Chariot Limited (AIM: CHAR): Forming a JV with Vitol subsidiary to target the highly profitable industrial gas market in Morocco
• Chariot has entered into a partnership agreement with Vivo Energy to develop the industrial gas market in Morocco.• The industrial domestic market is one of the three routes to market targeted by Chariot, alongside sales to ONEE and to Europe through the Maghreb Europe Gas Pipeline. As illustrated by the prices achieved by SDX (~US$12/mcf), the domestic industrial market can be very lucrative.
• The 50/50 JV will market and commercialize the gas produced from Anchois and build the distribution infrastructure (pipeline, CNG, etc) necessary to develop the industrial market.
• The partnering with Vivo provides access to an established energy distribution network in Morocco.
• Securing a farm-in partner for the development of Anchois continues to be expected in 2Q23.
• Chariot continues to be a value story with very material near-term catalysts. We re-iterate our target price of £0.55 per share.
Who is Vivo Energy?
Vivo Energy, acquired by Vitol for US$2.3 bn in November 2021, is a pan-African retailer and distributor of high-quality fuels and lubricants using the Shell and Engen brands. In 2021, the company generated US$471 mm of cash flow from operations and US$304 mm of free cash flow. The business sold 10.3 bn litres of fuel and had >1.8 mm customers with 2,463 retail sites that year. In Morocco, it operates 404 service stations and sold 2.1 bn litres of fuel in 2021. The JV with Vivo will provide Chariot with immediate credibility and balance sheet fire power.
Value and newsflow
Finalising gas sales agreements (and announcing the prices at which the gas would be sold), announcing an industry partner, securing debt funding and taking FID at the Anchois project remain the key near-term catalysts and would take our Core NAV to ~£0.65 per share.
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.
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