Chariot Limited (AIM: CHAR): Initiating a strategic review of the Transitional Power business to focus on gas

• The farm-out transaction with Energean has now completed. Chariot has received the US$10 mm cash upfront payment and retains 30% of in the Lixus licence (where the Anchois project is located) and 37.5% of the Rissana licence, offshore Morocco.
• A rig contract has also been signed with Stena Drilling to drill the high impact Anchois-East appraisal and development well in 3Q24.
• Anchois East is a very important well that could increase the size of Anchois to >1 tcf (300 bcf net to Chariot). Our overall unrisked NAV for Anchois, including Anchois East Footwall and Anchois East North Flank, is £0.42/sh. This represents 4.5x the current share price.
• Energean has the option to acquire a further 10% of Anchois in return for a (1) a further US$50 mm convertible/share payment, (2) a US$850 mm gross carry and (3) a 7% royalty. The cash and carry component values 10% of the project at US$220 mm or US$440 mm for Chariot’s residual 20% interest (£0.31/sh). The royalty adds further value.
• Exploration drilling onshore is also expected to start on the Loukos licence very shortly. We re-iterate our target price of £0.50/sh.

More on Loukos drilling
The main target at Gaufrette (the first prospect to be drilled) is estimated to hold 10 bcf gross prospective resources. The prospect benefits from a positive seismic attribute. Historical wells in the area encountered gas in the target reservoir where a seismic anomaly is exhibited. Gaufrette sits directly updip of thin gas pays encountered in high quality reservoirs in the LNB-1 well. This suggests a high chance of success for Gaufrette. Success is also expected to unlock numerous follow-on prospects in the Gaufrette area with an additional 16 bcf gross resources in the same sands. Recent identification of deeper targets suggests further potential at the Gaufrette well (beyond the 10 bcf estimated in the main sands and the 26 bcf in the Gaufrette area). Chariot will then drill the Dartois prospect with the main target estimated to hold 12 bcf gross resources. Success would derisk a total of 20 bcf gross prospective resources (+8 bcf) in the Dartois area.

Valuation
Our Core NAV for Chariot is unchanged at £0.27/sh. Our Sum of the Parts valuation stands at £0.53/sh. The potential presence of deeper targets at Gaufrette suggests that Loukos could be worth more than we initially thought. Our unrisked NAV for the main target (10 bcf) at Gaufrette is £0.02/sh. Success would also derisk a further ~£0.04/sh. A discovery in the deeper sands could add another £0.02/sh. The main target at Dartois (12 bcf) has an unrisked value of £0.03/sh with a further £0.01/sh for the additional 8 bcf in the wider Dartois area. Overall Dartois + Gaufrette could be worth £0.13/sh (unrisked). This represents ~1.5x the current share price.