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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: £0.04

Market: AIM
Market Cap: £13.74 m
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  • Junior oiler with acreage in Morocco, Brazil and Namibi

  • Traditionally specialised in Frontier or wildcat exploration for huge targets

  • Added production assets in Morocco with Lixus acquisition


How is it doing

Chariot Oil & Gas Ltd (LON:CHAR) has long had an impressive record of getting things done operationally.

But, some of the exploration operations failed to deliver the blue-sky discoveries hoped for by investors.

In many ways, the Lixus acquisition is something of a game-changer as breaking from the past, the company has 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.

The Lixus licence is host to the Anchois-1 gas discovery well in the west, which at the time already has some 307bn cubic feet contingent resources, some 116bn cubic feet of

deeper un-tested upside, and, nearby satellite exploration prospects presently amounting to some 527bn cubic feet.

A CPR in May for the satellite for the satellite prospects to Anchois (70mln and 100mln barrel equivalent, which includes a 50bn equivalent target in Anchois North which can be

drilled and tied back to the original discovery.

Options here are to extend the life of the Anchois licence or to increase production through offtake deals.

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 gas market and a decision on how to finish the programme."

 

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 gas market and a decision on how to finish the programme."

 

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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.

Finncap said the satellite prospects offer material upside/running room.

“The CPR validates and raises management’s previous gas resource estimates for these prospects by 6% to 1 tcf.

"At this early stage, we are only adding the Anchois North priority prospect to our risked-NAV, which raises this and our price target from 37p to 41p/sh.

"However, these satellite prospects offer significant further upside potential and running room to our NAV over time as they mature and likely form an important part of the farm-out negotiations for this acreage."

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