Member Info for KissnCuddles

Asian Energy - that's us right?

So many publications on the same topic. Have to wonder how the new government could continue to resist giving the green light now. I’ve a feeling we’ll see something happen soon.

Couer

Great question. I would hope that the increase means more revenues, thus a lower final purchase amount and a lower loan needed from Shell facilities.

But remember there are also these contingent payments as noted in the RNS “ Contingent payments of up to US$115m which relate primarily to Brent crude oil pricing exceeding thresholds between 2026 and 2028” I assume it means if Brent spikes, a portion of the spike, over and above a certain amount, will be paid to the seller in addition to the agreed consideration.

Overall I think an increase in oil prices is good for CHAR for this Angola deal. Could it also make Risanna more attractive. Murphy? And also the Anchois development with companies wanting to diversify and Morocco wanting to establish energy security.

It

$170m is the loan facility, but it doesn’t mean that this amount will actually be drawn down. The date whereby the economic interests passes to the buyers is 01 Jan 2025 so all revenues for the past 14 months (and counting) will be deducted from the total amount payable on deal signing.

I also still believe that Anchois will be put into operation. Energy security is more essential now than ever, and Morocco knows it. Anchois is the only significant gas discovery which can be commercialized - and they want it.

Marland

We get the $12m deposit paid back from the Angola deal, then material revenues immediately afterwards. I would hope that a share buyback would be considered.

Surety

And remember they got 400k for the sales of the water business in Dec 25. Excluding this it’s means their cash balance was 800k as at the end of December. Absolutely disgraced business management if you ask me.

Couldn’t we realize $100m value in the renewables business by selling 50% for $50m? So CHaR holdings will own 50% of a renewables business and 100% of the o&g business.

I’d much prefer that scenario rather than selling the renewables business outright.

Surety, you missed the point about the debt refinancing.

From the RNS (about the Shell facilities loan)

"The absence of early repayment financial penalties enables refinancing on completion to accelerate these distributions..."

It's clear to me that Etu & CHAR will immediately borrow money from a bank and use it to pay back their portion of the loan to Shell. This 'new' loan could indeed be for a term of 5-10 years, which can then be refinanced.

So from day 1 , from cashflows of 8,000 bopd, CHAR will receive the $12m deposit back from Etu, and then net revenues of its economic interest equivalent of the 4,000 bopd.

Fernan

It's great that someone has prepared a detailed calculation.

We need to remember that the 6 year payback period began from 01 Jan 2025, so we are already 1 year into it. Most likely we will be at least 1.5 years into it before the deal is formally signed, leaving 4.5 years remaining. But in any case, the loan will be refinanced with the term extended. And CHAR also gets it's $12m deposit back.

So CHAR gets $12m cash back plus $13m net revenues per year which is will use to finance (interest payments) a rolled-over loan, fund working capital and invest in other upstream assets. Not bad. The may even pay out a dividend in time :-)

Fernan cash flows of up to 4,000 bopd are not affected by a decision to increase capex. The oil and cash still flows, right?

Maintenance, temporary suspensions, periodic scheduled upgrades are something else. But a decision to spend 10’s of millions on further exploration will not imo result in zero or negative cashflows for CHAR.

Surfit

Q. How much and how long would it take to "service" the Shell Facilities? Does this mean repaying the "base consideration" which is US$195m? Or "the Contingent payments of up to US$115m which relate primarily to Brent crude oil pricing"? OR the US170 million from Shell Trading?

IMO 'servicing' means nothing more than honouring the terms of the loan i.e. paying whatever regular payments (including interest) are due. So let's say if in the first month after signing the SPA net revenues to CHAR (after expenses) are $4m, loan servicing costs (interest due) will be deducted and paid directly to Shell before CHAR can take ownership of the remaining revenues for that month. I very much doubt it means that CHAR must repay the entire loan before it can bank any of the revenues. And anyway, from the RNS "The absence of early repayment financial penalties enables refinancing on completion..." to me means that CHAR can pay back the loan in full to SHELL by borrowing from someone else i.e. a bank on day 1 after the SPA is signed.

In summary, CHAR will receive material cashflows from day 1 upon signing the SPA.

Also, imo the contingent payments of up to $115m relate to a clause in the contract whereby if Etu and CHAR are fortunate enough to reap bumper profits because of a surge in oil prices then some of these bumper profits will need to shared with Chevron.

Digit

I’m as hopeful as you are that Phulbari will get the GL. BUT we need to accept that Bara south and Phulbari are two different license areas. There is the possibility that the Bangla government will mess around trying to get more coal from Bara by OPM and avoid Phulbari purely for political reasons.

Devils advocate here

What if they end up redefining the license area of Phulbari to Barapukuria South, including a bit of Barapukuria proper, in order to make the license which GCM holds null and void. Kinda akin to Gerrymandering. Maybe that’s what the last raise for for? Legal and advisor fees to fight this skulduggery

Fernan

From the RNS: “ Under the Shell Facilities certain covenants must be satisfied prior to cash distributions. The absence of early repayment financial penalties enables refinancing on completion to accelerate these distributions…”

The loan can be refinanced. Yes, i know there are covenants which are not explicit in the RNS. But the above quote has me confident, given that the loan can be refinanced, that Char will receive revenues on day 1 of signing.

We also get the initial $12m deposit repaid.

Shouldn’t revenues come immediately on signing the deal? The loan can be refinanced (and i guess it will) so we get our share of revenues after we service the loan (interest payment)

We also get the $12m deposit back from oil sales.

Nimr0d

This is a key point. With an economic effective date of 01 Jan 25 it means that +18 months of revenues (Jan 25 to at least Jun 26 - coz the deal is scheduled to close sometime in 2H26) will come off the final acquisition price. I'm actually inclined to think that there's a typo in the effective economic date. perhaps it should be 01 Jan 26!?

Fernan

The loan does not need to be repaid before Char gets any revenues. Read the RNS “the absence of early repayment penalties enables refinancing on completion to accelerate these distributions”

The loan from Shell only needs to be serviced (i.e. interest payments) before Char can receive revenues. And anyway, it reads like the loan will be refinanced (paid back with another loan)

Masterfully I don’t think that’s true.

Chariot must ‘service’ the loan with Shell before receiving any cash from oil sales. Servicing means periodic payments with interest must be made, not the repayment of the entire loan. And anyway, the loan can be refinanced via a loan from a bank which can then be extended over a longer timeframe.

Could the attitude of the new government be 'let them get on with it' to best avoid cost overruns and endless delays from government interference?

It would mean that GCM could retain a material stake in the Phulbari operation.

SP doesn’t budge!? Crazy.