Chariot (CHAR) H2 2024 earnings summary

Executive summary

• Announced plans to split into two core entities: Upstream E&P and Renewable Power, to unlock value and attract different investor bases.

• Upstream business focuses on gas assets in Morocco, new ventures in Namibia, and a shift toward near-term production assets.

• Renewable Power business includes Etana Energy (electricity trading in South Africa), generation projects in Southern Africa, green hydrogen in Mauritania, and a water business in Djibouti.

• Recent $7.1 million equity raise was oversubscribed, supporting both business units' growth plans.

• Management and board are major shareholders, aligning interests with investors.

Financial highlights

• Secured $175 million financing for Etana Energy, with Norfund investing $20 million for a 20% stake, implying a $100 million valuation for Etana.

• Chariot holds a 34% economic interest in Etana, with the current market cap reflecting only this value, not the broader asset base.

• Additional $155 million in balance sheet support for Etana from Standard Bank, BII, and GuarantCo.

• $600 million in total renewable generation projects, with Chariot holding ~25% equity in these projects.

• Cost reductions implemented post-Anchois-3, including board and senior management salary cuts.

Outlook and guidance

• Upstream business aims to secure near-term production assets and expand geographically, leveraging asset-level funding and partnerships.

• Renewable Power business targets further growth in South Africa and expansion into the Southern African Power Pool, with a focus on battery storage and new generation projects.

• Demerger of the two businesses planned, with potential IPO or sale of the renewable unit; shareholders to receive equivalent shares in the new entity.

• Positive news flow and cash generation expected as Etana and generation projects reach financial close and begin operations.