Chariot Limited (AIM: CHAR): Milestone for the electricity trading business in South Africa
• Etana Energy (49% held by Chariot) has signed a PPA with Growthpoint Properties to supply 195 GWh per year of renewable energy. Etana will wheel electricity to their commercial property buildings located in several jurisdictions in South Africa.• The electricity that will be wheeled by Etana includes 30GWh per annum of hydroelectric power from Serengeti Energy. The plant is currently under construction and is expected to start production in 2Q25.
• Etana will be paid a fee for the electricity wheeled through the grid.
• While the terms of the agreement have not been disclosed this is an important part of the electricity business that Chariot is building. This is also South Africa’s first multi-jurisdiction, multi-building, multi-source renewable energy wheeling arrangement.
• The electricity trading business is not only expected to enhance the margins of electricity generation but also to enable Chariot to secure interests in further power generation projects by capturing electricity commitments. These electricity generation/trading combined projects could potentially deliver double digit returns; which is much higher than similar projects in Europe.
• Chariot is already maturing its interest in 4 wind projects totalling a gross 400 MW using the trading business as the enabler that provides access to PPAs with end-users. It is currently meeting banks and other financial institutions to finance its involvement in these projects through project and mezzanine finance at the asset and subsidiary holding level.
• We re-iterate our target price of £0.50 per share.
Who is Growthpoint?
Growthpoint is a publicly listed real estate company trading on the Johannesburg stock exchange with a market cap near US$2 bn. The company has assets in South Africa, rest of Africa, Eastern Europe, Australia and the United Kingdom. Growthpoint owns a 50% stake in the V&A Waterfront and a majority stake in South Africa’s first healthcare property fund. The electricity contract with Etana represents 32% of Growthpoint total current annual electricity consumption.
Valuation
While the focus remains on the Morocco onshore and offshore drilling campaign with unrisked value of £0.13/sh associated with Anchois East and £0.11/sh with Gaufrette and Dartois, the power business could become increasingly material. The cost of capital for the power business is also likely to be lower than for the gas business. Our Core NAV for Chariot is unchanged at £0.28/sh. Our Sum of the Parts valuation stands at £0.53/sh.
Chariot Oil & Gas is an independent oil and gas exploration company focused offshore in West Africa with a portfolio of assets located in the under-explored regions of Namibia, Mauritania and Morocco.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.