Chariot – GMP Summary

posted by riteastafrica on LSE re the pre-close operational update

17 December 2015
Chariot Oil & Gas
(CHAR LN, last price 5.2p/sh, market cap US$20m)

SUBJECT: Chariot continues to have a good balance sheet relative to its small-cap peers with $39m cash and no debt vs its market cap of $20m. Chariot is currently trading at a 50% discount to its current cash position and even after adjusting for $20m spending in 2016 on our estimates, Chariot’s market cap is currently equal to its expected 2016-end cash position. Chariot has dataroom open across its exploration portfolio and is looking for partners in return for drilling carry.

OUR VIEW: Chariot’s 2015-end cash position of $39m is higher than our estimates mainly due to management’s focus on reducing corporate and G&G costs. Chariot has a good balance sheet relative to its small-cap peers. Chariot continues to look for new venture opportunities and we believe the low oil price environment could provide Chariot with attractive and material opportunities. Chariot is looking for partners across its exploration portfolio, including Mauritania and Morocco in order to move ahead to the drilling phase. We remain confident in Chariot’s ability to deliver on its strategy of taking operated positions in frontier exploration areas and then partnering with companies in return for past costs and drilling carries. Chariot has successfully farmed out its exploration acreage previously and brought Cairn Energy into Mauritania, Woodside into Morocco and AziNam in Namibia.

DETAILS:

• Morocco: Chariot currently has dataroom open for its Rabat Deep licence (Chariot 50%, partnered with Woodside). Based on the 3D seismic shot last year, Chariot has identified a material four-way dip faulted Jurassic carbonate prospect, JP-1, with Pmean resource estimate of 768mmbbl gross. Chariot and its partners have got a nine-month extension on the current exploration period to complete analysis of the recent seabed coring programme. In the Mohammedia Reconnaissance Licence (Chariot 75%), Chariot has applied for converting the licence into an Exploration Permit. Also in Morocco, Chariot has decided to not enter into the next exploration period in the Loukos Exporation Permit (Chariot 75%) in order to focus on its Rabat Deep and Mohammedia licences.
• Brazil: Chariot has a 100% interest in four blocks in the Barreirinhas Basin offshore Brazil. Chariot has now secured Environmental Impact Assessment approval by the Brazilian authority Ibama and it plans to shoot 768sqkm of 3D seismic in Q1 2016.
• Mauritania: Chariot has an operated 55% interest in Block C-19 and its partners are Cairn (35%) and SMH (10%). Chariot has a dataroom open and plans to farm-out its interest in block C-19 in return for well carry. Chariot has mapped four prospects based on 3D seismic and this was affirmed by NSAI, an independent resource auditor, earlier in May this year. The four prospects are estimated to hold between 431mmbbl to 588mmbbl. In term