Chariot Oil and Gas - Capital Network: Large-cap Portfolio with Small-cap Leveraged Upside
Chariot Oil & Gas (LON:CHAR) is a UK-based oil and gas exploration company listed on the AIM market of the London Stock Exchange. The company has assembled a very prospective portfolio of assets located on both sides of the Atlantic in West Africa and South America, and has carried out the necessary adjustments to weather the commodity downturn, reducing staff from 22 to 12 and cutting G&A to less than US$5M. With a US$22M cash position significantly exceeding commitments, and no debt, Chariot Oil&Gas (LON:CHAR) is now in a position to drill three company-making wells in Morocco and Namibia in the near-term. Chariot Oil & Gas (LON:CHAR) intends to remain an exploration company, returning value to shareholders from the proceeds of the divestment of future discoveries at the point of maximum monetisation potential. We believe this is an opportune time for potential investors to revisit the equity story.
We understand from the company that, in the success case, the cash breakeven oil price for most of their targets would be US$20-25 /bbl which we reckon would place them in a favourable position on the global oil projects cash costs curve.
As such, Chariot would be able to easily monetise any potential discovery in the portfolio. However, for the purpose of this note we have not run our own economic analysis.
Quick facts: Chariot Oil and Gas plc
Market Cap: £13.5 m
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