WTI (Nov) $67.67 -$2.02, Brent (Nov) $71.60 -$1.86, Diff -$3.93 +16c
USNG (Nov)* $2.75 +3c, UKNG (Oct) 91.0p +1.53p, TTF (Oct) €37.36 +€0.39
*Denotes October contract expiry

Oil price

Oil is unchanged today after the falls due to this week’s article from the FT about Saudi production. Despite very positive action from China and an imminent war in the Lebanon uncertainty rules. 

Chariot

Chariot has announced its unaudited interim results for the six-month period ended 30 June 2024.

Adonis Pouroulis, CEO of Chariot commented: 
“We are providing an update on our Interim results today, but the main news recently has been around the drilling campaign offshore Morocco. As reported, the preliminary results of the Anchois-3 well did not deliver as expected. Post-well analysis is now underway and we will collaborate with our joint venture partners to determine the forward plan for the project. We still see a lot of potential within the Anchois field and the wider licence area, across Lixus and Rissana, and these drilling results need to be further analysed and incorporated into our understanding of the area.

Alongside this work, we continue to unlock the value of the other projects in our portfolio. We are making good progress on the financing of the Transitional Power business in South Africa, we have the onshore Loukos licence in Morocco, Project Nour and the electrolyser project in our Green Hydrogen pillar as well as the new venture opportunity.

The unexpected Anchois-3 well results have clearly had a significant impact on our share price therefore we have decided to take stock and consider our next steps with the project. We will provide further updates on forward plans across the business as soon as we are able to.”

It has indeed been a difficult time since the period end when results from Anchois have been well below expectations and if the development does go ahead it will be smaller than previous hopes. Chariot are now taking stock and considering its next steps, not only with the Anchois-3 project but also Loukos onshore,the Transitional Power business and of course the Green Hydrogen opportunity. Management are now continuing to concentrate on unlocking value in the rest of the portfolio which fortunately holds exciting projects.

The power business financing has been going along well, Chariot have said they are looking to retain a material stake and securing this financing will provide a read-through valuation for this business so we look forward to an update on this in due course.  

And of course, with the new venture opportunity that Chariot is pursing in Namibia, there is the potential to be involved in what is one of the most attractive post codes in world energy exploration so they will be keen to get that part of the portfolio into play. Clearly the Anchois result was disappointing but Chariot remain there and at Loukos and of course with opportunities elsewhere in the portfolio shareholders can see some sunlit uplands…

Highlights during and post period

Transitional Gas

Offshore Morocco:

• Partnership agreements completed with Energean plc (“Energean”) on the Lixus and Rissana licences offshore Morocco with Energean taking Operatorship and carrying the drilling campaign up to a gross cost of US$85m
• Drilling campaign commenced at the Anchois-3 well in August and completed in September, having drilled safely and efficiently to target depths
• Multiple gas bearing reservoirs were discovered in the B sand appraisal interval in the main hole, although with thinner associated gas pays than anticipated, and other target reservoirs were found to be water wet. Post-well evaluation underway 

Onshore Morocco:

• Two well drilling campaign successfully conducted in May 2024 safely and efficiently
• The RZK-1 well drilled on the Gaufrette prospect confirmed good quality reservoir and multiple gas shows, though was sub economic
• Gas discovery confirmed from drilling the OBA-1 well at the Dartois prospect – gross interval approximately 70m of primary interest identified
• OBA-1 well cased and cemented with a Christmas tree installed for rigless flow testing and potential use as a future producer
• Heads of Terms agreement signed with Vivo Energy to progress future commercialisation of onshore gas to industry business

Transitional Power:

• Strategic Review initiated to look to secure funding at the subsidiary level and enable ongoing growth and development of the portfolio
• Multiple expressions of interest received from South African focused investors to finance both the Etana platform and generation assets
• Financing negotiations are progressing well
• Potential financing terms will provide a read through valuation for the business

Electricity Trading:

Increased holding to 49% stake in South African electricity trading joint venture Etana Energy (Pty) Limited (Etana)

• Provides end to end electricity solutions by generating and trading energy through South Africa’s national grid
• Many generators to many offtakers business model – electricity offtake agreements signed with a range of large consumers including Growthpoint Properties, Autocast, Petra Diamonds and Tharisa
• Enables Chariot’s participation in large renewable generation projects – 400MW of gross wind generation capacity identified

Power to Mining Projects:

• Operational Essakane 15MW solar project at IAMGOLD’s gold mine in Burkina Faso

Developments ongoing at three key projects in Africa:

• Tharisa – 40MW solar project in South Africa
• Karo – 30MW solar project in Zimbabwe
• First Quantum Minerals – 430MW solar and wind projects in Zambia

Water:

• Water desalination project in Djibouti running well
• Other projects under evaluation in areas of water scarcity across the continent
• Also pursuing funding for this business at the subsidiary level

Green Hydrogen:

• Feasibility studies in Mauritania completed with partner TEH2 (80% owned by TotalEnergies and 20% owned by the EREN Group) and its in-house ‘OneTech’ engineering unit
• Confirmed scale and scope of project and outlined phased development approach 

Progressing offtake discussions

• Ongoing development of green hydrogen pilot project in Morocco in partnership with Oort Energy and University Mohammed VI Polytechnic (“UM6P”) 
• Pursuing financing options at the subsidiary level

Corporate and Financial

• Cash position as at 30 June 2024 of US$3.6 million supplemented by a fundraise completed in July 2024 which raised circa US$9 million (gross)

Sound Energy

Further to the announcement of 14 June 2024 regarding the entry into a conditional binding Sale and Purchase agreement for the partial divestment by Sound Energy (AIM: SOU), of its Moroccan assets by way of the disposal by the Company of the entire issued share capital of the Company’s wholly owned subsidiary Sound Energy Morocco East Limited to Managem SA, the Company notes Moroccan press speculation in relation to Managem having received authorisation by the Moroccan Competition Council to  the transaction.

Whilst the Company is pleased to confirm that the Moroccan Competition Council’s authorisation satisfies a significant condition precedent of the SPA, the Transaction remains conditional upon the following conditions precedent being satisfied or waived:

• Approvals by ONHYM and the Moroccan Minister of Energy of the Company continuing as the Operator of record of the Tendrara Exploitation Concession, and the Anoual and Grand Tendrara Exploration Permits where required;
• Receipt of the written authorisation of the Foreign Exchange Office (Office des Changes) relating to Managem’s payment obligations;
• Confirmation in writing by the Seller to the Buyer that no Material Adverse Change has occurred;
• Approval by Schlumberger in accordance with the terms of Schlumberger’s profit-sharing deed in respect of the Concession or Managem negotiating and entering into an agreement with Schlumberger for the cancellation of the profit-sharing deed;
• Extension of the Start Date/Deemed Start Date as defined in the LNG GSA; and
• Delivery of Completion accounts and Assurance Release Conditions. 

The Company is pleased to announce that whilst it is continuing to work closely with Managem to satisfy the above conditions precedent, the following conditions precedent have been satisfied:

• Approval of ONEE of the change of control of the Company pursuant to the ONEE GSA;
• Approval of Managem’s board of directors of the Transaction; 
• Removal of Sound Energy Morocco SARL AU as dormant subsidiary of SEME; and
• Receipt of Moroccan Competition Council’s authorisation

Further announcements will be made, as appropriate, in due course.

No comment from the company here but probably as the announcement is pretty clear cut, ie that the Company notes Moroccan press speculation in relation to Managem having received authorisation by the Moroccan Competition Council to  the transaction.

And this is because it is not speculation, the approval has happened and Sound are keen to be open and transparent about the process which is close to completion. I think that signatures and approvals are lined up and again praise to the Moroccan Government and authorities for the all clear. 

This is a good deal for Sound and provides much needed faith in Morocco, management should be congratulated for making this partial disposal attractive to Managem and will remain highly committed in-country and Sound will continue to build and to reward shareholders.

KeyFacts Energy Industry Directory: Malcy's Blog