Malcy’s Blog – Oil price, Shell, Chariot, Zenith Energy & finally

WTI $66.50 +93c, Brent $69.67 +80c, Diff -$3.17 -13c, NG $4.06 -20c, UKNG 233.8p -4.2p

By Malcolm Graham-Wood

Oil price

No surprise there then as Opec+ proceed with 400/- b/d increase but interestingly keeps the meeting technically ‘in session’ which means that they can revisit quotas at any time in order to monitor the impact of Omicron on supply and demand. Basically it means that the Saudis through oil Minister Prince Abdulaziz bib Salman or the Russians can move very quickly if needed. Given my well documented and amusing coverage of the KSA taking on the hated traders anything could happen but I suspect that prices are in quite a good place.

As if it were needed the deal has pulled the wool over the eyes of the White House, not over-endowed with experts in the energy industry who took it hook line and sinker by saying that it was their ‘partners in Opec+ ie the KSA and UAE that are addressing price issues’. Too right but not the way you think they will….

Shell

I don’t often mention the majors so twice in a week for Shell who yesterday decided not to go ahead with the Cambo project much to the disappointment of Siccar Point. Citing the economic case not being strong enough and potential for delays the major has back-burnered this one. So, another loss of investment that will push oil prices upwards in the longer term…

Chariot

Chariot announces that further to the Company’s announcement released at 4.30 p.m. on 2 December 2021, the Bookbuild has closed and the Company has conditionally raised gross proceeds of US$9.5 million (£7.1 million) through the successful Placing of, and Subscription for, 101,639,842 New Ordinary Shares, in each case at the Issue Price of 7 pence per Ordinary Share.

In addition to the Placing and Subscription, and as set out in the Launch Announcement, the Company proposes to raise up to a further US$2.0 million (£1.5 million) by the issue of New Ordinary Shares pursuant to an Open Offer to Qualifying Shareholders at the Issue Price on the basis of 1 Open Offer Share for every 30 Existing Ordinary Shares held on the Record Date. Qualifying Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through the Excess Application Facility. Details of the Open Offer and the action to be taken by Qualifying Shareholders to subscribe for Ordinary Shares under the Open Offer will be set out in the Circular, which will be sent to Shareholders on 7 December 2021.

The gross proceeds includes US$1.5 million (£1.1 million) conditionally raised from certain of the Company’s Directors, as part of the Subscription. The Placing Shares and Subscription Shares represent in aggregate 16.0 per cent. of the Company’s Existing Ordinary Shares. The Issue Price represents a discount of approximately 0.43 per cent. to the mid-market closing price on the London Stock Exchange of 7.03 pence per Ordinary Share on 1 December 2021.

The net proceeds of the Fundraise will be used to:

·    Re-enter the Anchois-1 discovery well as an additional value-accretive work opportunity capitalising on a low-cost rig rate secured for the Anchois-2 appraisal campaign, due to spud in December 2021, offshore Morocco;

·    Finalise negotiations of gas sales agreements and financing to unlock FID on Anchois;

·    Progress new ventures on debt fundable, material producing gas assets focused on Africa;

·    Fund a feasibility work programme on large-scale green hydrogen project in Mauritania;

·    Progress the rapidly developing Transitional Power project pipeline under recently expanded partnership with Total Eren.

Commenting on the Fundraising, Adonis Pouroulis, Acting CEO of Chariot, said:

“In addition to the ongoing support of our existing shareholders, I am also pleased to welcome a number of new institutions onto the register. I can confirm that myself and my fellow directors subscribed for a material amount of the raise, all of which resulted in the fundraise being significantly oversubscribed. We recognise our strong retail investor base, and we encourage them to support the business with its growth ambitions via the Open Offer. In closing, we look forward to providing further updates as we head into a busy operational period for the Company.”

“In addition to the ongoing support of our existing shareholders, I am also pleased to welcome a number of new institutions onto the register. I can confirm that myself and my fellow directors subscribed for a material amount of the raise, all of which resulted in the fundraise being significantly oversubscribed. We recognise our strong retail investor base, and we encourage them to support the business with its growth ambitions via the Open Offer. In closing, we look forward to providing further updates as we head into a busy operational period for the Company.”

Readers will know that I am confident that the building blocks that the Chariot management have been putting in place this year will ensure that the company becomes a major force in African energy in years to come. This raise, which has been well supported by existing and some new shareholders, as well as typically massively support from the board has also been extended to existing shareholders under an Open Offer. 

The raise will ensure that work on the Anchois field due to spud shortly will be extended to re-entry of the original gas discovery well in addition to already planned separate gas appraisal well and in addition to that will facilitate the ongoing discussions with regard to potential GSA’s. It should also make it possible to fast track other work in Morocco including unlocking the FID. 

For those who attended the recent presentation, which was incredibly positive, know that there are a number of new ventures in Africa in particular with regard to the partnership with Total Eren in power projects as well as the hydrogen project in Mauritania all of which will be funded from this raise.

Zenith Energy

I caught up with Andrea Cattaneo, CEO of Zenith Energy yesterday, a lot has changed at Zenith since I last looked and now it is an Africa facing stock. With production in Tunisia and hopefully more to come, a planned exposure at some stage to Nigeria as well as the infamous Tilapia well in Congo Brazzaville they are very busy.

This is the link to the interview.

Core Finance CEO Interview: Andrea Cattaneo of Zenith Energy

And finally…

Another big weekend, with only 2 races left the F1 caravan moves to Saudi Arabia and the new Jeddah Street Circuit, at present Max is faster in practice, and of course carries an 8 point lead in the title race.

It’s Tingle Creek Day at Sandown Park tomorrow, one of the best in the calendar in my view. With Aintree as well there is much opportunity to watch great jumping.

Rugby sees many good fixtures, the sides are all amazing but the Chiefs v the Sarries on Saturday and the Tigers v the Quins on Sunday should be great.

In the Prem last night Spurs beat the Bees 2-0 and the Red Devils beat the Gooners 3-2, the new boss starts on Sunday.

The weekend fixtures include a couple of tasty derbies, Chelski visit the London Stadium to take on the Hammers and its the south coast Riviera derby as the Seagulls visit the Saints. Elsewhere tomorrow the Magpies host Burnley, Liverpool go to Wolves and the Hornets host the Noisy Neighbours. On Sunday Leeds entertain the Bees, the Eagles go to the Theatre of Dreams, Spurs host the Canaries and the Foxes go to the Villa.

The opinions expressed here are those of the author

Malcolm Graham-Wood

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Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the blog


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