Chariot Limited (AIM: CHAR): Anchois-3 disappoints. All eyes on South Africa power, Morocco onshore & Namibia.
• The North Flank prospect at Anchois-3 is water wet (ReNAV: £0.03/sh), This has a negative impact on Anchois South (ReNAV: £0.07/sh).• The B sands that were the main appraisal targets were thinner than expected and the deeper C & M sands were water wet, however these were drilled down-dip from the Anchois-2 well where the sands were found gas-bearing. The B sands will not be tested and the main hole will be plugged an abandoned. This has a negative impact on the size of the contingent resources. We are now assuming, pending further information from the data acquired in the campaign, only the 1C case (365 bcf gross resources) rather than the 2C case (635 bcf).
• This would suggest a smaller potential development than initially expected and we are now assuming production plateau of ~70 mmcf/d rather than up to 200 mmcf/d (in an upside case). While Energean carried the cost of Anchois-3, the smaller resources might not be material enough for Energean to take a near-term FID on the project.
• As we remove North Flank and Anchois South from our ReNAV, reduce the size of Anchois to 365 bcf and reduce our chance of development from 75% to 15% pending visibility on next steps (including the position of Energean), we have changed our target price for Chariot to £0.08/sh in line with our new Sum of the Parts valuation.
• The main sources of value creation are (1) the power business in South Africa (2) Morocco onshore, and (3) securing the new venture opportunity in Namibia.
Upcoming catalysts
Over the coming months, we anticipate progress in financing the power business in South Africa which would provide a readthrough valuation. We carry ~£0.01sh for Tharisa. Developing Morocco onshore could also add production and reserves. We carry ~£0.03/sh for Dartois. Firming-up the new exploration licence in Namibia offshore is another important catalyst given the prospectivity and appetite of the industry for the region.
Valuation
Chariot has recently raised ~US$8 mm (net) of new equity and we anticipate that the company is in a good financial position. We are now carrying £0.02/sh for Anchois. As we currently attribute 15% probability of Energean taking FID, we have accordingly associated a 15% probably of Energean exercising the option to acquire a further 10% WI in Anchois. Our Core NAV based on Morocco Onshore and Tharisa is £0.03/sh. Adding the value of Anchois, Zambia power (First Quantum) and the green H2 project in Mauritania leads to a SoP of £0.08/sh. We are not carrying any value for Namibia.
Chariot Oil & Gas is an independent oil and gas exploration company focused offshore in West Africa with a portfolio of assets located in the under-explored regions of Namibia, Mauritania and Morocco.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.