Chariot – a great week – one of many to come.

Chariot had an outstanding week this week and the Penny has started to drop on its massive transformational potential.

With a free carry announced the week before on Morocco with ENI, in addition to Woodsides involvement,  and then Tullow entering the drilling phase with Pancontinental in nearby Nambia acreage and in the current climate, it sends a massive vote of confidence on both Moroccan and Namibian acreage.  The cash back (to be disclosed) from ENI to Chariot will bolster its already good cash pile. Chariot therefore has a strong cash position,  more cash to come, a free carry – and that’s just the start. The increase in share price has been great – but the market has not yet valued the free carry! yet ….. and that’s a massive opportunity.

The Morocco farm out has, however,  released the pressure valve for long term shareholders a tad, and will play into Larry’s negotiations for further farm-outs. You can bet on it. Larry is a tough negotiator which has been painful at times, but will pay off going forward. (FYI: See here for an idea of potential back costs we are looking at in farm-out negotiations).

The change in share price trend could be seen a few weeks back although I must admit, I thought it was due to the Mauritania and Senegal success of Kosmos and Cairn and their respective partners. Given Kosmos and Cairn have had some of the largest discoveries in the world of both Oil and Gas in the last few years – and Chariot is in the same oil and gas fairway – you have to wonder what Larry will get for the Mauritania acreage! I expect it to be farmed out soon – and I expect more cash. Interestingly, Cairn are also our partner in Mauritania. DYOR and check how  many small AIM oil companies have a significant interest in Mauritanian acreage with its massive upside .. hint – there are only two. Chariot is one of them.

Chariot therefore, in my personal opinion,  has a very realistic chance of getting another RNS in the next 2 quarters for another free carry – and its most likely to be Mauritania. It might also be sooner than we think.

Imagine a situation of an AIM exploration company having two free carries on elephant prospects running simultaneously. Imagine what would happen if Namibia or Brazil then got a free carry and/or cash back. And if Tullow strike oil in Namibia …!!.

Chariot is now the best frontier exploration company on AIM. Period. And I bet Newlands capital think the same. Add to this the reducing free float and it becomes a perfect storm for a sustained trend upwards in share price.

I continue to accumulate – on pull backs – and took a massive chunk in the 4’s and 5’s not so long back. I am sure this was helped by plenty of de-rampers’ with clever sarcastic debating points. Thank you 😉 and  I will keep on accumulating up to £1.

The day traders will come and go – I am more of a long term accumulator investor. I am convinced this will be life changing for those with a similar strategy. You know who you are . Good luck…

Morocco – Farm-out – Rabat Deep – JP1

Excellent News: A free carry on a drill, cash-back etc

Note: The farm out still leaves Chariot with another Moroccan license to farm out in which it holds 75% – Mohammedia  – which could become very valuable if Rabat strikes.

Eni were the guys who recently discovered a ‘supergiant’ gas field – 20tcf off the coast of Egypt. Chariot is in good company with both ENI and Woodside as partners – both have the technical expertise to validate Chariots belief that Rabat is an elephant!

It was not so long ago that Woodside announced that sea bed coring was complete on the Moroccan Rabat acreage – an important piece of information – and an unusual step – in a good way.

Chariot Oil & Gas Limited

(“Chariot”, the “Company” or the “Group”)

Farm Out Agreement with Eni in Rabat Deep Offshore, Morocco

 

·      Eni to acquire 40% equity interest in, and operatorship of, the Rabat Deep Offshore exploration permits I-VI;

·      Eni to carry Chariot in a deepwater well on the JP-1 prospect, to an agreed cap;

·      Eni to carry Chariot for other geological and administrative costs relating to work commitments in the next licence period;

·      Eni to pay a contribution towards Chariot’s investment to date;

·      Funds to be used for continued development of Chariot’s portfolio; and

·      Completion is subject to receipt of Moroccan authorities and partner approvals.

 

Chariot Oil & Gas Limited (AIM: CHAR), the Atlantic margins focused oil and gas exploration company is pleased to announce that its wholly owned subsidiary, Chariot Oil & Gas Investments (Morocco) Ltd., has signed a farm-out agreement with a wholly owned subsidiary of Eni, which will acquire operatorship and a 40% equity interest in return for a capped carry on drilling the JP-1 prospect. Eni will also carry Chariot for other geological and administrative costs relating to work commitments in the next licence period of Rabat Deep and will pay a contribution which will equate to Chariot’s investment to date and be used for the continued development of Chariot’s portfolio. This agreement demonstrates Chariot’s ability to deliver on its strategy; seeking third party investment in order to de-risk and progress its assets towards drilling in order to provide the opportunity for transformational growth.  

 Following completion of this agreement the licence ownership will be as follows: Eni (Operator, 40% equity interest), Woodside (25% equity interest), Chariot (10% equity interest) and Office National des Hydrocarbures et des Mines (“ONHYM”) (25% carried interest).

 The Rabat Deep Offshore licence area is located approximately 30km offshore in water depths ranging from 150m to 3,500m. The JP-1 prospect has been described following detailed processing and interpretation of 3D seismic data as a large, four-way dip closed structure of approximately 200 square km areal extent, with Jurassic carbonate primary reservoir objectives. Based on this data, Netherland Sewell and Associates Inc. conducted an independent Competent Person’s Report and has estimated a gross mean prospective resource of 768mmbbls for JP-1. The prospect sits adjacent to a source kitchen modelled to be oil generating and third party drilling offshore Morocco has confirmed that the Jurassic can have excellent reservoirs and the presence of a light oil charge, hence the focus on this play within Chariot’s acreage.

 Retaining a 10% equity interest in the drilling of this well has the potential to create transformational value in the success case due to the large scale of prospective resources, excellent contract commercial terms and robust economics even in the current lower oil price environment. Additional prospects and leads have been identified within the Jurassic fairway and any success in JP-1 would also materially de-risk these other targets and offer significant follow-on exploration potential in both Rabat Deep and the neighbouring Mohammedia permit (Chariot, Operator with 75% equity interest).

 The completion of this farm-out agreement remains subject to both the approval of the Moroccan authorities and various conditions precedent, a number of which are outside of Chariot’s control.

 

Larry Bottomley, CEO commented:

 

“We are very pleased to have signed this farm-out agreement with Eni as the future operator of our Rabat Deep acreage. We look forward to working with them and our other partners, Woodside and ONHYM, to progress to drilling the JP-1 prospect which, subject to the relevant approvals, well planning and securing a drill rig, we anticipate to occur in 2017. The response we had to the partnering initiative and subsequently securing this deal endorses our technical view of the asset and is another milestone in delivering on our strategy. Eni is a world-class explorer and an experienced operator focused on projects with the potential for material production.

 

“Despite the challenges posed by current market sentiment, Chariot’s high quality assets continue to attract industry investment. We are excited that we now have an opportunity to see one of our priority targets through to drilling at near zero cost to the Company, with the agreed cap above recent drilling cost estimates provided by an independent party.”