1.00 in price.
Jimmy

The predator gas development plan has a high opex, approx $3 per mcf higher than chariot as it is going to sell compressed gas by tanker.
In addition it has not secured finance, unlike chariot that has finance letters of intent and draft sales agreement agreed.
Jimmy

Predator oil and gas are a useful comparator as to how chariot should be valued. Predator broker issued an update to day where they outlined their plans to develop their onshore gas discovery in Morocco.
Predator require funding to drill two additional wells and bring into production for compressed natural gas at a rate of 25000 mcf per day , with net recoverable reserves , assuming the productions wells get drilled of 57 bcf net to predator.
The predator current market capitalisation is £33 million which works out at £579k per undeveloped bcf.
Predator report the current gas price in Morocco is $11 per mcf.
The equivalent valuation for chariots proven undeveloped gas in Morocco would be 750 bcf x £579k x 75% = £325 million = £0.39 per chariot share compared to current price of £0.10 per share.
Time for the directors to bang the drum as the cfo stated.
Jimmy

The current price for gas in uk per ICE £476 and the forward price for winter 2025 is £111 per mcf price = £11.11 or approx $14.85 an mcf. Chariots previous forecasts were at $8.00 an mcf.
Chariot have a 75% interest in estimated 750bcf of proven gas on Europe’s doorstep.
Plus a further 10 tcf of high quality exploration prospects with full three d seismic and drill ready.
Amazing that this share price is not £1.00
Jimmy

The rise in natural gas prices has resulted in green hydrogen now being cheaper to produce than hydrogen from natural gas.
See.
https://www.rechargenews.com/energy-transition/ukraine-war-green-hydrogen-now-cheaper-than-grey-in-europe-middle-east-and-china-bnef/2-1-1180320
The chariot green hydrogen project is expected to be one of the lowest cost green hydrogen producers in the world due to the high winds that prevail , at 10 meters per second which is sustained due to the proximity of the Atlantic waters to the hot Sahara desert.
Investors currently get this project for free.
The high gas price will help bring in jv partners looking for very low cost production sites.

Jimmy

SHC,
I had a look at PDR, and certainly the market reacted strongly upwards.
I thought the rns was rather poor , disjointed. It certainly emphasised the importance of Morocco to the European gas market, although it does look to me like pdr are about to fundraiser.
It’s time now for chariots brokers to issue a commentary on the European gas market and the role that Morocco can play it meeting a huge supply problem, particularly as the forward price has moved up.
Obviously the audited reserves are not yet ready, but a commentary from our new brokers is blow due in light of the European situation.
Jimmy

Chariot recently were awarded a huge licence area around its proven anchois field discovery. To the south of this licence is a large area that chariot previously held under licence and which is already covered by a huge 3D seismic survey and which happens to be close a well drilled by another company that had gas shows.
Chariot have stated that they will now be examining this area for direct hydrocarbon seismic indicators that have proved so successful at the nearby anchois field.
So you might ask what’s the potential.
Fortunately, it was previously identified and quantified in 2019 see page 18 at
https://www.chariotenergygroup.com/wp-content/uploads/2019/02/2nd-Morocco-OG-Summit_-Chariot_Feb2019-1.pdf

I calculate that these prospects could hold approximately 7.3 tcf per the chariot prospect graph.
Now that’s something that’s going to be very interesting to big oil, particularly German and Spanish.
We are just beginning an extraordinary value journey.
Jimmy

Hi SHC.
The gas composition is likely to have been completed relatively quickly. The core analysis takes time, and there were 12 sidewall cores taken and this analysis will form the basis for the reservoir permeability calculations, which we were told were very high. Within porosity reported at between 25 to 30% these reservoirs will flow at huge rates. I can see three wells easily producing 90 000 mcf per day.
We know there are seven reservoirs, and they each have their own gas water contact , so it’s likely there are different pressure regimes in each reservoir, so there is some detailed reservoir engineering work and completion design to optimise production. A great problem to have and it just takes time to get through it. The flow rates then determine the pipeline size, offtake contracts, which leads to project finance and then construction contracts and final investment decision. Lots of work and chariot have the team to deliver this quickly.
The corporate presentation reported that chariot had used a new reservoir assessment tool to identify thin sand reservoirs below electric logging resolutions. I don’t fully understand the technology, and how it can be incorporated into seismic mapping. It’s just upside I cannot quantify.
One upside that I am confident about is Anchois north prospect directly adjacent the main anchois field. The major breakthrough in drilling the anchois 2 well is that it validated a seismic direct hydrocarbon indicator called spectral decomposition which successfully identified both reservoir and whether such reservoirs were gas or water filled. The corporate presentation clearly shows anchois north as being a continuation of the reservoirs at anchois 2 and they are gas filled and the gas water contacts can be clearly seen. This is extraordinary technology that has been validated . I estimate anchois north will add a further 600bcf of gas, the probability of success here is very very high, so I suggest it should be funded from the anchois field project finance, cost approx $20 million and could be drilled at the same time as anchois 3 production well, should consider drilling deeper to test the Oursin prospect below the anchois field.
SHC , I can easily see how your industry contact was talking about reserves of over 1tcf.
Jimmy

Hi Henry,
There are so many long term value drivers in chariot.
The most immediate value is the current proven gas at anchois which I estimate at 750bcf.
Chariot prepared it’s economics at pre Ukraine at $8. Mcf.
You can form your own view of long term gas prices or you can refer to the forward market price which can seen at
https://www.theice.com/products/910/UK-Natural-Gas-Futures/data?marketId=5253318
The winter 2025 price is £911 divide by 10 to get mcf units and multiply by fx rate say 1.35 and you get $12.28 an mcf, Less than 25% of the current gas price so it’s certainly conservative.
In terms of revenue, what does this mean
750 bcf x $12.28 = $9210 million less royalty 3.5%= $$8,887 million less opex say $40 million by 20 years ( Julian stated opex at circa $25, so being conservative) = $8,087 million pre tax profit of which chariot have 75%.
First ten years are tax free. You can decide whatever gas price you think appropriate and then decide what’s the current present value .
My view is that this is worth at least £1 billion to chariot now ,
The priority is to get to production cashflow ASAP and then drill out the 3tcf of low risk prospects in the lixus area which have an estimated chance of success of 85% based on drilling elswhere in this basin.
This field will be a huge cashflow generator for a very long time with enormous follow on potential
There are two drivers of long term natural gas prices in Europe, an urgent and long term need to replace Russian natural gas supplies , currently providing 40% of European gas needs, and secondly a need to economically produce green hydrogen, which competes against natural gas prices, so high gas price needed to make green hydrogen economics.
Chariot has a natural hedge here also with its Mauritania green hydrogen project.
Everybody will have their own views, but decide yourself what are the long term gas prices and do the calculations.
One thing is sure, the current share price is a small fraction of it’s true value.
Jimmy

Henry, if you review the various chariot presentations over the years they have prepared production profiles for anchois ranging from 50 000 mcf per day to 90k per day. In the recent webinar they stated they were going to use both anchois 1 and 2 wells as producers and that in view of the extra reservoirs now encountered there would be a third production well and the presentation includes the locations of the three production wells.
Chariot have appointed world experts in subsea developments to fast track its development.
The pre well prognosis if all reservoirs were fully gas bearing was for anchois field to have approximately 900bcf of proven gas. The O sand did find good reservoir but was compartmentalised and had both gas and water. Accordingly I reduced my estimate of proven gas to 750bcf of gas. Chariot reported the well results as exceeding expectation, but I think it’s prudent to reduce gas reserves to 750 bcf till they announce audited reserves.
So the key to getting to production cashflow is getting the financing offtake contracts with hedged gas prices in place. Chariot have stated they are in discussions with a third party for such contracts , and they were being advised by an investment bank, per julians interview with proactive. There are a number of substantial counter parties for this kind of deal including glen core and trafigura as well as a few specialist funds in the USA.
Of course it’s lots of hard work and legal fees will be substantial but the European gas supply crisis will focus everybodies efforts.
The forward gas prices for winter 2025 are reported on the ICE Natural gas website site and it’s very clear high gas prices are here to stay, and even though the forward price is 25% of the current spot price, it’s still substantially higher than the $8 mcf that chariot used in its npv valuations.
Obviously until the field is in production there is risk, but there is really is very little for a project that will generate $3 billion of free cashflow to chariot. You can be sure there will be plenty of parties looking to provide the $300 million to develop the field.
Then there are the derisked gas prospects nearby of a further 3tcf, with an expected success rate of 85%.
This is incredible value , and each investor has to decide on their risk tolerance, but recent high volume share trading indicates that institutional investors are now waking up to this incredible value.
Jimmy

Mr fibbles.
Why is there a need for another equity raise when. Chariot reported. They had funds for more than 12 months and they completed the drilling of anchois well ahead of schedule by 8 days saving millions,
In addition the additional proven gas reserves will generate free cashflow of over $3 billion, so you may be waiting quite a while for the next equity raise, get in now while it’s cheap.
Jimmy

Nor dell,
I am a long term investor in chariot. However, there are many who also short term trade chariot, and that’s how the market works. Short term traders do use charts as a guide to trading strategies and that can create opportunities for the long term investors to pick up shares with great value.
I too look at charts, but primarily to understand the overall market . I believe the use of charts for low volume and value daily trading is a problem, and chariots daily share trading values are still too low for charts to be reliable.
I believe that chariot is a fantastic value opportunity for a medium term investment horizon.
With the markets in meltdown due to geopolitical issues it’s a great opportunity for the value investor who believes that Europe needs additional gas supplies on its doorstep.
Jimmy

Hard to believe that the cfo and director of a listed company can go on the record and state that the previous npv valuation of $500 million is due for a major upgrade following the anchois well results and the share price declined resulting in a market capitalisation yesterday of £73 million .
With 4 million shares purchased yesterday reported late, this may be the start of institutions investing , at long last.
Jimm