Chariot Limited (AIM: CHAR): Initiating a strategic review of the Transitional Power business to focus on gas
• Chariot is initiating a strategic review of its Transitional Power business.• The business includes multiple wind and solar projects in Southern Africa (with a solar project already operational in Burkina Faso). It also includes a power trading licence in South Africa. In order to move these projects to construction and first production, a material amount of mezzanine and equity funding (at the Transitional Power subsidiary level) will be required to fund the proportion of the capex not covered by senior debt.
• Chariot has already received indications of potential interest from South Africa focused investors.
• The purpose of the strategic review process is to evaluate the best option to take these projects forward while maximizing the value to Chariot shareholders.
• The Transitional Power business could be fully or partially sold or demerged with equity being raised at the subsidiary level. Chariot is giving priority to its gas business in Morocco and any funds raised through selling the transitional power business could be redeployed in Morocco.
• Selling the Transitional Power business would also reduce Chariot’s G&A.
• Chariot’s Green Hydrogen business will remain part of the Group as this does not currently require significant capital.
• We re-iterate our target price of £0.50 per share.
Anchois
The farm-out transaction with Energean is expected to close shortly, at which point US$10 mm will be payable to Chariot. Drilling of the Anchois-East well is planned for later this year and a rig has been identified and the teams are working closely together on this.
Valuation
Our Core NAV for Chariot is unchanged at £0.27/sh. Our Sum of the Parts valuation stands at £0.53/sh.
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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