A flash blog this morning from Cape Town, as usual, if anything needs further attention I will add…
Chariot
Chariot has announced that it has increased its stake in the South African electricity trading company Etana Energy (Pty) Limited alongside H1 Holdings (Pty) Limited (“H1”).
On completion, Chariot will own 49% (previously 25%) and H1 will own 51% (previously 26%) of Etana. This transaction involves Chariot and H1 in substance acquiring the 49% of Etana previously held by the Neura Group, on identical pro rata terms. H1 is a black-owned and managed company based in South Africa, which has a proven track record in developing and investing in large renewable projects.
· Etana holds one of the few electricity trading licences granted by the National Energy Regulator of South Africa, enabling it to buy and sell electricity through the national transmission grid.
· South Africa has the largest electricity market on the continent, but it suffers regular power outages due to insufficient supply. To combat this energy crisis, rapid market deregulation is currently taking place, facilitating the build of renewable energy projects.
· Etana’s business plan is to deliver unique renewable energy mix solutions at competitive prices to help address these significant power requirements across South Africa, with the trading licence opening up access to high-volume electricity consumers, including municipal, industrial and retail customers.
· Electricity trading will bring an additional revenue stream into Chariot and further enable Chariot’s participation in large renewable projects in Southern Africa.
Benoit Garrivier, CEO of Chariot Transitional Power commented,
“We are very pleased to be increasing our exposure to the South African energy market by acquiring this additional stake in Etana. We will not only get an increased split of future revenues, but the electricity trading business unlocks significant renewable generation capacity which we are looking to develop in South Africa. We are tapping into the future growth of an essential market, one that is rapidly transforming and expanding, and we look forward to playing a material role within this together with H1 and other major commercial partners.”
Reyburn Hendricks, CEO of H1 Holdings commented,
“As a long time independent power producer in the South Africa electricity market, we are convinced that the way to unlock project finance based power generation projects is through the utilization of privately licensed trading companies. As one of the first movers in this space, we believe that Etana is well positioned to capitalize on this exciting opportunity.”
This seems like a smart deal to me, Chariot accesses the potentially exciting and more importantly crucially and increasingly needed renewable projects.
Key deal terms:
· Chariot is acquiring 49% of Etana from the Neura Group, with H1 acquiring 25% of Etana from Chariot, contemporaneously. This transaction results in a simplified ownership structure and commercial terms are identical for Chariot and H1 on a pro rata basis.
· Upfront cash consideration is net c.US$0.3m on completion with a further c.US$0.7m payable by 31 March 2024.
· Success based contingent payments of net c.US$1.6m on financial close of a 250MW generation project and a further consideration of net c.US$2.6m payable in 2028, subject to further significant generation projects reaching financial close.
· The upfront consideration will be paid from current cash balances with success fees payable from future subsidiary level project finance.
Disclosure relating to Chariot
Adonis Pouroulis, CEO and director, of Chariot, beneficially controls 28.21% per cent. of the total voting rights in the Neura Group. The Neura Group is not considered to be a related party for the purposes of the AIM Rules for Companies and the Company confirms that the transaction was negotiated on an arms-length basis between Chariot, H1 and the Neura Group sellers.
Kistos
Further to its announcement of 12th December 2023, Kistos, a joint venture partner in the Greater Laggan Area and co-owner of the Shetland Gas Plant, today provides an update on the recent shutdown of the plant.
Following repair to the heating medium system, the Shetland Gas Plant safely restarted the export of gas on the 16th December.
Andrew Austin, Executive Chairman of Kistos, said:
“We would like to thank the teams at TotalEnergies for their swift and highly professional approach to this incident, both in the immediate response, and then the subsequent investigation and implementation of the engineering works to successfully ensure the plant was safely restarted and back to full production.”
Diversified Energy Company
Diversified has announced that trading in its ordinary shares will commence at U.S. market open today on the New York Stock Exchange under the ticker symbol “DEC” as part of the Company’s previously announced US listing process. The Company will retain its premium listing and will continue to trade on the main market of the London Stock Exchange (LSE). Further, it is expected that the Company will also continue to be a constituent of the FTSE 250 index in the UK. No ordinary shares are being offered or sold in connection with the US listing.
The Board believes that the US listing will benefit the Company and its shareholders for multiple reasons, including raising its profile in the US. The Board expects that the US listing will facilitate broadening the Company’s access to high-quality equity investors (including domestic US funds) and will also increase the Company’s ability to attract a broader group of equity research analysts as there is a comparable set of peer companies listed in the US which have a strong US equity investor base and are covered by a broad group of equity research analysts. The Board also expects that the US Listing will enhance the Company’s daily trading liquidity and potentially provide it access to additional financing options, which can be used to continue the Company’s acquisitive strategy.
Rusty Hutson, Jr., CEO of the Company, commented:
“The additional listing on the NYSE is an important milestone and was a high-priority strategic initiative for the year. We expect the NYSE listing will facilitate increased ownership by US domestic funds over time. The executive team plans to undertake additional investor engagement to enhance understanding and awareness of why we believe that as the natural consolidator of existing mature assets under our stewardship-based strategy, we are the RIGHT COMPANY at the RIGHT TIME.”
Additionally, John Tuttle, Vice Chair of the NYSE Group, said:
“We are thrilled to welcome Diversified Energy, a leading US domestic producer of natural gas, to our NYSE community. As the listing venue for many leading energy companies, Diversified Energy will feel right at home at the New York Stock Exchange.”
Not new this but definitely good news from DEC who confirm their listing in New York where they will have the added advantage of more investors. Also potentially another route to raise money if the market allows. I would like to think that US investors will appreciate DEC a bit more than they are at the moment what with a yield of over 15%.
Wentworth Resources
Wentworth today provides an update on the offer from Etablissements Maurel & Prom S.A. which is now expected to complete before 31 December.
Background
On 5 December 2022, the boards of Wentworth and M&P announced that they had reached agreement on the terms of a recommended all cash offer by M&P for the entire issued, and to be issued, share capital of Wentworth (the “Acquisition”). The Acquisition is to be implemented by means of a scheme of arrangement pursuant to Article 125 of the Jersey Companies Law. The circular in relation to the Scheme was published or made available to Wentworth Shareholders on 25 January 2023 (the “Scheme Document”).
The Acquisition was approved by Wentworth Shareholders at the Court Meeting and the General Meeting which were held on 23 February 2023, but remains subject to the satisfaction or (where capable of being waived) waiver of the other Conditions to the Acquisition as set out in Part III (Conditions to and certain further terms of the Acquisition and the Scheme) of the Scheme Document
These Conditions include, inter alia, (i) consent from the Minister responsible for petroleum affairs in Tanzania under the Petroleum Act 2015 and any other applicable laws; (ii) the waiver of any right of first refusal or pre-emption right to which by the Tanzania Petroleum Development Corporation (“TPDC”) is entitled in respect of the Mnazi Bay asset; and (iii) approval from the Tanzanian Fair Competition Commission (“FCC”), in each case on terms satisfactory to M&P, acting reasonably.
On 6 December 2023, the board of Wentworth announced that it had made arrangements for a Court Sanction Hearing to be held on 19 December 2023. On 7 December 2023, M&P announced that it had signed an agreement with TPDC pursuant to which M&P received the required pre-emption waiver from TPDC and Tanzanian government approval for the Acquisition. M&P noted in this announcement that the only outstanding condition to the Acquisition is approval from the FCC and that this approval was expected to be received prior to 19 December 2023.
Current Status
The board of Wentworth is pleased to confirm that FCC approval of the Acquisition has been received. As a result, the Court will be asked to consider, and if thought fit, sanction the Scheme at the Court Sanction Hearing scheduled for tomorrow, 19 December 2023.
If the Court sanctions the Scheme, the only outstanding condition to the Scheme will be the delivery of the Court Order to the Registrar of Companies. Subject to the Scheme receiving the sanction of the Court, the delivery of a copy of the Court Order to the Registrar of Companies and the satisfaction (or, where applicable, the waiver) of the other Conditions set out in Part III of the Scheme Document, the Scheme is expected to become effective on 21 December 2023. The expected timetable of principal events for the implementation of the Scheme is set out below. If any change to the key dates and/or times set out in the timetable are made Wentworth will give notice of this change by issuing an announcement through a Regulatory Information Service and such announcement will be made available on Wentworth’s website at www.wentplc.com/investors/offer-for-wentworth/
With this approval the M&P takeover of Wentworth is nearly done, the court sanction final hearing is tomorrow and after that final approvals should be a formality. Shareholders have been very patient but the moolah should be in the bank very soon in the new year.
Serica
Serica has announced the signing of a new US$525 million secured Reserves Based Lending facility.
Mitch Flegg, Chief Executive of Serica, commented:
“I am very pleased to announce the signing of a new RBL facility which substantially enhances Serica’s financial firepower. This has been achieved in a challenging market for upstream financing. The standing of the international banks in the lending syndicate reflects the quality of Serica’s asset portfolio, strong balance sheet and ambitions for further growth. The new facility, combined with our existing attributes, means that Serica can approach acquisition and investment opportunities from a position of considerable strength.”
This is a very good RBL from Serica in a sector that banks are allegedly refusing to lend to, their bad as Mitch Flegg and his excellent team have been doing great things in the M&A area lately, banged on for the 2024 Bucket List when surely investors will be rewarded.
The new RBL facility replaces Serica’s existing RBL and Junior facilities. The existing RBL facility has US$271 million drawn and will be fully repaid upon completion of the new RBL facility, which is expected to occur in January 2024. The Junior facility remains undrawn.
Facility Highlights
· Significantly increased liquidity to support future acquisitions and investments.
· Option of potentially doubling RBL facility to over US$1 billion through an accordion[1] feature.
· Debt maturity deferred by more than two years to end 2029.
· Establishes new relationships with a syndicate of leading international banks.
· Simplified financing arrangement with single facility.
Description of new RBL facility
· US$525 million revolving credit facility available in multiple currencies. Serica’s existing RBL facility is in amortisation phase with capacity falling to US$330 million at the end of 2023.
· Maturity date of 31 December 2029 with amortisation commencing on 31 December 2026. Serica’s existing RBL facility matures on 30 June 2027.
· Additional uncommitted accordion option of a further US$525 million increasing the potential total facility to US$1,050 million.
· $100 million sub limit which can be utilised to issue Letters of Credit without the need for cash security.
· The Borrowing Base Assets comprise all of Serica’s interests in producing fields except the Rhum field.
· Available amount under the facility is subject to semi-annual redeterminations.
· If 50% or more of the amount available is drawn, the minimum commodities hedging requirement is equal to 50% of forecast production from the Borrowing Base Assets in year one and 30% in year two. The hedging requirement is halved if less than 50% of the amount available is drawn.
· Initial interest rate for loan drawings of SOFR[2] plus a margin of 3.90% per annum. The margin under the existing RBL facility is 3.10% per annum.
· Net Debt to Adjusted EBITDAX financial covenant £ 3.5x, tested semi-annually.
Deltic
Deltic has provided a further update on progress on Pensacola and Selene.
Pensacola
The JV has now finalised the positive well investment decision on Licence P2252 and approved the 2024 work programme and budget that allows for drilling the Pensacola appraisal well in late 2024.
Selene
Shell U.K. Ltd, the Operator of Licence P2437, has informed Deltic that the geotechnical site investigation works on the preferred surface location of the Selene exploration well has been successfully completed and the vessel has been de-mobilised from site. The results of this work will be incorporated into the operational drilling plan. The well remains on track to be drilled in Q3 of 2024.
As expected Deltic is on track for an exciting and busy 2H 2024 and when both these wells are on track to be drilled.
United Oil & Gas
United has announced an update on the ASD S-1X exploration well on the ASD south prospect in the Abu Sennan licence, onshore Egypt. United holds a 22% working interest in the licence, which is operated by Kuwait Energy Egypt.
Summary
The ASD S-1X well commenced drilling on 11 November and reached a total depth of 3450 metres on 12 December, ahead of schedule and under budget.
The well has subsequently been logged and petrophysical analysis by the operator indicates the presence of a total of 9.5 metres of net pay across the targeted Abu Roash C (AR-C), Abu Roash D (AR-D), Abu Roash E (AR-E), Bahriya and Kharita formations, with 6 metres net pay encountered in the primary AR-C reservoir. The well will now be completed and tested in the coming days, with a further update once test results have been received from the operator.
If the flow test results prove the presence of a commercial hydrocarbon accumulation for this exploration well, an application for a development lease will be submitted to Egypt General Petroleum Corporation for this area ASD S.
The completion of the ASD S-1X well will conclude the drilling programme for the Abu Sennan License in 2023. A comprehensive drilling programme for 2024 is being finalised with the JV partners on the Abu Sennan Licence and is anticipated to start in early January with the drilling of the ASH-10 development well on the ASH Field.
United Chief Executive Officer, Brian Larkin commented,
“We are pleased with the petrophysical analysis from the ASD S-1X exploration well which shows the presence of net pay of 9.5 metres of hydrocarbons and look forward to the results of the testing over the coming days. The additional data from the testing will enhance our understanding of the potential in this area of the licence. This brings to an end our 2023 drilling programme.”
This looks OK for UOG who have had a torrid time this year what with Maria, Jamaica and sundry key staff and directors leaving. Still I’m confident that with this Egyptian play going at an OK but sub-scale level they will be able to grow in other areas…
Trinity Exploration & Production
Trinity has today provided an update on operations at its Jacobin oil discovery.
Trinity safely perforated the two Lower Cruse 1 zones on 28 November 2023. Initially the well flowed clean black oil with a very high Tubing Head Pressure (THP) of around 2,500psi on a very small 12/64th inch choke. The well was also flowing considerable volumes of gas, which, when mixed with oil and water, produced a viscous emulsion at surface.
The well flowrate was initially unstable, flowing at a rate of between 80 to 160bpd of fluids including varying volumes of water and an unquantified rate of gas. The emulsion issue was managed by injection of speciality chemicals at the wellhead and on 10 December 2023 the well was diverted into a separator to allow the flow rates, including the gas rate, to be more accurately measured. The oil is of good quality with API density measured at 31.7 degrees at 60°F.
In recent days the flow rate from the well has begun to decline and given that the presence of gas and water was not anticipated from the original well log interpretation and so Trinity is embarking on a series of data gathering exercises, starting with a pressure gradient survey in the next week, potentially followed by a Production Logging Tool (“PLT”) run that will help determine how best to optimise the oil production rate.
The initial results confirm the presence of oil in the Lower Cruse 1 formations and given the presence of confirmed oil in the Lower Cruse 3 horizon as previously announced provides further proof of concept that these deep horizons contain producible hydrocarbons.
The various data gathering exercises outlined above will be completed in January 2024 and decisions will be taken on how best to optimise production from the well. The results of these activities will also help the Company’s decision-making process for the adjacent Buenos Ayres licence where Trinity intends to drill a further exploration well next year.
Now that the completion of the Lower Cruse 1 zones has occurred, the majority of the key activities have been completed, and we estimate that the undisputed costs incurred to date thus far to be USD 8.3 million, of which USD 6.2 million has already been paid. There is an amount of USD 2.3 million which falls outside of the drilling contract provisions, and pertains to costs incurred while drilling the well. As previously reported, Trinity expects to settle the total cost of this well, without recourse to any external finance.
The Company will continue to keep the market informed of progress on Jacobin operations.
Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:
“The well has reinforced our confidence in the potential of the deeper play despite the operational challenges encountered with the Jacobin well. We have flowed volumes of good quality oil and demonstrated the potential for producible oil in the deeper horizons. Our work now will be to gather further data that will inform next steps in terms of establishing the full production potential of the well.”
This is a really disappointing result for Trinity who have been relying on something big from Jacobin but it now looks borderline commercial, for a well that was going to be the next great hope for the company it is a very sad state of affairs indeed.
Tower Resources
Tower has announced that, further to the Company’s announcement earlier today outlining the proposed subscription for 3,000,000,000 new Ordinary Shares, the Company has successfully placed 3,000,000,000 new Ordinary Shares and raised gross proceeds totalling £600,000 at a Subscription Price of 0.02 pence per share. The Subscription Price of 0.02 pence per share represented a 13% discount to the closing bid price of the Company’s shares on 15 December 2023.
Pursuant to the Subscription, Jeremy Asher, Chairman and CEO, has entered into an Agreement (the “Subscription Agreement”) to subscribe for 400,000,000 new Ordinary Shares in the Subscription for £80,000 as detailed below.
The participation of Jeremy Asher (the “Director Related Party”) constitutes a related party transaction in accordance with AIM Rule 13. Accordingly, Paula Brancato and Mark Enfield, the Director’s independent of the Subscription consider, having consulted with the Company’s Nominated Adviser, SP Angel Corporate Finance LLP, that the terms of the Director Related Party participation in the Subscription is fair and reasonable insofar as the Company’s shareholders are concerned.
The following table sets out the Directors’ shareholdings and percentage interests in the issued share capital of the Company following completion of the subscription.
|
|
Holding prior to the announcement of Proposed Subscription |
Number of Subscription Shares acquired pursuant to the Subscription |
Immediately following Admission of the Subscription shares |
|||
|
|
Number of Ordinary Shares |
% of issued share capital |
Number of Ordinary Shares |
Number of Ordinary Shares |
% of issued share capital |
% of fully diluted share capital |
|
Jeremy Asher* |
611,603,608 |
6.46 |
400,000,000 |
1,011,603,608 |
8.11 |
7.18 |
|
Mark Enfield# |
1,877,546 |
0.02 |
– |
1,877,546 |
0.02 |
0.01§ |
|
Paula Brancato# |
– |
– |
– |
– |
– |
– |
* Includes shares held directly and via Agile Energy Ltd and Pegasus Petroleum Ltd which are owned by the Asher Family Trust of which Jeremy Asher is a lifetime beneficiary
# Independent Director
§ This figure describes the ratio of shares held immediately after admission to the fully diluted share capital; in the event that Mr Asher and Mr Enfield exercised all warrants and options they hold and continued to hold those additional shares after exercise, then their respective shareholdings after full exercise as a percentage of fully diluted capital would be 12.7% and 0.7% respectively.
Share Capital Following the Subscription
Application has been made for the Subscription Shares to be admitted to trading on AIM. It is expected that Admission of the Shares will become effective and that dealings will commence by 8.00 a.m. on or around 10 January 2024.
Following admission of the Shares, the Company’s enlarged issued share capital will comprise 12,467,459,075 Ordinary Shares of 0.001 pence each with voting rights in the Company. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in the interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.
Warrants and Options in Issue
Following the issue of Broker Warrants the total number of Warrants and Options in issue is 1,615,088,147 equating to 11.5% of the Company’s enlarged share capital assuming full exercise of all warrants and share options.
What, a placing from Tower, I would never believe it…surely shome mishtake.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion
