Member Info for KeithOz

"Chariot Limited (AIM: CHAR), the African focused transitional energy company, is pleased to announce it has signed a Pipeline Tie-In Agreement with the Office National des Hydrocarbures et des Mines ("ONHYM") securing access to the major Maghreb Europe Gas Pipeline ("GME") in Morocco. The GME, owned and operated by ONHYM, runs from eastern Morocco through to Tangiers in the north and subsequently across to Spain. This agreement will enable the gas produced from the Anchois Gas Project, offshore Morocco, to be transported via the GME to different potential offtakers."

No mention of Terms.

Is it just me, or is the presentation referred to in this morning's RNS not available on the website yet?

Oh deary me indeed (corrected spelling). Sometimes I wonder why I bother. The Liberum figure you quote originates from their initial appointment in February 2022, and has been rehashed a little later by Proactive.

Since then, PRD has received results from:
*2nd seismic campaign
*Airborne Gravity Gradiometry
*Multispectral Satellite Spectroscopy
*Electrical Resistance Tomography
*Qemscan reservoir analysis

All this data has then been integrated by e team of respected professionals. This has shown a larger stacked prospect at Tai than previously indicated by the less detailed stage 1 seismic, confirmed a new shallow reservoir, confirmed excellent reservoir characteristics from actual core from Tai, confirmed extensive Helium migration to surface from spilling of filled reservoirs, confirmed 140m of main reservoir seal plus numerous minor seals in the Lake Bed Formations.

You are of course entitled to your opinion that none of this makes any difference to the geological chance of success, as am I to my opposing opinion, which is based on having a Geology BSc, post-graduate qualifications, and exploration experience, together with having read just about every piece of relevant research published, and discussions with the folks at Oxford geology dept. I am also entitled to my opinion that the management of Helium One, from Ian Stalker down, are very far from ignorant chancers, as some on this board appear to be proposing, but they are of course entitled to their own opinions.

What nobody is entitled to do is to knowingly mis-represent information, or generate false information, in an attempt to gain financial advantage. That is called fraud.

@LochNez - Thank you for that - the wording is a little unusual (translation?): "According to the agreement, ONHYM will be granted (should be "granting"?) rights to exploit the Tendrara concession for Sound Energy through establishing a 120-kilometer natural gas pipeline."

Looking back to the SOU 14th March 2022 RNS, it is clear that I was wrong about the current ownership of the Maghreb pipeline, my apologies:
"The GME Pipeline, which was transferred to Moroccan state-owned entity ONHYM by the previous operator (Matragaz) on 1 November 2021, is owned and operated by ONHYM. Pursuant to the Pipeline Tie-in Agreement, ONHYM has now approved the connection of the Tendrara Production Concession via a gas export spur pipeline to the GME Pipeline.
Under the Pipeline Tie-in Agreement, following the provision of certain technical information by Sound Energy to ONHYM in respect to the Tendrara Production Concession export spur pipeline, and subject to Sound Energy's approval thereafter of ONHYM's proposed technical and financial terms for the construction of the tie-in infrastructure, ONHYM (the acting operator of the GME Pipeline) has committed to put in place the tie-in infrastructure between the Tendrara export pipeline and the GME pipeline, facilitating Tendrara gas to flow to all clients connected to the GME."

Since Spain is currently negotiating to send gas to Morocco, this could indeed be an important issue. With the new EU requirements to store and share gas collectively between member states, there could be pressure on Spain to retain its gas within the EU, to the obvious detriment to Morocco, which currently has two gas-to-power stations inoperative due to inadequate supplies. So Cube's proposition is quite possibly correct - while I have not seen the financial details of the SOU/ONHYM tie-in agreement, it is looking very likely that in the event of an upside discovery at MOU-Fan and/or MOU-NE, ONHYM are likely to be happy to pay for the short connection to the GME pipeline to enable Moroccan power generation. In the event of a major upside, Moroccan gas may be finding its way to Spain, rather than the other way round.

@Nigel. I recently released you from filter jail, obviously it was timely. Having been critical of both management and geology for as long as I can remember, you now concede that success is indeed "more probable than possible" and that you are currently buying PRD shares.

Your remarks re perception of risk are of course relevant, and I agree - if you care to read through my attempt at valuation posted here on 4th September, you will see that currently the market is applying only a 5% cos to the independently valued Contingent Resources, which is remarkably low. In my valuation, I reduced the risking in line with the passing of milestones, ending up with what would be considered a more standard discount to NPV on success of the MOU-2 well, which is an APPRAISAL well.

Could you please explain why in your opinion a CNG operation would not materially affect the market capitalisation? It is my observation that transition from Explorer to Producer results in a huge change in market perception, since valuation can now be based on the hard numbers of cashflow, rather than estimated volumes of gas, and of course the risks related to geology have been removed. This will surely be even more marked when the capital required for such an operation is so low, and the current demand for gas from a geopolitically stable country close to Europe is completely unprecedented?

Part 2 - Tai Prospect

Lots of trolling regarding the suitability of the Tai prospect as well. Suggestions that it has a 35% chance of success, with no indication of which bit of the air that was pulled from. 2020 CPR gave Tai a 27% cos. Since then, a large number of things have happened to change that. RNS 24th May:

"Management have been encouraged to select Tai as their primary target by new data taken from the Phase II 2D Seismic campaign acquired in November and December 2021 and processed in early 2022. This interpretation, which is now complete, has not only provided improved resolution over the Tai structural closure, but has also identified a newly defined closure in the Lake Beds which was not previously targeted.

Drilling at Tai is supported by stratigraphic information from the 2021 drilling campaign. QEMSCAN analysis on cuttings has provided information on reservoir distribution, mineralogy, seal potential and grain size of the entire sedimentary sequence at Tai-1/-1A, indicating good to excellent quality reservoir. It also confirms the presence of a thick claystone unit at the top of the Karoo Group as well as the presence of intraformational claystone and calcrete interbeds within the Lake Bed Formation.

The Tai prospect is further understood by the identification of multiple helium shows (helium identified in drilling mud) across all formations but which the Company was unable to log or test with wireline equipment. With a robust structural closure, detailed information on reservoir and seal, and the identification of subsurface helium which proves a working helium system, Tai is the lowest risk prospect in our current AOI of the Rukwa Basin for the Company to focus exploration expenditure with a primary objective of confirming a discovery in the 2022 campaign."

If you don't understand the implications of the above, then clearly any purchase of HE1 shares by you can only ever be a gamble , not an investment, and you are equally clearly not competent to post supposedly 'factual' information here.

Part 1 - Exploration

Lots of trolling here concerning the rig. I suggest you read the RNS of 2nd August, where it is clearly stated that the rig condition and availability is not an issue, but that it is the related services determine the critical path.

" With a suitable rig identified and long lead items such as casing and drill bits already ordered, integrated services are the remaining long lead items on project mobilisation. Integrated services including drilling fluids, wireline evaluation and downhole gas sampling, are essential to the successful operation and data collection from the planned drilling campaign.

Given the importance of these critical services, the Company is pleased to be working with a tier-one oil and gas service provider to finalise the delivery of an integrated drilling services package. Drilling services are in high demand globally and equipment will need to be shipped from multiple locations to Rukwa ahead of operations. Helium One is currently working with our preferred service provider to confirm the date that equipment and staff will be available in country AS THIS WILL DETERMINE THE EARLIEST DATE THAT THE DRILLING CAN COMMENCE" (My caps)

@Wraith. Yes - that's why I found the article in the Irish Times so interesting.

@LochNez, my question was genuine, since Cube is being more cryptic than usual. ONHYM does not own the Maghreb pipeline, Metragaz does, so I didn't know if it was a reference to the pipeline or to a future JV needing involving an increase in ONHYM's current 25%, or perhaps ONHYM approval of a future JV. Similarly, I took SVR to be Sluzhba Vneshney Razvedki, the Russian secret service, who could be involved in stopping the flow of gas to Europe. I have obviously spent far too much time in Russia with the wrong sort of people :-) Star Valley Rig makes a lot more sense, so thank you!

The 10% drop is on less than £2K of trades. Nothing much is going to happen in terms of real volume until KAV digs up some mineralisation.

Thanks, I had already seen it on Twitter, just wondering what the Russian version of the CIA (SVR) had to do with it, and what an ONHYM tie-in agreement might involve, when they already have 25%. That's why I asked for a translation :-)

Don't forget PRD owns the licences 50/50 with Theseus.

@Wraith / Wacky - I found this bit very interesting: "Extending the gasfield’s life could involve tying other nearby reservoirs likely to hold viable quantities of the fuel to Corrib’s existing infrastructure. Exploration businesses operating in the region have identified several possible prospects relatively close by, though these have yet to be proven. If one were shown to have viable quantities of gas in coming years, connecting it to Corrib’s infrastructure could allow it to begin production by the end of this decade."

Anyone care to translate?

@Kas. From my read of the last three relevant RNSs (12th May & 19th July Ops updates, 17th Aug reason for placing), all long lead time items were already ordered, and all other components and services were specifically identified as being available, albeit in various parts of the world. PRD have presumably now used the placing money to pre-pay for these and get them shipped/bookings confirmed. Physical shipping and customs clearance remain the two unknowns for timing - this is where I would like to hear some clarity. Final location of MOU-2 pad, local approvals (not EIA, already done) and pad construction start were all due in July, so should now be complete by now.

You would not start the rig contract or mobilise until you were fully confident that all the various ducks were in a row, otherwise you could waste $000s a day hanging round waiting for necessary stuff to turn up (for example, high density mud). I am awaiting confirmation of a detailed schedule, without which we can only speculate. Let's see what is announced this week, it may well not be until Thursday morning so that they can give us the very latest update - then we will need to start drawing up a list of questions for the Thursday meeting.

@Kas - getting components and services into the country will be critical for timing. I am confident that all other necessary preparatory work will have been completed by now. It is my hope that there will be an RNS update this week, and an expansion of the timelines during the Thursday presentation. Not much else can be said before then.

I'll try to address the last ten or so comments, while the cat is asleep. Neither I nor anyone else knows the GIIP or likely % recoverable. Nor does anyone know the effect of sentiment in a particularly unusual market. All I have done is to present assumptions that seem reasonable to me, based on the relatively objective numbers from the CPR. Charlotte was quite correct yesterday, market valuation rarely reflects NPV, since it is always assumed that there are risks to be overcome at various stages. This is why I have reduced the applied risk assessment as PRD approaches steady state production.

I have tried to come up with my own NPV, using sensible guesses for production rates (ramp up faster), capital costs (lower), prices (same), and depletion rates (lower). My best estimate is perhaps $50 - 100M better than the SLK number for the same volume of gas - but given the large number of variables we already have to deal with, I suspect this is not particularly material.

I share the concerns of some posters regarding poor management of placings, director sales, PR, etc. In their defence, Paul & Lonny are in effect running a virtual company, without the benefit of an army of supporting management just down the corridor. When this is taken into account, I think they are doing pretty well, especially with management of multiple projects against the backdrop of Covid restrictions on personnel movement and worldwide supply chain disruptions. Hopefully the two new NEDs will help out here.

Is it my imagination, or do those posters making critical (but still potentially valid) remarks about management, largely fail to address the extraordinary scale of the geological assets? Any ideas why this should be so?

Lastly, the MOU-1 RNSs were very far from ideal, but most here understand that there were political constraints involved. The most recent announcements from CHAR, echoed by ONHYM, were a lot more positive and open, so hopefully a new tone will be set if we are able to demonstrate the scale of the assets that we hope for. As Rumi put it in the Mathnawi, "Once in the bridal chamber of the King, there is no longer a place for modesty".

btw, anyone know what has happened about PRD relinquishing 25% of the Guercif licences this month? Maybe there has been a Covid extension, but I can't see anything on the ONHYM website. If this isn't covered on Thursday, could someone please ask? Much as I would like to meet folks face to face, you will understand that for me this would be an impractical undertaking.

Sorry, 01/Apr/23 should be $3M/month, not $300K. Distracted by having to re-type after daughter's cat walked over the keyboard.

To give my answer to Graham's question, I really need MS Project & Powerpoint, but let me try to put a value to the most optimistic case – Morocco only, I have no idea if T&T and Ireland have any value. I will assign to each stage a date, assumption (A), a very rough calculation of net present value attributable to PRD (V) and the likely % age discounting (D) applied to that NPV by the market, and the resultant market capitalisation. There are roughly 380M shares & options currently in issue, so divide by that to get the fully diluted sp. I will convert USD to GBP at current 1.15 : 1.

02/Sep/22 V = £515 (from CPR), D = 5% M = £27M, SP = 7p.

08/Sep/22 A – RNS / presentation confirms final MOU-2 location, local permitting & completion of pad construction, all components & materials in country by end-Sept, final drilling schedule. MOUs signed with CNG equipment leaser and local industrial purchaser. V = £515, D = 7.5%, M = £40M, SP = 10.5p.

01/Oct/22 A – MOU-2 spud, TD 1500m. V = £515, D = 10%, M = 51.5M, SP = 14p

21/Oct/22 A – MOU-2 TD reached, Nutech & Petricore & CPR data validated, either:
i) 75m gas column, over 11 km², giving 300 BCF, or,
ii) 110m gas column over 30 km², giving 800 BCF.

That gives i) V = £515, D = 20%, M = £103M, SP = 27p, or ii) V = ~£1.4Bn, D = 20%, M= £280M, SP = 73p.

01/Apr/23. A – MOU-1 & MOU-2 extended flow testing complete, 2 x MOUs now converted to signed and functioning agreements, with some gas already sold. On grant of Exploitation Licence, production ramped up to 10mmcf/d, generating US$ 300K per month at $10/mcf.

Valuation now moves to a cash flow & reserves basis, I don't have enough detail to give a confident figure, but just based on what by this stage are Reserves not Resources the SP should be approaching double the previous numbers – say 50p / £1.50.

Apr – Sep/23. Addition of further wells on MOU-Fan, financed by a combination of Reserve Based Lending (which is now possible, and would be the normally preferred financing route) and cash flow, over the next few months could bring production up to the next target of 50mmcf/d. By then, which is roughly a year from now, we should be close to the £2Bn MCAP/ £5 per share.

Somewhere around this point, I would expect either the Moroccan licences to be sold, or else a few exploratory bores put into MOU-NE, maybe even a deep one into a promising Triassic horizon. This could at least double the gas resource, and probably provide some indications of considerable oil potential - and then be sold for even more. Alongside the drilling, I would hope that a lot more seismic is being done – there is good reason to expect a few more Jurassic carbonate reefs similar to MOU-NE along the margins of the Guercif graben. Whether there is an outright sale of Guercif, or a JV with change of operatorship, I can not predict at this stage. It would be nice to retain at least some stub equity for exposure to upside.

Just my rough guess