Chariot Limited (AIM: CHAR): Key step towards developing future gas to industry business onshore Morocco
• Chariot has signed Heads of Terms with Vivo Energy for the future offtake from the Loukos onshore licence where natural gas has been encountered at Dartois.• Up to 3 mmcf/d would be initially sold to the CNG midstream business under a long-term gas sales agreement.
• Vivo intends to design, fund, construct and operate a CNG plant and virtual distribution network to transport natural gas from a number of sources to existing and new industrial customers in Morocco. Chariot will have the option to own up to 49% of the CNG midstream business, with Vivo Energy holding the balance.
• Vivo might complement this domestic production with natural gas imported from Europe. Demand is the area is estimated at 10 mmcf/d.
• 3 mmcf/d gross production would imply 2.25 mmcf/d net to Chariot. At US$10-15/mcf, this would lead to ~US$8-12 mm revenue net to Chariot which would bring cash in to fund further growth of the business.
• We view the current share price weakness as an opportunity. The company is expected to test the Dartois discovery in 3Q24. In addition, the high impact Anchois East well continues to be expected to spud in August. A drilling success could increase the size of Anchois to over 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 per share. This represents >5 times the current share price.
• We reiterate our target price of £0.50 per share in line with our ReNAV.
Valuation
Our Core NAV and Sum of the Parts valuation are unchanged at £0.30 per share and £0.50 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.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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