Chariot Limited (CHAR) Earnings Call Transcript & Summary

Good morning. Welcome to the Chariot Limited Investor Presentation. Your presenters today will be Adonis Pouroulis, Chief Executive Officer; Julian Maurice-Williams, Chief Financial Officer; and Duncan Wallace, Technical Director. Questions are encouraged and can be submitted during the presentation and the presenters will do their best to answer as many of the questions as possible during the time allotted. I will now hand over to Adonis to begin the webinar.

Thank you, Jimmy. Good morning, everybody, and thank you for your time today. As you know, we're here to talk to you about our recent developments and the future plans for Chariot. Five years ago, we broadened our strategy to focus on transitional energy, which was the zeitgeist, the theme at the time. During this period, we successfully built out our portfolio of gas, renewable power and hydrogen assets, and we now have 2 very different but core entities that have their own business plans and importantly, their own attributable value. This value is not currently recognized or reflected in our market cap as a combined group. And the world has also changed, and we are cognizant of the shifts in sentiments towards the energy transition. This is something we have seen the majors adjusting to in their strategies, and we too are looking to evolve our business again. Today, I'm talking to you as a fellow and major shareholder, but as a Board and management team, we believe that now is the time to look to split the group in order to release the inherent value that sits within these 2 entities, the upstream E&P business and the renewable energy business, which we call the Power business. And this will allow both businesses and enable them to grow. Moving on to the next slide, our disclaimer slide and moving on to the next slide. As you've heard earlier, the 3 of us will be presenting today, Adonis, Julian and Duncan, and I think we are known to most of you now. You've seen this slide before. So we move on to the next slide. This is just a quick overview of our upstream oil and gas and renewable power portfolios. The map on the right gives you a snapshot of the Chariot universe. Our gas assets in Morocco are in red. As you know, we drilled a well on the Anchois gas field last year, the Anchois-3 well, and this did not deliver the upside resource volumes we thought. But importantly, we found gas in that well. And Duncan will talk on this further, but we do know we are sitting on an active hydrocarbon system. Remember, 3 wells have been drilled in Anchois, and all 3 wells have found gas. Anchois-1 and Anchois-2 were hugely successful wells. Anchois-3, less so. But we still believe we have a smaller but yet economic development, and this is warranted because we still see a great deal of value across not just Anchois, but in Lixus, the surrounding area in our Rissana, which -- offshore license, which surrounds Lixus and of course, on Loukos, our onshore license. We also have our new venture, which you can see in red there in Namibia, and we're progressing this as we've announced publicly. But importantly, we've also decided to strategically shift Chariot from being an explorer and a developer only to now also focus on securing near-term production in producing hydrocarbon assets. We currently have a number of active opportunities we are pursuing. And hopefully, within the next year, Chariot will again transform itself into a company with a balanced portfolio of assets that span the full upstream pipeline. And also, you may ask the question and before you ask it will be, well, how will we finance all of this growth in these transactions? Well, we believe we have the financing structures in place now to move these opportunities forward. And again, we will primarily be looking to fund these at the subsidiary level, just as we have done with our Etana trading license and with the renewable energy business. We have precedent. Our focus across the renewable power portfolio today is in our trading and our generation assets. We have our Etana Energy electricity trading business in South Africa, and we have generation projects in South Africa, Zambia and Zimbabwe. Etana was just a concept in 2022. It is now a fully financed bankable business. And as we stand today, we have 400 megawatts of gross generation in our assets and our portfolio, and these are fast moving towards financial close with Tier 1 partners. Remember, we also have our green hydrogen assets in Mauritania in partnership with Total. And in Morocco, we're partnering with UM6P to install a 1-megawatt PEM electrolyzer at Jorf Lasfar OCP's site that will produce green hydrogen on a pilot scale, which will then produce green ammonia. We also have a water business and have built a project in Djibouti, which had been running successfully producing clean water using renewable energy for the last couple of years. The green hydrogen business and the water business will sit within the renewable power portfolio going forward. Now if you move on to the next slide, you can see with these 2 distinct businesses, we now have 2 different investment thesis that offer different return profiles, which will attract different investors. It is our belief that by separating them into 2 different vehicles, we can look at giving our existing shareholders the proverbial 2 bites of the cherry and create an opportunity to attract different pools of capital. The upstream E&P business offers higher risk but higher returns. With this business, we're looking to redefine our Anchois project, and Duncan will speak about this a little later. And you would have noticed that we announced recently, we have resecured our 75% operating interest in our offshore assets and now we intend to look to Moroccanize this asset. What do I mean by Moroccanize? Well, we have had an interest from Moroccan entities, which are potentially interested in partnering with us. Gas is a strategic commodity and is fundamental to the Moroccan economy and the Kingdom. And we've had approaches from public companies in Morocco as well as private companies, enterprises that are interested in developing domestic gas and energy resources, and we're going to pursue this with some vigor going forward. As I mentioned earlier, we'll also seek to partner on our various other upstream assets as we build out our portfolio of production, development and exploration assets. Our renewable power business offers a lower risk investment opportunity, but the returns are also way more predictable and secure, thus attracting a different investor, one that seeks more certainty to that of the higher risk but higher reward that is offered by the oil and gas industry. The question is asked, why now? What was the catalyst now for spinning these 2 business units out? Well, firstly, we needed to resecure operatorship and our equity position in our offshore licenses in Morocco. And secondly, we needed to complete the financing of the trading license Etana, and this has done 2 things, specifically with regards to Etana. Firstly, it has enabled Chariot to secure a position in large power generation assets in partnership with Tier 1 companies. And secondly, and more importantly, it has given us as shareholders a read-through value for the Etana business. We recently announced a $175 million financing package for Etana, which was secured with major funding institutions, which effectively resulted in us building a strong balance sheet around Etana. Norfund, the Norwegian sovereign wealth fund, set a price point with their investment of $20 million for a 20% economic interest in Etana. Chariot has a 34% economic interest in Etana. So you can look at this, and it's pretty simple math from there. Our entire market cap today is reflected, we believe, solely on the value of Northfund's investment in Etana, and it is clear to see that there is hidden and locked up value in the wider group structure. It's also important to note that this valuation point on Etana does not include our power generation assets nor the green hydrogen nor the water assets nor the gas assets. So effectively, these assets, the gas, the hydrogen, the generation and the water, we see sitting in our books at a 0 value today. The renewable energy business is now an entity that needs to stand alone, and we are, therefore, considering all options as how to realize this value. And we're looking at ways in which we can demerge this business and release this value to all stakeholders. We recently completed and successfully raised $7.1 million. This was oversubscribed, and so we thank you, our shareholders, who participated. These funds will enable us to secure our stakes in wind, solar, gas and upstream assets and will allow us to execute our plans and strategy going forward, and it will enable both businesses to grow. Management, as you know, make up the largest shareholding group in this business, and we believe we are very much aligned with our investors. We have all invested a great deal of our own money and time in the company over the years, and this last raise was no exception where we all supported it as well. I'm now going to hand over to Duncan, who will take you through the Upstream business. Duncan?

Great. Thank you, Adonis. So if we progress forward to the next slide. So -- and the next one, thank you. So clearly, as we plan for the potential demerger of the power business from the group, we need to ensure that the upstream business is also well positioned to grow and to do so in a way which responds to industry trends and to meet expectations for investments in our sector. For us, we see the recent industry reset and refocus on upstream E&P investment as an ideal opportunity for us to both attract investment across our existing Moroccan portfolio, but also to diversify into new projects. In Morocco, shown along the top, as Adonis mentioned, we're redefining the Anchois development project now operatorship has been restored, which we consider has significant remaining potential and value, and I'll update you on this project in the next slides. But it's important to state that there is also significant exploration upsides within the Moroccan portfolio, the potential of which has really not been fully recognized by the industry due to the focus on Anchois. In our offshore acreage, for example, we have a diverse portfolio of plays with material resource volumes and large drill-ready targets. Additionally, in the onshore, the Loukos license, we've got a lower cost appraisal and development opportunity to deliver high-value gas to industry. In effect, Morocco, therefore, provides 3 distinctly different types of projects, all in a strategic and attractive investment location, which may appeal individually to different potential partners to fund the further activity. We can't, however, rely on the gas-weighted portfolio in Morocco only to deliver, and we believe the time is right to embrace a more balanced strategy and our near-term new venture pipeline includes both oil and gas opportunities, spanning the full range from exploration to near-term development and existing production. Our strategy here is to leverage our experience and operational track record to deliver projects in established basins with low entry costs and which can attract external financing at the asset level. I'll provide further details later. However, on the next 2 slides, I'd like to update you on the Anchois development project. So moving forward. Presented on this slide are the key results of the Anchois-3 drilling campaign. This was conducted in September last year under the operatorship of Energean and Chariot's costs of which were fully carried as part of the farm-out deal. Now clearly, this well did not deliver the results that we'd all hoped for, but it still did encounter gas in the well. The main objective of this drilling campaign was to find additional gas resources in the exploration objectives in deeper reservoirs of the field, ultimately to deliver an expanded and upscale development. Despite finding thick intervals of good quality reservoir with gas shows, these were unfortunately unsuccessful, principally due to fault-related trap failure. Additionally, the appraisal targets were found less well developed than hoped for and as in Anchois-2 in an off-access location in the sidetrack well. Despite the disappointing parts of the results, we did find gas pays in the B Sand reservoirs, which provided us with a good understanding of the lateral development of these sands in the eastern area of the field and as shown by the log data in the central part of the page. The reservoir quality was again found to be very good and even the relatively thin pays of approximately 25 meters in Anchois-3 were estimated to be capable of delivering around 50 million cubic feet a day from the pre-well test modeling done by the operator. Drilling performance was also excellent and combined with the rich subsurface data set that was acquired during the operations, this gives us a real opportunity to look at optimizing the development plan in the future. Considering the significantly thicker gas pays of the Anchois-1 and Anchois-2 wells of 50 and 150 meters, respectively, our forward plan is to evaluate the possibility of a rescale development, focusing initially on the resource potential identified by those first 2 wells. So we move to the next slide. Thanks. This slide shows the Anchois subsea to shore development concept on the left-hand side. And on the right-hand side on the map, the planned priority sales route to the existing power plants in Morocco via the GME pipeline. These existing power plants are currently supplied by approximately 100 million cubic feet a day of imported gas. Now this is important because in the delivery of any development project, it's necessary to find the appropriate balance of value, of costs or CapEx and the scale of the resources. In the case of this project, the value of the gas is fundamentally unchanged by the recent drilling results since domestic gas is clearly of strategic importance in Morocco and the current consumption is intrinsically linked to the international LNG and European gas markets, offering also an attractive pricing point. And the Moroccan fiscal terms are just about the best in the world. So with those strong commercial fundamentals, our focus now is to find the correct balance between a reduction in the development CapEx in line with the resources to be developed in a particular scheme of development. We believe that there are several initiatives available to us to reduce development CapEx, both in terms of the development scope, for example, by reducing the number of producer wells and the overall production capacity, but also through a change in contracting strategy to access a more competitive contractor market. Our development scheme is already very mature with an approved EIA, a completed FEED and advanced discussions on gas commercialization and financing. There are also synergistic upsides from exploration opportunities and even a smaller scale development of 70 million to 100 million cubic feet a day has the potential to deliver annual net free cash flows post OpEx, post royalty and tax-free in the order of $150 million to $250 million to our share at the expected gas prices. We believe that these credentials will be attractive also to potential future partners, including those who've previously evaluated the project and also local Moroccan investment given the strategic nature of Anchois. And we've already received significant incoming interest regarding the next steps of the project. On the next slide, and as I previously mentioned, there is a wealth of opportunity beyond Anchois in our Moroccan portfolio. In the Rissana license, which surrounds Lixus, we have a diverse set of exploration plays, including prospects covered by 3D seismic and considered drill-ready in our older Jurassic classic play with audited individual prospective resource of around 0.5 billion barrels in an oil case or 2 TTF in a gas case in the prioritized drilling opportunities. This license also contains other plays such as a recently identified tertiary basin floor fan play shown in red, which is AVO supported and has multi-Tcf potential with individual targets of sufficient scale for stand-alone development consideration. Our intention here is to benefit from the industry shift back to meaningful and material exploration to fund future activity with an appropriate exploration-minded partner. And we believe that this area has all the credentials that corresponding farm-in lease are looking for and the Morocco remains an attractive destination for investment, thanks to the aboveground stability, fiscal regime in addition to the subsurface exploration potential. With a different scale, but still with meaningful potential is the Loukos onshore license on which we drilled 2 wells last year, recording one gas discovery. Subsequent to that activity, we've now completed a seismic reprocessing project and integrated all of the well results to update the portfolio now estimated to contain around 16 Bcf of discovered gas, including legacy discoveries and significantly over 100 Bcf, including the resource potential and new exploration targets identified. Again, the gas market here is readily accessible and provides attractive commercial metrics with undersupply leading to high prices at Kenitra. And we have an ongoing farm-out process here with the objective to fund a multi-well drilling and testing campaign to confirm the threshold of commercially viable resources to unlock a development. So Morocco, we have those 3 distinct projects, which are valuable and where we're actively engaged with prospective partners. Now the next slide provides further detail on the new venture strategy, which is important to diversify our portfolio geographically in terms of hydrocarbon type and also project type. As I'm sure you're all aware, Chariot has a very long history in Namibia and was a pioneer in offshore exploration in the country and where we maintain a back-in right to high potential acreage in the Orange Basin adjacent to major recent discoveries. In Namibia, we're also pursuing the opportunity to restore active participation and operatorship in exploration projects, which have been identified, leveraging our deep knowledge of the hydrocarbon systems and rich subsurface data sets. Clearly, the progress here has not been as quick as we had expected due to a general industry slowdown in activity caused in part by change in government and also a change in the governance of the petroleum sector, but we believe we're ideally positioned to deliver this project in a global exploration hotspot, where we can't just rely on this for our new venture pipeline for growth. So beyond Namibia, we've compiled an opportunity set for portfolio expansion, principally built on the management team's long history of activity on the continent and leveraging our operating track record. As the number of smaller E&P companies with operating credentials has dwindled over the past years, we now find ourselves to be in an advantaged situation, which is opening up opportunities for bilateral deals. Going forward, we're broadly focused on 3 types of assets, which all have the potential to deliver material growth in value. These consist of: exploration opportunities in proven basins where cost of entry is low and when there's already extensive 3D seismic data, allowing the possibility of near-term drilling; development opportunities on overlooked discoveries, which are fully appraised and can be commercialized rapidly at low cost by leveraging existing infrastructure; and finally, producing assets, which are typically mature, unloved assets where additional value can be created through optimization and reinvestment. It's important to us that this strategy avoids excessive dilution of the top company, and so we have an asset level funding strategy to focus on development and producing assets, which can be funded principally through debt and also to leverage our enviable track record of funding through partnering, particularly for exploration projects. We're excited by both the potential of Morocco and by this new venture opportunity set, and we're confident to deliver on these ambitions and look forward to updating shareholders on our progress. I'll now hand over to Jules to update you on the power business.

Thanks, Duncan. Next slide, please. And one further forward, please. Okay. So let's start with the current power situation in South Africa and why it is a massive opportunity for Chariot. So South Africa is Africa's largest electricity market. There has been significant undersupply in the last years, leading to load shedding or power cuts. Indeed, around 30 gigawatts of more electricity generation is needed by the end of this decade. And to give you an idea of scale, the largest power station in the U.K. produces 4 gigawatts. Now Eskom, which is the state utility, which previously had a monopoly, has not built enough generation over the last 3 decades. And combined with that, a lot of their power plants are reaching end of life. And so there's now a determined effort through a rapid deregulation to solve this power shortage through the private sector with Eskom not being allowed to play a material role in building more generation. And this deregulation of the electricity market in South Africa now allows both private generation of power, but also the award of electricity trading licenses. Now trading licenses allow you to buy electricity, put it on the grid and then deliver it and on sell it to where it is needed. And we saw getting a trading license as the key to accessing the massive business opportunities that we believe this market has. And that's why we applied and we're successful in getting the second trading license issued 3 years ago through our joint venture vehicle called Etana Energy. And using this trading license, we've now created what is, in effect, South Africa's first private electricity utility company. We have significant first-mover advantage in this market, and that's why we think we have something really quite special here. Next slide, please. So what is our business? So it's buying electricity from many large renewable projects, so wind and solar, transmitting it through the grid and then on selling it to many large commercial and industrial offtakers. We are the first trader to have successfully built this many-to-many business model. And this trading license is held through a joint venture SPV called Etana Energy, in which Chariot has a 34% effective economic interest. And if you look on the right-hand side, our other joint venture partners are Standard Bank, which is the largest bank in South Africa, indeed the largest bank in Africa; Norfund, as Adonis said, which is the Norwegian government; and H1, which is a well-respected, well-funded black empowerment partner who has been involved in lots of large infrastructure projects in South Africa. So why do the commercial and industrial offtakers want to buy electricity from us? Well, it's simple because we can offer them cheaper and greener electricity than they can buy elsewhere. So why do the renewable generators want to sell electricity to us? Well, it's because we are able to provide them with a good price for their electricity from a bankable entity, allowing them to build these new large wind and solar projects. So what's in it for us? Well, we get a good gross margin on these electricity sales, so the difference between the electricity that we buy and the electricity we sell. Also, as Adonis mentioned, this business is now fully financed with $175 billion now committed from some really big international and financial governmental institutions, all done at the sub level, not the listed company level. Norfund have just written a $20 million cash for a 20% stake in Etana, providing the working capital for that business potentially forever. But as Adonis said, it also provides a look-through valuation. $1 million per percentage point gives a value to our 34% holding. We also got $155 million of balance sheet support from letters of credit from Standard Bank, BII, which is in effect the British government and GuarantCo, which is a large international financing organization. And this is really important because it makes Etana bankable, which means the generation projects can be project financed because they will have certainty that they will have -- be paid for the electricity, which they generate. Next slide, please. So this slide gives a more detailed description of our trading business. You've got the generation on the left-hand side, offtake on the right-hand side and trading in the middle. On the left-hand side of the slide, you've got generation projects, all large shovel-ready projects, all with big sponsors. The first 75 megawatts has already reached financial close. The rest is reaching financial close this year. This is just the immediate projects, just to start. If you look at the right-hand side of the slide, you've got large creditworthy commercial and industrial offtakers. We're offering them cheaper and greener power. We've now signed over 20 power purchase agreements with the likes of Growthpoint, which is the largest real estate group in South Africa, a variety of mining operations and other large industrial and commercial groups. We also have a lot more offtake than we have initial generation, so 50% more. So we have a fair allocation policy to those offtakers, but that shows the growth potential here as well. If you now look in the middle, you can see Etana. Now to be clear, Etana is not an agent for the offtakers. We are generally buying the electricity and then reselling it. So we have created a utility here and charging a good margin between the electricity that we buy and the electricity that we sell. So this is a very good business. But the trading business is just the first revenue stream. The second revenue stream is having equity stakes in the generation projects themselves by leveraging our position in Etana. So we can provide to you with bankable offtake, but we would like to come into your equity on ground floor terms. Next slide, please. So as I said, the second revenue stream is investments directly in large renewable projects, so wind and solar, selling electricity to both Etana, our trading vehicle as well as direct to mining operations. We've got up to 4 projects reaching financial close this year, 3 wind and a solar project. And they're all with world-class sponsors. We're targeting a 15% return on equity. We get an additional kicker when we trade that electricity, all funded at the sublevel. And we're doing the long-form documents on that transaction at the moment, and we expect that transaction to complete shortly. If you now look on the right-hand side of the slide, it's just worth looking at the funding structure in a little bit more detail. So total projects which we are involved in is around $600 million. Now those projects themselves are held in project SPVs where project finance, so debt is brought in, in the ratio around 80% debt to 20% equity. And we have, on average, around 25% of these projects. And so that has a $30 million equity ticket, and we are raising that money at the sub level at the moment. Next slide. So this slide shows just the near-term generation projects. We have a lot larger pipeline that we are working on. First 5 projects are in South Africa. First project has already reached financial close and is under construction and then up to a further 4 projects reaching financial close this year, which are fully funded. And it's worth just stepping back from it. This means that potentially Chariot will have almost 100 megawatts net of generation funded and being under construction by the end of this year. Next slide, please. So this slide shows the corporate and funding structure in a little bit more detail. So it's just worth explaining where the different assets sit within the group and how we are financing it. So starting on the bottom left, you can see our holding in Etana, where we now have Standard Bank and Norfund as our co-shareholders without cash and guarantees going into that entity as we've already described. If you look on the bottom right is our South African platform, and you can see the blue dotted line where we are bringing a minority investor in shortly to fund our share in those 3 wind projects and that one solar project. Directly above that, you've got our non-South African assets and other proof of concept, water and green hydrogen projects. And if you look at the green box there, that is the vehicle to be demerged. If the company is IPO-ed, those shares will be distributed to our shareholders as a dividend in species. If it is sold, that cash will be returned to Chariot. Next slide, please. So final 2 slides in the renewable power section really deal with the growth of this business. This slide deals with the opportunity and explaining it in a little bit more detail. And then the final slide gives you a feel for the number, the fee of the scalability that we see. So just looking at this one on the left-hand side, for Etana, as the private electricity market in South Africa matures, we will look to trade other people's electrons as well as projects that we are directly involved in. We're also going to look to expand into the South African power pool, which allows you to trade electricity across multiple Southern African countries. So for example, build a solar plant in Namibia, bring the electricity into South Africa. We're also looking to investigate battery energy storage solutions, so BESS, which allows the shifting of electricity between different times of day in order to get a higher return. And as we've already said, this business is already fully funded. On the generation side, we're going to look to leverage Etana's position to get into more generation projects with the initial projects already funded at the sub level. And longer term, we're going to look to secure strategic partners to finance our growth. And now just looking at the right-hand side of the slide, what you've now got is you've got an oil and gas business and a renewable business, which are quite different entities, different risks, different returns, different investors. We need to demerge these businesses now to release that value, and that's exactly what we're going to do. Next slide, please. So final slide in this power section, as I said, shows what the growth potential can kind of look like to give you a feel of the size of this. And the financing -- if you start on the left-hand side, the financing that we've just done gives a read-through valuation of this business. We're about to do a generation funding also at the subsidiary level, which will provide a further uplift in valuation. And then in 2027, we will have from the projects which we're financing now a net EBITDA -- material net EBITDA due to Chariot. And multiples applied to these types of business are normally greater than 10. But this is a small fight in comparison to potential. We are the only ones in South Africa who have currently managed to create this type of business. If you capture just 10% of the available market in the next 5 years, you're looking at a business which is potentially 8x that size. That makes us, when demerged from the oil and gas business, a very valuable business, either to continue to hold for those future revenue potential or as a potential acquisition target. So there are some larger energy groups who are now beginning to enter this market. They're quite far behind us. But potentially, we become an interesting option. And that is why we are so excited about this business because we believe it has so much potential. I'll now hand back to Adonis.

Thank you, Julian. If we move to the next slide, please. So as we said several times today already, it is clear that these 2 business units now have their own momentum with their own different and exciting business trajectories. The slide that you see here is a summary of where we are today shown in blue with the paths going forward over the next 18 months of the 2 businesses, the upstream in red and the renewable business in green down below. There's a lot of activity going on over the next 18 months. But I think it's important to say that some of Chariot's core strengths clearly are, I believe, its people and its ability to be nimble, flexible and to spot opportunities and adapt to them when needed, and we're doing just that again now. We have a very clear plan to deliver value in dividing these businesses later this year, implementing our new upstream strategy and in growing the renewable power portfolio. We move to the next slide. I'd like to thank you for your time, and we are now happy to take any questions that you may have. And I believe there's quite a few that have come in. So we're happy to answer them.

[Operator Instructions] We will now commence with the Q&A portion of the presentation. How close are you to partnering in Morocco?

As I said earlier on, we -- when we announced that we had taken back operatorship and resecured our equity, we were already approached shortly thereafter by several companies, both within Morocco and some international companies to come and have a look at what we've done to really look at the data, and that is an ongoing process. And we continue to work with not only possible future partners, but we are going to work in collaboration and are working in collaboration with ONHYM, our partners in Morocco and the Ministry of Energy, and it's very important that we bring everybody along for the ride.

Will a changing ONHYM moving into a private plc model affect our projects in Morocco?

We believe it may affect it in a positive way. I think there's a lot of focus and emphasis, as I mentioned earlier, on the gas industry. It's fundamental to the Moroccan economy. And we think that these changes are aimed at streamlining the business. And I just want to stress that all along in our time in Morocco, when we drilled Anchois-2 and when we drilled Anchois-3, the Moroccan authorities have been very collaborative and enabled us to operate these wells efficiently, and they continue to be great partners to us.

Following the recent equity raise, are you confident that you can get the company to cash flow generation and self-sustainability without the need to raise further funds?

Well, as you can see and as we said, the renewable energy business has a life and momentum of its own, and we fund it on a subsidiary level. And Julian showed you in the one slide, if you -- we don't need to go back to it, but you can see the slide there where we've got the Etana $175 million balance sheet around it, and that's funded going forward. But also, there's -- we plan to bring a minority equity investor into the South African platform that then allows us to take care of those big generation projects. So on the renewable energy side, we're funded. The new strategy on the upstream side and the money we just raised is exactly that to try and get into some production and cash flowing assets. And we're leveraging off our history on the continent, our relationships on the continent to bring these assets forward. And again, I want to stress that we'll look to fund those at the subsidiary level.

In July of last year, the company raised money to secure a material new exploration license in Namibia and progress onshore gas commercialization plans in Morocco. What is the latest update on where these funds were spent and what progress has been made on these work streams?

Firstly, let's start with Namibia. Namibia went through quite a lot of change last year. You had, unfortunately, the president passing away, which led to there being a need in a search for a new president. But in that interim period, the founding father of the country passed away as well, President Sam Nujoma. So things slowed down. SWAPO, which is the ruling party, went in for a leadership nomination and currently chose the president that is the President of Namibia today, but went to a general election and she won and she was inaugurated this year in March. Also, there were some changes that we saw in Namibia, where the Ministry of Energy is being brought under the presidency and all of this has delayed. We continue to work. But I want to stress, it's not that Chariot has suffered any particular delay. There has been, to our knowledge, no new licenses issued since we raised that money. We are confident we're getting there. I know that the Namibian authorities are working hard to start the ball rolling again. With regards to -- I believe the second question was on Morocco, Loukos. Yes, we did drill 2 wells. One was not successful. The other we felt was more successful. And at the time, our focus then shifted towards the Energean well, Anchois-3. And we all expected, I think it's fair to say, a different result to what we got. We're all quite shocked and surprised that the upside potential didn't come in. However, I want to stress that we found gas and we found gas where we thought we would find gas in the B Sands. So our focus went there, and we thought to preserve our position and move forward because obviously, we thought we were going to have a development earlier -- decision to develop Anchois earlier this year. Obviously, that is delayed. So the money was spent on the 2 wells, onshore Morocco and Loukos and obviously carry on with the various other business streams that we've mentioned.

Following the drilling last year, do you believe that Anchois is still a 500-plus Bcf project?

I'm going to ask Duncan to answer that question. Duncan?

Yes. So yes, I mean, I think it's too early for us to state exactly what the resource number is there. Obviously, we need to go through an audit of that number as we approach any potential development. I think from the work that we've done post the well, we're confident that the development can deliver material gas production, the range I mentioned in the presentation, sort of 70 million cubic feet to 100 million cubic feet a day, which does bring very material cash generation. The actual scale of the ultimate resources to deliver will depend upon the exact development scheme. So which sands do we drill, do we complete, do we tie into the development, which fault blocks do we add and when. So we need to get the balance right between the development scope and the economic potential of the project before then we can confirm exactly what resource base is going to be unlocked through a chosen development. And we'll make sure that we audit and announce the numbers at the right time corresponding to the ultimate chosen development scheme.

And what barriers have been encountered to achieving production onshore Morocco?

Well, the barriers, and I'll answer half and I'll ask Duncan to answer the other. There are no barriers in effect from a legal and a regulatory point of view to producing gas onshore Morocco. You do some flow tests and ensure that whatever gas we have there is sustainable to produce meaningful gas that we can supply to the local industry. And as we've said before, you talk about 5 MMscfd to 15 MMscfd a day, and that's what we're going to go for. So more work is needed to do that. And we had a mixed bag of results on the 2 wells that we drilled. But Duncan, I don't know if you want to add to that.

No, I think on the previous question that was asked, Adonis, you answered much of it. I mean, we drilled those first 2 wells, had encouraging results and had planned to progress with sort of flow testing. But unfortunately, the results and the follow-up from the Anchois-3 campaign really sort of changed the focus and the forward direction somewhat. I'd say we're very encouraged by the work we've done on the seismic reprocessing and looking at additional exploration plays that we hadn't recognized before because the seismic imaging didn't allow it. So actually, what we've been able to bring into the portfolio in Loukos are not only the opportunity to appraise to test and to potentially commercialize those 16 Bcf of discovered resources that we covered in the presentation, but also to go to drill more meaningful individual prospects in new plays, which can bring a sort of step change in the value of that asset. And that is something that we've been using to sort of educate and present to potential partners on the project. And if we can ultimately deliver a drilling campaign that covers both appraisal and testing of existing resources, but also testing some of those new opportunities, that would be ideal for us.

Did the $67 million capitalized subsidiary company transferred back to Chariot from Energean include any funds in it?

Simple answer is no, it didn't. But we took back -- many tens of millions of dollars were spent. We now have that back. And more importantly, we have all the data and the knowledge back. We've learned a lot from that campaign.

You have been on this journey for a few years now. What do you feel has and hasn't worked?

We set out a plan 5 years ago to build a transitional energy business. And I think you can see we've done that. And in many ways, the renewable side of the energy business has been a big catalyst for us realizing value now and for being able to spin it out. So I think we've largely hit the targets we said we were going to do. We wanted to have a near-term gas development. We still believe Anchois is there. We've grown that business. We built a very successful renewable energy business, and we secured -- and people don't speak about this now because it's not the theme, we secured one of the best green hydrogen projects in the world with a Tier 1 partner. Green hydrogen is not flavor of the month, but it will come back and our project in Mauritania is probably one of the best in the world when it does return. So I think on the big things we've delivered, right, where it is disappointing for us is that we really all thought that Anchois-3 was just merely a decision in doing a larger development. And now we have to relook at the numbers and probably work on a smaller development. Could we have done things any differently? Perhaps there's a few things in the -- smaller things maybe we could have been more efficient here and there. But in the large theme of what we told people we're going to do, we've done it, and we've achieved what we said we're going to do. Unfortunately, that has not been reflected in our share price. And I think that's largely got to do with the disappointing Anchois-3 well last year. Is there any plan to conduct a share consolidation before a demerger of the renewable portfolio?

Is there any plan to conduct a share consolidation before a demerger of the renewable portfolio?

So we've spoken about this quite extensively internally. As Jules mentioned earlier on, we're looking to demerge the renewable energy business and the likelihood is probably going to be listed on AIM. And that might be the time to look at restructuring the upstream business as well and to do them sort of in one go together and you have these 2 sort of independent listed companies. And that -- yes, it's a possibility, and we have looked at doing that. I can't definitively say we're going to do it now, but it's something that has definitely been discussed.

Will Chariot shareholders be allocated shares in a new renewables company? And will they both have separate boards in the event of an IPO?

The answer is yes. For every share that you have in Chariot today, you'll get an equivalent share in the new listed vehicle. And clearly, it's a chance for us to restructure, reshape the Board, taking into account that we've got a lot of corporate memory, which we don't want to lose and splitting that and sharing that between the 2 companies. But it's also an opportunity for us to reinvigorate, reinvent, add more skills to both companies.

And if the renewables side is sold rather than demerged, will the funds be returned to shareholders?

Funds will come back into the E&P business and we'll look to see what we do there depending on the plans in the E&P business, should the business be sold, if there's no use for those funds in the E&P side of the business, we'll return them to shareholders.

Have efforts been made to reduce costs such as Board and management salaries?

Yes, quite extensively. After the Anchois-3 well last year, we took some drastic decisions. Board compensation was cut as well as, and I want to stress as well as not just the Board, senior management took a haircut in salary, and we cut down costs elsewhere in the business significantly.

And the Board commit to improving future communications with shareholders?

Yes, we want to have a good relationship with our shareholders, and we want to continually speak with our shareholders. I think the last 9 months, when we had, call it, the shock of the Anchois-3 well, we had to sit down and see how do we get through this. And truth of the matter is until we got control back of our offshore acreage, there was not much we could do because we were not operators. On the renewable energy business, maybe Etana and the financing thereof took slightly longer than we thought, but we will report when we feel there's something meaningful to tell shareholders, we're going to report it.

The company spent approximately $15 million in 2024 in share-based payments, G&A and hydrogen costs. How much money is forecast to be spent on those items this year?

Julian?

Okay. So just very quickly, we had a very operational year in 2024, probably the most in Chariot's history. We're scaling up for a development. We were drilling -- we drilled 3 wells, and we significantly progressed our business in South Africa. And then after the well, we obviously, as Adonis said, we restructured the business. Going forward, we're going to look to demerge the 2 businesses. So there will be sharing of costs between the 2 businesses. Also the financing that we have done in the -- at the subsidiary level will significantly reduce our overhead burn as well. We have enough cash for the next 12 months at least, and that's if we just sit on our hands and do nothing else. But as we've said, we are progressing the different business streams towards that first cash flow, which should then make these businesses sustainable in the long term.

What does management see as the key triggers for a share price rerating over the coming 6 to 12 months and beyond?

So we need to -- there's 2 parts. So on the upstream side of the business, we clearly need to deliver partnerships and take our Moroccan business forward to the next level as we described over here in the presentation. I think having some high-impact exploration in the right areas like Namibia will definitely be a positive, specifically in the Orange River Basin, where there's been huge success recently. I think bringing in some producing assets so that shareholders can see that there's a cash flow coming in will also help rerate that business significantly. On the renewable energy side, it's obviously the IPO and it's what's the actual start when we start trading electrons in Etana because remember, we're not far away from positive cash flows in Etana and people can just see that money coming in. There will be new projects announced, new growth in the renewable energy portfolio. We're not sitting still. And I think that in itself will create a lot of value.

And the final question, can shareholders expect to see a steady stream of positive news flow going forward?

Definitely, shareholders are going to see news flow going forward. We believe and hope and pray that all of it is positive, and that's what we're going for. I think we're putting our -- every effort into making this business successful. And as I said, all of us have followed our money here. We're investing in the business. We get rewarded and suffer along with our shareholders depending on what we do. So we're aligned.

And I will now hand back to Adonis for closing remarks.

Thank you very much. And again, shareholders, thank you for your time. I just want to conclude by saying we're creating now, as you can see, 2 stand-alone business units that are in an emerging market. It's on an untapped African continent. And Africa has the resources to provide power in all shapes and forms to this ever hungry and energy-demanding and energy-consuming world. And that is only going to get worse. The world needs more energy, more power in all its forms, and we hear about what -- how much energy AI needs. And we're playing into this whole universe where the energy infrastructure is being replumbed along with the electricity infrastructure and this new world that is taking shape, Chariot sits there. Chariot is lucky enough to sit right within that mix, I say. And we're going to look to take advantage of these opportunities and provide solutions to supplying this energy not only across Africa, but to the rest of the world as well. And I'd say for a small company, we punch a little bit above our weight. We have a broad energy mix that caters for all possible energy sources and requirements, and we see a great deal of growth and possibility with both businesses going forward. Again, it's been a tough 12 months. It's been, I can imagine, very frustrating for our shareholders. We thank you for your continued support. We will communicate with you as often as we can. And once again, thank you for your time this morning.

That concludes today's presentation. I would now ask listeners to please take a moment to complete a short survey following the event and a recording of this presentation will be made available on Engage Investor later today.