Member Info for Surety

From Simon Cawkwell

Jersey Oil and Gas (JOG) seems to be coming along. So why it stands at 180p, down slightly on Friday’s close and after today’s RNS I do not know.

DYOR

From Simon Cawkwell (paragraph 2 for Char, but have pasted Jog for sentence context)

Jersey Oil and Gas (JOG) seems to be coming along. So why it stands at 180p, down slightly on Friday’s close and after today’s RNS I do not know.

Similarly, Chariot (CHAR) announce encouragingly today and is well offered at 9p. Strange.

Https://on.ft.com/3UxHzG3

Back on the topic of near shore energy security.. Chariot are in a very good place

Hard to believe that a bid isnt a talking point (fully accepting that AP would have to vote in favour), but any noise would clearly fuel the share price..

DYOR

Reads well, pretty glowing.. mention for finalisation/formalisation of the Serica farmout as a key event - and reference the year end cash at the end of 2024 as being material..

DYOR

Completely agree.. by the nature of the purchase there is clearly nothing on the cards in this exact moment.. but good sign, decent value and the run up to FID should be interesting..

DYOR

There was an RNS on Covalis at 6 + % and Askar was sat on 6.2%.. I wonder if Covalis are out and Askar has reduced..

DYOR - I'm not sure how long they have to inform the market.. but I suspect the drag has been caused by a significant seller as others have commented..

At under £100m market cap, an offer starts to look attractive at 2-3x this .. If Energean are pretty convinced the gas is there (or someone else is) - they might be better making a bid and taking the whole thing out at this price..

Lets see

DYOR

Can’t read this as it’s behind a paywall.. Chariot gets a mention in the message header ..

@Jimmy/all - any thoughts on this ?

https://www.upstreamonline.com/exploration/hopes-of-major-oil-discovery-offshore-morocco-look-to-have-been-dashed/2-1-1577336

DYOR

Https://www.proactiveinvestors.com/companies/news/1036922/small-cap-oil-and-gas-stocks-to-watch-in-2024-part-one-1036922.html

Merry Christmas all!

Https://www.proactiveinvestors.com/companies/news/1036922/small-cap-oil-and-gas-stocks-to-watch-in-2024-part-one-1036922.html

Merry Christmas!

Also worth considering that it's highly probable that they may find upside in that area when they drill in Q1..

I do wonder if the seller (assuming it is a single seller) has another agenda that has driven the aggressive exit here... it makes little sense to exit right now, who knows - Fund timings, Recent COP round, Shared listing of the new operator (Energean), etc ..

Time will tell

DYOR

I wonder to exactly this point, and given the pace of selling following the announcement (hardly time to appraise the deal) as to whether there is something that relates to sanctions in holding shares in chariot, given the shift in operatorship following the farmout which has somehow impacted one of the big investors

Just a possibility

DYOR

You would think that at this level of damage it's one of the institutions.. to create that level of pullback immediately on farmout news suggests a big seller.

It may well be one had a low average on their first few percent, so exited with a profit; it might be that they were expecting a T/O; it might be that their fund is saying that they have to be out of/reduce their fossil fuel exposure by x% date.

I'm not sure that I subscribe to the further risk argument, as the drill looks relatively low risk and the chariot boys think its a clear runner + They would have encouraged the T/o otherwise.

I think this could easily rebound to 15+ once the seller clears.. when it goes green others will hop on

I think Loukos could move it to the 20-30 range if the news is good. by end Q1 (we've been at 26 before, admittedly now with ~20% dilution), especially given the cross reservoir read.

Assuming the Anchois East drill goes well then it's 40-60

DYOR

GP

The only thing I would say is that one seller, holding 6%, who tries to burn the lot in short order can do an awful lot of damage and quickly (and it isnt necessarily the market talking !!) /... Lets see..

JIMHO

This is the interesting bit for me. It's really clear from the analysts reports and Chariots presentations that they think there is a lot of gas here - as in a lot and management have bet (with their own shares) that developing it will give the best outcome. I think the market will cotton onto this..

While Chariot has taken dilution, we believe we are unlocking a potentially much larger development than initially thought, with significant further upside.

The analysts prices of 71 and 67, barely factor in the massive TCF upside from 'cross area reads.'

Also worth nothing that broader Rissana isnt dilutable through the optionality, only Lixus. If they prove the gas, then the share should rise rapidly

With Loukos between now and then and an oversold bounce to come..

DYOR

You have to laugh - utter madness!

Having spent most of today reading / catching up on various broker notes, financial press and news articles I can’t help but think in the circumstances management have achieved a decent farm out. They clearly believe the gas is there and fully accessible - and have staked material upside on that (rather than encouraging the indicative bid) - alongside upside on shore…

It’s bananas that we are trading at about 1/7th of the analysts potential targets. As soon as the seller clears you would think this has to lift/bounce.

DYOR

Hi Jimmy. Thought your reservoir comment was really interesting re the onshore. If it does provide to be thicker, to that magnitude, any sense of how valuable that could be ? Cheers

B-D-C

Thanks for the response

Agree on the 10 percent, that’s also how I see it and clearly good for Chariot too. They obviously believe there is an abundance of gas there otherwise they would have taken the bird in hand - so nothing to lose ..As Adonis said on the webcast it’s also not a binary choice - if things change

Interesting story on accretion - different industry but I saw something very similar with a Covid related share (SNG). Major institution heads for the hills, many followed, and 2 weeks later the stock factors up to an 8x glidepath!

DYOR

Worth highlighting that both broker notes indicate the company could have a value of 67p and 71p respectively by end 2024 based on drilling success and the Energean exercising their option. That also doesnt really fully account for the adjacency benefit from the Anchois East drill either (from what I can see )- let alone any meaningful upside from the Loukos activity that Jimmy references earlier today

Whilst the 10% option is relatively expensive for Energean compared to the initial deal structure so far, it's a no brainer if the gas is there - and the Anchois East well looks relatively low risk..

Interestingly SP Angel also reference chariot in a broader industry note yesterday (no price target), stating that financing pressures (i.e. provision of funds against Fossil Fuel operators) would have also further impacted Chariots deal optionality in the farm out process and that M&A expectations were simply too high - inferring that that probably caused investors (potentially a 6% er ?!?) to dump or aggressively trim their holding!

From my side I am definitely sticking.. we have a very interesting 2024 ahead. ST view seems right - this will bounce when the dust settles.. with a lot of triggers in flight, not to mention the feasibility study of Project NOUR concluding which we know from the webcast is going well..

Sticking with the Gas though, the big action is clearly Q1 with Loukos and then Q2/Q3 on Anchois East (drill around the mid year).. and then onshore production hopefully at some point not to far off..

IMHO/DYOR