Chariot Limited (CHAR) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Chariot Limited Investor Presentation. [Operator Instructions] And I'd now like to hand over to the management team from Chariot and Adonis, good morning, sir.

Good morning. Thank you, Mark. Good morning. Good morning all and welcome to this Chariot update presentation. So just to remind everybody, whatever we do in Chariot from a business point of view, we like to get involved in businesses that are materially scalable so everything we do, whether it's in the hydrocarbon space for the renewable energy, we look at the scalability of that project. So just joining me today, I'm joined by Duncan and Julian. My name is Adonis Pouroulis. If there are anybody on the call who doesn't know who we are, I'm one of the Founders of Chariot and the CEO of Chariot.

Yeah. So Julian Maurice-Williams, Chief Financial Officer at Chariot, experienced in financing large energy projects in Africa from inception through to production.

Yeah and Duncan Wallace, Technical Director of Chariot. I'm a geologist with over 20 years of experience in exploration, development and production projects. I've been with the company for just over 10 years and leading our projects in the hydrocarbon sector, particularly in our projects in Morocco over the last four years, which have been a key focus for the group.

Thank you. All right. Just to remind everybody, a snapshot of what our business is about. We've got three pillars to the business, three verticals. We've got the hydrocarbon sector dominated by the gas side of the business in Morocco. We've got transitional power or renewables business, and we've got the green hydrogen business as well. Just to quickly summarize what we're doing in each of those pillars, each of those verticals. So our gas business is really the focus is in Morocco, where we've got a package of licenses. We've got two licenses offshore, and we've got a license onshore, the two licenses offshore are Lixus and Rissana, and we're in partnership with Energean over here. And of course, the big news there is this is high-impact well that we're going to drill in the middle of August. It's a very important well. We carried up to $85 million on that well. The purpose of the world is not so much as to are we going to find gas or not find gas? We've already found gas through previous two wells that were drilled. It's more a question of how can we scale the project? What will the development look like? How large will the development be? And so that's a multipurpose well. It's got really several objectives. One is it's got an exploration objective whereby we'll be drilling deeper into what we see as a gas sands further down that we never intersected in our last well and neither did Repsol intercept in 2009 because they stopped short and so did we. The second part and objective of that well is an appraisal well. The third part is a flow test and the fourth part of that well is to leave it in a state that it can be a future producer well. So it's a big catalyst for us, and the rig is currently in the Canary Islands, and it will set sale in August to be on site for spud, as I said, mid-August. On the onshore side, we've got the Loukos Concession. And over there, we successfully drilled two wells in May, June. We're looking forward to doing a flow test well on our discovery well, the OBA-1 well that will happen, as I say, in September. And from that, we can determine what a possible development can look like, and Duncan will take you through that in more detail in a moment. Of course, one of the reasons we undertook this fundraise is there's an opportunity, a new multibillion barrel opportunity that we're looking at. It's actually not really new for Chariot because it's in Namibia and the origins and history of Chariot start in Namibia. It's in our DNA. And again, Duncan will speak a little bit about that later on. On the power side of the business, we've made incredible progress over here. We were looking at funding this business on a subsidiary level. We undertook a strategic review. We've had incredible interest from within South Africa to fund what we're doing. And the next system, the focus of this business has moved towards Southern Africa. It's a very valuable business. And Etana, our electricity trading license really has been a catalyst that's allowed us to actually draw more generation and more clients. And this business has grown a lot quicker than any of us could have thought of. I think the important thing is that the business is going to be funded on a subsidiary level and Julian will speak about that a little later on. At the same time, on our green hydrogen business, we've got our flagship project in Mauritania with TotalEnergies. We're a 50-50 partner there. We've completed the feasibility study. That feasibility study showed that it's one of a Tier 1 green hydrogen project, not only from an African context, but worldwide. Last night, the Mauritanian government published the hydrogen code, which is excellent news, so we can go forth now and sign our final conventions with them. On a smaller scale, we will be delivering a 1-megawatt electrolyzer unit into our project in Morocco. Remember, we signed a collaboration agreement with UM6P to put a 1-megawatt PEM electrolyzer and OCP facilities in Jorf Lasfar. That will be installed, and we hope to have green hydrogen production, albeit on a pilot scale from a 1-megawatt unit before year-end. So there's a lot that's been achieved, a lot going on in the three pillars and a lot of triggers before year-end. Moving on, I think let's just start on the right side of the slide here. As I said, when I started an introduction, everything we do is scalable. If you look at our gas side of the business in Morocco, we speak about the onshore development and up to 150 million cubic feet a day production. That's great. But what we mustn't lose sight of is that on the actual Lixus Concession area, we got to 4.5 Tcf potential. So it's scalable, new ventures, multibillion barrel opportunity is scalable. I've spoken to you a little bit about the power and the hydrogen. On the power side of that, as I said, the electricity trading license of ours Etana, it just allows us to not only trade our own renewable energy generation of third parties. And in South Africa, that has incredible power uncertainty and is moving towards green renewable energy. It's a very, very scalable and our license is an enabler, our trading license enables us to trade a lot of electricity through that. I don't need to say much more on the hydrogen front, a 10 gigawatt electrolyzer project in Mauritania is imminently scalable. But let's look at the left-hand side of this slide -- thus far and through the two wells that have been drilled, we know that we have a 2C resource of 637 billion cubic feet. There's upside. And this third well we're going to drill the onshore East well hopefully shows that upside. And if we were to scale it up to 150 million cubic feet a day, just to remind everyone, our base case and what we put forward was 105 million feet a day. But if we were to scale up to 150 million, you can see what type -- what it means. And it assumes that Chariot only has a 20% interest in the Lixus Concession area. You can see over here what the cash flows are to us. Whilst we're paying down our debt and even while we're paying down our debt, we still get in excess of $50 million of free cash back to Chariot from that 20% stake in the Onshore gas development. The minute we've paid back our debt -- we get over $100 million of free cash from a 26% stake in the onshore gas development. So it's actually it's a meaningful project. It's significant cash flows back to us and back to shareholders. So we're going to dive a little bit -- well, before we dive into, let us tell you what we did, the next thanks, Jimmy. So we've achieved a lot, okay, in the last year. Just some of the stuff we've achieved on the gas front, we drilled two onshore wells that were successful. One, unfortunately, was not economic. The other one was a discovery. We'll do a flow test on that to see what we can do going forward on that. We've partnered with Energean and we signed a rig contract. So there's a lot of sort of triggers to happen before year-end. But over and above that, when you look at what we've done on the other two pillars as well, you're going to have some news on how we're going to fund the renewables and on the hydrogen on the subsidiary level. We're going to have a flow test from our offshore coming up, multibillion barrel new venture. And of course, we've got the onshore flow test coming up too. So between now and year-end, there's a lot of triggers, a lot of news flow to come up. We've just recently raised a net of $6 million. On the bottom of the slide, you can see where that money is being applied to. $2 million is general balance sheet and trying to finalize what we're doing on the renewables and on the green hydrogen in the funding on the subsidiary levels. We've got $2 million for new ventures, primarily there's a new venture we'll speak about now and $2 million is to further carry on our work not only the flow test on OBA-1, but the relationship and the partnership we've got Vivo Energy to further sort of commercialize the onshore potential. Then we'll dive in a little bit more detail now on the three pillars. And I'll hand over to Duncan just to talk about the gas side of the business.

Great. Thank you Adonis. So yeah, focusing on this slide and as a reminder to everybody about our Moroccan portfolio essentially splits into two areas. The offshore is the Lixus Offshore license that contains the Anchois gas discovery and the development project and then the Rissana offshore license that surrounds that. Those two licenses, we are in partnership with Energean. And really, the key change on those licenses was the delivery of the upgrade in gas resources that Chariot delivered through the work that we've done since taking the Lixus Offshore license back in 2019. That delivered a 5x increase in the estimated discovered gas resources, 637 Bcf of 2C resource and including the low-risk exploration upside that we will evaluate through the Anchois East well, about 1.4 Tcf in total recoverable resource. And so really, that is the key thing that we're doing in the coming months on the gas business is the drilling and testing of the Anchois East well with the objective to take the project towards FID on an expanded development. As a reminder, where that gas is going to go, the gas will come onshore to CPF. Then from there, you will see on the map, a small red tie pipeline that goes into the GME pipeline. That is a major trunk gas pipeline that is existing already and connects power generation facilities in-country to CCGT power plants connects them up into the European system in Spain. And currently, those power plants are running on import gas around 100 million cubic feet a day of imports. So that is the key first market that we will look to deliver gas into through the Anchois development is the domestic power market. Over and above that, any surplus gas beyond domestic requirements, we can then sell into the European network using that same pipeline that's currently being used to import gas. We can actually send gas the other way into Europe, which then gives us access, obviously, to a very, very large market, but one also which carries lots of upsides through volatility as well. So really, we're perfectly positioned to material and attractive gas markets that can carry a premium over European price. The key thing also to mention is, and I think this has become obvious through statements from the two companies is how important the Anchois development is and how aligned the companies are on progressing the Anchois development in terms of getting the development underway on -- with the highest value we can do, that means potential expansion and upgrading of the resources, returning free cash flows to shareholders and also then looking to grow the project organically through those cash flows. So I think [ Chariot and Energy ] and are very focused and aligned together on the potential of the Anchois field. I'll talk a little bit more around the details of the upcoming well in the next couple of slides. In the onshore, Chariot is partnered with the state company ONHYM in terms of the upstream, 75% Chariot, 25% ONHYM. And we've recently completed our first drilling campaign in May. That was completed safely on time and on project budget with one gas discovery at OBA-1, which I will describe to you a little bit later with a planned flow test later in Q3 this year. The market for the onshore gas is different. We're looking to commercialize that gas more quickly, and we're focused on the industrial gas market initially in Kenitra which is undersupplied, and we've seen increase in local gas prices. So there's an opportunity there to commercialize high-value gas rapidly. And the key to deliver rapid gas delivery is using a flexible development solution such as virtual pipelines. That's where the relationship with Vivo comes in. So we have a midstream partnership we're putting together with Vivo. And yeah, that was a recent announcement, and I'll provide some more details on that in the next couple of slides. So on Slide 8, starting with Anchois East. This is the really big news that is coming up. As a reminder, there are already two wells on the Anchois field, Anchois-1 drilled by Repsol in 2009, found gas, which is shown by the red colored sands in the A and the B sands. We then drilled Anchois-2 in December 2021 through to January 2022, reconfirmed those discoveries, but also found additional gas sands in the Lower B Sand, the C Sand, the M Sand. And then at TD, a very well-developed sand called the O Sand, where we had some gas pays sitting on top of a thick interval, which had water at the base of the well. But that's important for the additional prospectivity that we see deep in the Anchois field. So the Anchois East well, the well that's coming up. You can see that on the right-hand side. What you can also see is that it's within the main fault block of the field. So ultimately, the Anchois East well is at the location of where the third important producer well is in the field development plan for the field. So inherently, it's a low-risk well and a major component of the Anchois East well is to put in the ground a key future producer well for the field. So inherently, it's low risk. So why are we drilling that well early? Why are we doing it ahead of FID? I think reason number one is it means that we can penetrate all of those producer sands early. We can perform a flow test so we can optimize the development and derisk the development further ahead of taking FID. The second key reason are the inherent upside that we can drill for very low additional cost at the same time. Those could make a material difference in terms of the scale of the development and then the value that, that subsequent development can bring with increased gas production rates. So in terms of the sequence of drilling, we're fully carried for the anticipated cost of the campaign, as Adonis described, and we will be using the Stena Forth drillship as recently announced. The total duration of the operations, including drilling and testing will take in the order of two months, we expect. And the sequence is that the pilot hole will be drilled first. That is shown by that blue line going to the right or to the east, that pilot hole at 0.1 will re-intersect the B Sand, which is one of the key sands for the development of the field. So we'll get further reservoir data there. We will then cross the fault, which is shown by that curved black line. And we'll go into the footwall structure. So these are additional potential resources that aren't in the 637 Bcf of discovered gas. The structure we will drill is called the Footwall. So that's the Anchois Footwall prospect, and that's independently audited at 170 Bcf of P50 or best estimate resources and carries a chance of success greater than 60%. So really, it's kind of an appraisal level of risk rather than an exploration level of risk. That's how we view it. It also sits adjacent to proven gas on the other side of the fault. So inherently, it's a low-risk target, but it brings quite a lot of additional potential value. After drilling the pilot hole and logging that to get all the reservoir data we need, we'll plug back and then drill the main borehole inside the main fault block. At Point 3, we go through those Red Sands. So those are the existing discovered sands. We will drill and evaluate those because those will be key sands for the -- an eventual Anchois East producer well, and we'll deepen into Point 4. That is the North Flank prospect. Again, like the Footwall, this is largely an O Sand target. That O Sand was proven to be good quality reservoir at the base of Anchois-2. The North Flank trap is a fault supported trap with over 200 Bcf of resource potential. Again, it's relatively low risk for an exploration target. Then following that, we will then prepare the well for flow testing, and we will look to get empirical productivity information of key reservoir sands that helps us to plan the subsequent completion for the well in an eventual development. There is also a key read-through from Anchois East, the footwall and North Flank prospects being O Sand reservoirs, if they come in, if they're successful, there is a direct read-through to the South Flank prospect that you can see on the left-hand side that is beneath the TD of the Anchois-1 well. That carries a further 372 Bcf of estimated resource potential. So that will be materially derisked by success at the Anchois East well. So the overall objective of the well, as I mentioned, is to deliver the development of Anchois, but also look to deliver an expansion of that development. And on Slide 9, this shows you the value increment of an expanded development. The top left shows you the development scheme. This is a subsea to shore gas development, which is typical for a gas development in water depths like this, approximately 400 meters. So three initial producer wells with a subsea tieback to a flow line and a central process facility onshore. That then feeds the gas into the GME pipeline and off to the markets that we've previously described. Now Anchois East, as I say, has -- Anchois field has 637 of 2C resources. Currently with Anchois East, if both of those two new prospects are successful, that could take us to a development of 1 Tcf. That would allow us to expand the project to 150 million cubic feet a day or even higher. What is the impact upon value? Well, actually, in terms of the initial development CapEx it's minimal, less than 5% incremental in terms of that initial CapEx to be deployed. The reason is that the development doesn't really change. We still think the three initial producer wells can deliver those volumes. We just need a larger capacity flow line and an expansion of the central process facility to accommodate the greater through flow of gas. But in terms of initial CapEx difference, it's not much. That 50% increase in production plus those additional resources can drive a 75% increase in project NPV versus Chariot's original development case of 105 million cubic feet a day based purely on the 2C resource. So this is one of the key reasons why we liked the work program, which was put forward through the energy and partnership deal because we see the real value in upgrading the project from day 1. There's lots of further upsides that could be shown lower left on that chart, that read through to the Anchois South Flank prospect beneath Anchois-1 could deliver a 1.4 Tcf of resource that could flow through this infrastructure and elsewhere in high-graded tieback opportunities, which are all seismic amplitude supported. We see over 2 Tcf of potential that can ultimately route through the Anchois infrastructure once it's in place, giving a long-term resource. In terms of the deal structure with energy, and there are two options really. Currently, Chariot retains 30% working interest. Energean have the option to take a further 10%. As Adonis described earlier, that would see us fully funded up to a gross development cost of $850 million. We would have material free cash flow from First Gas. And there are additional payments related to gas price, royalty payments. Also, we have a convertible ore, energy and shares that can be exercised at our option or our elections part of that deal. Altogether, that gives around $0.5 billion of net NPV for the project based upon anticipated gas prices. In the case that option isn't exercised, we would retain a higher working interest in the project, access to larger cash flows from Anchois. We've retained the maximum value from the exploration upside in and around Lixus, which, as Adonis mentioned are over 4 Tcf of resource potential. The important thing here, of course, is that we would have to fund our share of the development. But we are confident that we can do that without a dilutive equity raise being required. We see through the work that we've done with SocGen, a lot of interest with project finance. We've advanced discussions with the local banks in Morocco and also potential key strategic partners to help fund our share of the development in the case that we retain 30% working interest. And as you can see from the NPV, there, it's still a very, very material project, which we can use to help to fund that our share of the development. So that is Anchois and as I mentioned, middle of August, we will start the work on Anchois East so it will be a very exciting couple of months ahead. In terms of the onshore, as mentioned, we just completed our first drilling campaign on the Loukos Onshore license. We signed this license approximately one year ago. So we saw an opportunity on the 3D seismic data that was existing to fast-track the drilling of the first exploration wells to see if we can rapidly unlock and deliver gas resources for development. So these first two wells that we chose were on the Gaufrette and the Dartois prospects, and I'll just talk you through the well results on this slide now. On the left shows the Gaufrette prospect an up-dip of the LNB-1 well that found reservoir with some gas pays, and we drilled the RZK-1 well. And that was in a fault supported trap. Now what did we find? We found very good development of good quality reservoirs, exceeding pre-drill expectations, over twice the anticipated reservoir thickness in total. And we found multiple gas shows through the well, including some very strong gas shows at the primary levels of interest. So that was all looking very positive. Unfortunately, when we wireline locked across most of those reservoirs, we could see low resistivities, and we calculated only residual gas shows over many of those. So the interpretation post-drill is that we basically drilled a paleo accumulation. So this trap was once filled with gas and probably due to late fault movement. And that trap was breached and the gas escaped as shown by those red arrows on the schematic. So the key thing for us now in terms of learning from that well, lots of positives in terms of the reservoir development and lots of positives in terms of the strength of the gas shows supporting quite a prolific gas play in this basin is to take those learnings and see what it means for the prospects in the area around Gaufrette. This is a prospect specific trap failure. On the map around the RZK-1 well, you can see the other blue prospects in [indiscernible] and then still material prospects like Eclair and Eclair West with nearly 30 Bcf of combined potential sitting in an up-dip location from the RZK-1 well. We've just received the newly reprocessed seismic data from that 3D. So we need to take those learnings and reinterpret the data and see what it means for the future exploration potential. We fulfilled our obligations. So any future exploration drilling here is at our option. The second well we drilled was OBA-1 on the Dartois prospect. This was a long trend from the RJB-3 discovery, which was made in the 1960s, tested over 2 million cubic feet a day of good quality gas. We estimate it to hold around 5 Bcf of resource. In OBA-1, shown on the schematic, we drilled a growth section of around 200 meters, which corresponded with the pre-drill targets. The uppermost reservoir, you can see there in yellow, was found high quality but water bearing with some thin gas pays on the top. So we see some potential from that upper reservoir, which ties into RJB-3 for some up-dip structures that remain to be drilled adjacent to that well. And those are targets that we're currently mapping on the new reprocessed 3D seismic. The key interval of interest and where we see the gas discovery is in the middle section. That's over a 70-meter gross gas-bearing interval with elevated gas and resistivity indicating gas pays. That is the section that we're looking to do the well testing, which is planned towards the end of Q3 this year. That well testing operation, clearly, will be looking at the different lithologies that we see in there to look at the productivity potential and then allow us to then map out the potential resources associated to the discovery and the development plan to support potential future commercial production. But it's not just OBA-1 that underpins the potential value from Loukos. On the map, you can see other discoveries. We've already mentioned RJB-3. There's also two other discoveries of note at LAM-1, which was drilled by a previous operator, which actually had gas in three zones, two of those were tested, the upper and middle zones, but the most promising zone, the lower most zone was not tested at the time due to mechanical problems with the completion. We see around 5 Bcf potential in that zone that we could redrill and put on test and potentially commercialize. Similarly and very recently, another discovery called RJB-2, has flown under the radar really because in that area of the 3D seismic, the previous data quality wasn't sufficient to really map out any potential gas resources. But on the new data, we see bright amplitude and structures adjacent to potential pays and gas shows in the well. So that is an area where we're assessing the potential resources that we could reevaluate through potential future drilling and testing. So the key to unlock this commercial opportunity is shown on the next slide, which is this relationship with Vivo. So we announced recently the signature of the heads of terms for a virtual pipeline or a CNG scheme with them. Now Vivo are 100% owned by the Vitol Group and the second largest distributor of hydrocarbons in the country. So they are a key company that brings all of the experience of commercializing hydrocarbons and to move that and with expertise in CNG from other countries they can call on. What we would look to do is Chariot has the upstream with ONHYM. Any gas from Loukos, whether that be the OBA-1 discovery, the other legacy discoveries or any future success in exploration portfolio, we would process and then deliver into the midstream partnership, which will comprise Vivo 51%, with Chariot an option to go in with 49%. That midstream partnership would build out that virtual pipeline development system, which is gas compression, trucks and trailers for transportation and then the decompression skids to deliver natural gas to the suppliers, to the offtakers, focusing initially on the Kenitra industrial market where we understand that current gas prices are extremely high. We can also use that midstream vehicle to also commercialize third-party gas from a variety of other sources. And as you can see, that also gives Chariot exposure to an additional value stream, not just the upstream from Loukos, but also the midstream partnership, whereby we would also see value from redistribution of third-party gas. So alongside the OBA-1 flow testing, we're also going to be progressing this partnership with Vivo over the current -- over the next few months. So that is the onshore, but I think sitting alongside the Anchois East drilling, the other major catalyst in our hydrocarbons business really is the new venture that we're working on. So -- for those who follow the Chariot story for some time will recall that we were originally an exploration-focused company, focused on the Atlantic margins with major exploration projects in Brazil, in Morocco, in Mauritania and also in Namibia. In Namibia, specifically sort of shown on the right-hand side, our last well that we drilled as operators was in 2018 and actually resulting from that portfolio we held as operator, we still maintain a 10% back-in right in licenses actually in the Orange Basin. So having completed the deal with Energean last year and then taking operatorship of our Moroccan offshore portfolio, we wanted to look at a new venture strategy and how we can get access to additional scalable opportunities. And clearly, all of that experience and the money we've invested in data and previous wells in our previous exploration ventures, it was an area for us to particularly start. And so we've been working very hard on this and the opportunities that we're looking at do carry significant scale. Importantly, we feel that we have unique insights both to the exploration potential and also how to operate in these areas. And the important thing here is that if we are successful in securing the licenses, we believe that these opportunities can be partnered at the asset level, either through [indiscernible] them out or strategic investors. So they're not necessarily going to require top company equity funding and also opportunities where we can deliver fast track drilling within the next 12 to 24 months to make sure that those catalysts are in the near-term, we don't want a very long drawn out exploration work program. We want to deliver expedited value-accretive opportunities. So Jules, I'll hand over to you.

Thanks, Duncan. So this slide summarizes our renewable power division. We are focused on our business in South Africa, where the electricity market is one of the largest in Africa and where there has also been big supply issues. What has also happened in South Africa is there has been recent and rapid deregulation of the electricity market. And Chariot has taken advantage of that and now has 1 of 5 electricity trading licenses in South Africa. What this allows us to do is to put electricity on one part of the grid and take it off elsewhere. And through this trading license has then unlock Chariot's involvement in some large wind and solar projects in South Africa. Now this business is focused on a many-to-many model. So many generators to many offtakers. And you may have seen that we have recently signed power purchase agreements, so PPAs with some of the largest off-takers in South Africa, for example, Growthpoint Properties, which is the largest real estate group down there. Now we announced a strategic review early this year to look to finance this business. And I'm pleased to say that since then, we have undertaken a financing process in South Africa to look to raise $50 million, and we have now received offers from South African banks and other funds, all at the sub level, and we anticipate retaining a controlling stake in this business, and we believe we will be able to announce this within the next few months. And what this does is, firstly, it finances a really interesting, scalable business with a lot of potential. It secondly reduces the perceived overhang on the Chariot listed share. It reduces our overheads, and it also provides a look through valuation for this business, which is not currently recognized in our share price. So this slide summarizes our green hydrogen business. We're focused on our large projects in Mauritania, where we're looking to produce green hydrogen from electrolysis or splitting of water using electricity generated from renewables, so from wind and solar. The use of that green hydrogen will be for green steel or for ammonia production. We're at a part -- a 50-50 partnership with Total in this project, and we've just carried out the feasibility study. And the next steps will include agreeing the investment convention with the Mauritanian Government and progressing our offtake discussions. Now at the moment, Total are bearing most of the costs of this project. So the costs for Chariot are small, and we're going to look to finance this division at the sublevel as well. So this is the timeline, and it could be argued it is the most exciting period in Chariot's history ahead of us. So going from the top, we've got offshore, where we're a matter of weeks now from commencing the Anchois East drilling. We're then looking to reach FID on that project in early '25 with two years to first gas. On the onshore, we've got our flow test in Q3. We're going to look to progress the midstream with Vivo with potential first gas next year. And then on the new ventures, we've got that multibillion barrel potential. We're going to look to secure those licenses, partner and potentially drill next year. And on the power and hydrogen is around closing that financing, starting construction of those renewable projects and getting the read-through valuation of that financing for release. And our focus as a management team is to get these projects -- these different divisions, these material different divisions to those material cash flows as quickly as possible and look to return that cash to our shareholders.

Thank you, Julian. So in summary, we've got a lot of exciting things happening in Chariot and before year-end, you've got the business in Morocco, which is looking to open up a totally new gas basin marching towards a final investment decision on onshore gas development. Onshore in Morocco, we're looking to flow test on OBA-1 with a view to looking how we can bring onshore into production in partnership with Vivo. [indiscernible], we're looking at a multibillion barrel opportunity. And in our renewables energy business, we're looking at funding it on the subsidiary level. And as Julian has said, that will allow shareholders to see a see-through value into that business, and we're doing the same on the green hydrogen. We've got a lot of interest in funding it on a subsidiary level, which allows shareholders to see a see-through value for that hydrogen business. A lot is happening. I just want to remind shareholders that there is an open offer of $2 million that were aligned all of our shareholders to participate in and also that this presentation that we just presented to you will be available on our website after this webcast. I think we'll now open it up for questions.

That's great. [Operator Instructions] As you can see, guys, you've had a number of questions from investors throughout today's presentation. Thank you, firstly, to everybody for engagement. If I may just hand back to you to read out these questions, and I'll pick up from you at the end.

Thank you. When are we going to get an update on the renewables and what is the result of the extensive review?

So we anticipate that we will have further details on the partners that we are going to look to bring in at the sub level in the next few months. And as I said before, we anticipate retaining a controlling stake in this business.

Can you share your thoughts on how soon you expect the business to be delivering cash flows?

It depends. I mean if we can show some economic viability onshore in Morocco, we could see cash flows next year from that. Starting off small and remember, as Duncan said, those cash -- that gas that we produce will be delivered to Kenitra, which is the industrial zone in Morocco. It's a different market to the power sector. And we'll do that in partnership with Vivo with a view to doing compressed natural gas, which speeds up your production or ability to produce. You don't have to install a pipeline. So again, it depends on the flow tests, but if those work out well, we can get a development plan. We hope that next year, sometime we could be in production onshore. That will be the closest to cash flow.

What is the company doing to ensure capital discipline?

Well, I think as already discussed, we've carried out strategic review on the power level. We're going to look to finance that separately, and that will clearly reduce the G&A. In addition, it's worth noting that we have further consideration coming in from our energy and transaction. So it's $50 million on final investment decision whether Energean exercise the option or not. And obviously, if they do exercise the option, we then get a $50 million convertible bond or 3 million Energean shares, which produce a dividend.

Does the company anticipate carrying out any further share raises?

Look, we think we -- this fundraising that we've just recently done will take us through to a final investment decision on Onshore. So we think we've covered until that point. And obviously, we're aligned with our shareholders. And we've tried to in particular, this past raise we minimized the quantum of the raise so as to minimize dilution, taking into account where our share price is.

Will the debt relating to Energean carry be refinanced?

Potentially, that we are able to refinance it at any point, and that is something that we would definitely be looking at as we head towards first gas because there is the potential that we refinance it, and then it brings -- it allows you to bring those revenues further towards us and increase the cash that we can return to shareholders even largest from day 1.

When does the company plan to the onshore flow test to take place?

As I said, we're planning to do that in September of this year.

How many meters are you planning to flow test? And given all the research you've done to-date, what type of flow rates are you hoping for?

Yeah. I'm assuming this is for the onshore flow testing, so I'll answer that in that way. Yeah, we've got a 70-meter gross interval to test -- what we need to do is to characterize the lithologies within that. So yeah, we're not going to flow test the full 70. We're going to be selective about the intervals that we perforate and test. That's something that is in the planning at the moment, so I can't give a definitive answer, but we want to make sure that we get representative data or data that's representative of what the productive potential of the whole well could be. In terms of research and what we anticipate in sort of flow testing, offset wells, we now have tested between typically 2 million cubic feet a day actually tested, but the estimated product potential is sometimes much higher, 5 million or 10 million cubic feet a day. The key thing on the onshore is not the initial flow rates because you need much lower flow rates to give commercial production versus an offshore well. It's how long you can sustain those productivities. But typically, in our business planning for the onshore producer wells produce 1 million to 2 million cubic feet a day through the life of their production. So those are the sorts of levels that can be commercially attractive.

How likely does the company believe it will be that Energean exercises their option?

Well, that you'd have to ask Energean that question, but we've, as a company, plan for both scenarios. It doesn't matter what happens. We've got a plan if they do exercise the option and a plan if they don't exercise the option.

Anchois-1 and 2, have they been completed as producers?

Yeah, Anchois-1 was drilled by Repsol in 2009 and Chariot drilled Anchois-2. So Anchois-2, I'll address that one. That well was left suspended for reentry for completion as a producer. So actually, the reservoirs themselves were actually abandoned, but the top part of the well was retained so that we could reuse all of the wellhead and the shallow casing and then we can drill the optimal producer drain location and then to complete those sands during the development. So yes, Anchois-2 will be reused as a producer well. On Anchois-1, that was drilled with a different well construction than we would like to optimally have for a producer. So what we would do at Anchois-1 is we would drill a new producer well but very close to Anchois-1. That would be the plan for a producer well in that location. The key thing is all of that reservoir data is known. So that producer well is already fully derisked. It would just need a new well constructed from top to bottom.

What is the Loukos drill program for 2025 and how will it be financed?

That drilling program will depend upon the work that we do over the coming months. And that's this commercialization plan that we're putting together with Vivo and off the results of the OBA-1 testing and the evaluation of those other legacy discoveries. We need to package that up into a commercial plan, and then we will see the commercial potential and the best way to finance it. One of the key advantages of that Vivo partnership on the midstream is that we believe that can be project financed. And that's a lot of the CapEx that will be needed to take Loukos gas to market could be project financed with a high degree of debt on top, and we would obviously share the equity contribution for that with our partners, Vivo. So actually that is a very efficient way of funding and minimize what we need to fund from an upstream perspective. But how we fund that, I think, needs to be resolved following the work that we'll do over the coming months.

It's just worth noting that, obviously, as I already touched upon, we've got further considerations coming in from [indiscernible] cash coming in from Energean. We've also carried out a strategic review of the Power division. So there are multiple different ways that we could finance any small equity [indiscernible].

Is the company able to give rough guidance on how much gas is currently sold in Morocco and/or what it's been sold for over the last couple of years?

So yeah, I mean, over the last few years, Morocco has been importing gas. And that has been international LNG gas, which has been regasified in Spain and then imported to Morocco South by the GME pipeline. So clearly, to do that, is likely to represent a premium to international gas prices, so a premium to the European price. Typically, that European price sort of averages around sort of $10 per MMBtu. But obviously, with the Ukraine crisis, there has been significant increases in volatility over the last couple of years and the outlook for TTF remains pretty strong at around those levels.

Onshore Morocco could the company come back on the reason why the 5 Bcf discovery at the north of Chariot's acreage that was tested at 2 million cubic feet a day was not developed?

Yeah, that well was drilled in the late 1960s. And obviously, that was before sort of gas markets had really started and before the gas pipeline network was really established in the [ Gharb ] basin. So really, that gas discovery has remained stranded since that time. I think now is probably the time whereby we can look at potentially commercializing those legacy gas discoveries, which are obviously quite old.

With regards to the partnership with Vitol in Morocco, could the company give a sense about the margin taken by the midstream business.

I think we can get -- sorry, Duncan, you can carry on but I don't think we can give that detail today. We still have to establish that arrangement. And just bearing in mind [ Shell's ] note, we would have at our election, a 49% stake in that midstream as well. So we would benefit at the wellhead and would benefit in the midstream. Sorry, Duncan, carry on.

That's absolutely fine. I was just going to comment that typically, the margins on the midstream are obviously much lower than the margins from the upstream, which reflects the risks in those businesses.

How certain is the company's buyback into Namibia?

Well, I think we started by saying we have a 10% back-in right that we've always had, and that's there. So that's something that's secure and it's a known. As Duncan can say later on, there's some exciting things happening and we'd look at increasing our exposure over there. There's absolutely no 100% certainties on anything but it's a country we have operated in for more than 15 years, and we feel quite comfortable operating there.

How does the company reconcile its move into an oil and gas jurisdiction with Chariot's recent rebranding and positioning as a transitional energy business?

But we are a transitional energy business and one needs to take it into account that we're operating on the African continent and the African continent has its needs and has it's right to develop its own resources. This opportunity is something that we believe is in the benefit of all of our shareholders, and it's very important, and we -- it would be remiss of us not to look at it and take it seriously. At the same time, we offer a blend of energy sources through our gas, through our renewable energy, which is wind and solar with a bit of battery support and through our green hydrogen. So we are very much a transitional energy business. I'd like to also add that we're responding also to what the markets are saying and what our shareholders are telling us. And as Jules said earlier on, we're getting funding for the renewable energy business and for the green hydrogen business on the subsidiary levels. And I think it's worth noting that, that funding is not coming from the UK markets which is a sign that we haven't managed at this stage to get much traction for our renewable energy business or our green hydrogen business in London. Maybe that will change as we get a see-through value from those raises. But we're responding to the market and the questions we get on our road shows and the interest is very much on our hydrocarbon side of the business. So we're responding to the needs of our shareholders to the requirements of our shareholders. And also, let me say, for the benefit of Africa as well.

Given we've had lots of good news, why do you think it is not yet reflected in the share price?

I mean we don't know, and it's as frustrating for us as it is for our shareholders. We are acutely aware of our low share price and we must do more to get it up there. We need to focus on improving our share price. And I think there's a general malaise in the broader markets. There's something going on in the energy sector. And I just don't think we're alone amongst our peers in not having a great performing share price. I think it is worth noting that we sit at a share price which is lower than before we made the onshore to gas discovery. But it's [indiscernible] us complaining and [ bleaching ] about it. We just get on and do our job, get the value in the business. And I think in time, the share price will respond to that.

Given the scale of the offshore gas and the new ventures, are you planning to continue building/developing small new water desalination plants?

Again, that forms part of the renewable energy side of the business. And we haven't spoken about it in this presentation, but I can say that we've got a lot of interest in the water side of our business as well and funding it on that subsidiary level because water is, as we like to say, is the new solar. It's going to be where a lot of focus goes on and a lot of funds are looking at the water side of this. And again, it fits in with our business because you create clean potable water using renewable resources. So we have got a lot of interest from some funds in the water side of the business. But again, I just want to stress that this will be funded on the subsidiary level, right?

In the event that a second well is to be drilled on Anchois, how will this be financed?

Well, no decision has been taken on a second well to be drilled, okay? So typically, when you have these rig contracts out there, you have a provision and an option to drill a second well. That decision to draw a second well hasn't been taken. Duncan, I don't know if you want to add to that?

No, I don't think so at this stage Adonis, but you'll be right. Often rig contracts do come with options, and that's clearly one that's been stated here. But yes, no decisions being taken. What I would say is that any options that may sit out there, I think, are obviously in the Anchois area and would tap into the value that I presented earlier and look at potentially unlocking additional gas resources in the Anchois area.

Is FID with Energean guaranteed? And if not, is there a plan B?

I mean you'd have to ask Energean, but I suspect that it's in the interest of both companies to get to an FID as soon as possible. As Duncan referred to earlier on, Energean has sold a lot of their portfolio off. And so they recently sold Egypt and Italy and Croatia off. So they're sitting with their assets in Israel and their growth in Morocco. So it's in both parties' interest to get to an FID as soon as possible. And as I said earlier on, this well that we're willing -- drilling Anchois East is not to prove whether there's gas there or not is to see the scale and size of the development.

And I think just to add to that, the reason we chose Energean and as our partner from several offers was because of their experience at doing these brand-new gas developments from inception very, very rapidly.

Why could the onshore gas commercialization not have been funded through the full well underspent?

Jimmy, just repeat that, sorry.

Why didn't the full well drill campaign happen following the fundraise last year?

Okay. Yes. So we -- the fundraise of last year, we -- that was just at the time of securing the Loukos license and looking at these high-graded opportunities. And at the time, we looked at potentially up to four wells to be funded. Now we decided that with the work that we did that we needed to reprocess the seismic data, but we thought that an appropriate first campaign was to drill two initial wells to test two different reservoir systems and two different trap types, which we did to commit to drill four wells immediately. I think at the end of the day, would have been too much. I think drilling two wells first evaluating the results combined with the reprocess seismic data allows us the best way to optimize future investment in drilling. And we did actually buy additional stock, so tangibles and other materials that would allow us to drill potentially additional wells. So we do have that in our inventory, which would obviously be contributed and reduce the cost of future drilling should we decide to do that. But yes, two wells as we felt it was the right thing to do in that first campaign.

Is the Board and management aligned with shareholders and did they take an active part in the recent fund raise?

Yes. I mean we are actively participating in -- what we did participate in this fund raise up to $1 million. And that wasn't just the Board of Directors. That was senior management as well. We're very much aligned with our shareholders. And just to remind everyone is that the Directors and the management are still the largest single block of shareholding in this business. And we put our money where our mouth is in this last fundraise.

Thank you, Adonis. I'm conscious that we only had an ad for this. So I'll now hand back to you for closing remarks.

Thank you very much, Jimmy. Yeah. Look, I mean, we are very positive here in Chariot about the prospects of the group going forward. We've been very busy over the last year. We've achieved a number of goals. We've progressed all three pillars quite aggressively. And in many ways, the pillars have grown far quicker than we thought. If it wasn't for there I said our languishing share price, I think people would look and say, gee, this company has actually done a lot and achieved a lot. I think as we stressed in this presentation, there are a lot of triggers happening between now and the year-end, and we look forward to timelessly reporting news flow to our shareholders for this very exciting period ahead. We thank our shareholders for their loyalty and support. We also thank institutions who supported us in this recent fund raise and look forward to our shareholders' participating in the open offer, as they've always done in the past. Thank you very much.

That's great Adonis. Thank you very much indeed Julian and Duncan for updating investors this morning. Now I please ask attendees not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Chariot Limited, I'd like to thank you for attending today's presentation. That now concludes today's session and wish you all a very good afternoon.