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Chariot Oil and Gas plc

Chariot Oil & Gas firms up potential at Lixus acquisition with CPR

Snapshot

“Lixus allows lows us to ally elephant hunting with low-risk product and exploration targets.

Gas plant

Quick facts: Chariot Oil and Gas plc

Price: 3.345 GBX

Market: AIM
Market Cap: £12.29 m
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  • Junior oiler with acreage in Morocco, Brazil and Namibia

  • Traditionally specialised in Frontier or wildcat exploration for huge targets

  • Added production assets in Morocco with Lixus acquisition

What it does

Chariot Oil & Gas Ltd (LON:CHAR) traditionally has targetted blue-sky discoveries.

The Lixus acquisition broke from the tradition, as the company picked up new acreage that already has a discovery.

It is a switch from high-risk wildcat drilling to a lower risk appraise-and-explore approach.

There’s still the requisite upside potential and blue-sky to keep Chariot’s stock market following engaged, though this time it is grounded in more certainty than the big-hit-or-big-miss type projects that have been pursued in the past.

How it's doing

A competent person's report for Lixus in September detailed multi-TCF gas potential – with 1 trillion cubic feet of recoverable gas seen at Anchois, plus 308bn cubic feet at the Anchois North ‘priority’ satellite and some 1.2 trillion cubic feet of prospective resources in the other on-block prospects.

Chariot noted that a development feasibility study and gas market assessment has been completed for the Anchois gas field.

The former confirmed it is technically feasible as either a single-phase or multi-phase project to optimise access to different parts of the gas market, while the latter defined a ‘fast-growing energy market with strong gas prices’.

The company has begun an environmental impact assessment (EIA) for a drill campaign and it has also opened a data-room so that potential farm-out partners can evaluate the opportunity further.

Similarly, farm-out efforts continue for the group’s high-impact exploration opportunities elsewhere in Morocco and Brazil.

Chariot continues desktop work to evaluate its Namibia acreage whilst integrating the findings of the Prospect S well (drilled in late 2018).

It also highlighted that other operators are due to drilled offshore Namibia in 2020, including one in a block adjacent to Chariot’s.

In terms of the financial results, the pre-revenue explorer reported a US$1.86mln loss before tax for the six month period.

At the end of June, it had US$12.13mln of cash and equivalents and was debt-free.

Chariot noted that all its licence work commitments, totalling less than US$1mln, were fully-funded.

What the boss says: Larry Bottomley

“Lixus allows lows us to ally elephant hunting with low-risk product and exploration targets.”

“It is just to the north of our existing assets in Morocco and has a low work commitment:

These are a processing campaign, feasibility study, appraisal of the gas market and a decision on how to finish the programme."

Video

Inflexion points

  • Farm-out opportunity in Namibia, Brazil and Morocco
  • Fully funded for work programmes to get Lixus into production
  • That can be with a single or multi-stage process

Blue Sky

In a note to clients, analysts at ‘house’ broker finnCap said: “Chariot’s rating has been heavily depressed by the two dry holes last year in Morocco and Namibia and the need to secure funding for additional drilling.

 “With data rooms open in three regions – Brazil, Morocco and Namibia – and now a range of risk/reward opportunities within Morocco, the prospects for a successful farm-out must have been improved by this latest licence award.

 

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Watch

Full interview: Chariot Oil & Gas reports more than 2 TCF of gas at Morocco...

Chariot Oil & Gas Limited's (LON:CHAR) Larry Bottomley discusses with Proactive London's Andrew Scott the results of a new third-party assessment of the recently acquired Lixus project area offshore Morocco. Five additional exploration prospects present more than 1.2trn cubic feet (TCF)...

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