Chariot Limited (AIM: CHAR): New Moroccan upstream licence award
• Following the announcement of 10 July, Chariot has now been awarded the Loukos onshore gas licence with 75% WI (ONHYM: 25%).• The licence covers an area of approximately 1,371 km2 and is adjacent to Chariot’s Lixus and Rissana offshore licences.
• The previous operator relinquished the Loukos licence before Anchois was recognized as a discovery and the related play was at the time poorly understood. Some onshore wells located between Anchois and initial highgraded area on Loukos were tested at 1.5-2.0 mmcf/d.
• A 150 km2 area is covered by modern 3D seismic and Chariot has already identified multiple shallow prospects that have been grouped by geological areas: Gaufrette with 26 bcf, Éclair with 30 bcf and Dartois with 13 bcf. One of the prospects had been clipped by a well drilled previously (and targeting a deeper horizon) but never appraised.
• The onshore wells are drill ready and a suitable drilling rig has already been identified in Morocco. Each well costs ~US$3 mm to drill.
• The individual onshore prospects share characteristics with their much larger analogs offshore. This means that any discovery onshore would have favourable implications on the risk profiles of some of the offshore prospects.
• The gas play is expected to extend beyond the 3D seismic and the overall prize onshore is probably larger than what has been mapped so far.
• With seven wells expected to be drilled in Morocco (three development wells at Anchois and four exploration wells onshore) over the coming 18 months, and a farm-out partner at Anchois due to be announced shortly, the story now benefits from much more frequent and material newsflow.
• We re-iterate our target price of £0.50 per share.
Development and monetization
The prospects consist of a conventional, shallow gas play in a basin with a high historic success rate of 80-85% and low development costs. With nearby existing infrastructure, production from an onshore discovery could start before Anchois first gas. Gas production could initially be sold through CNG or pipeline to industrial users in Kenitra ahead of utilizing the Anchois onshore processing plant. Domestic industrial gas prices have been reported to have reached ~U$16/mcf.
Value and newsflow
Announcing an industry partner and taking FID at the Anchois project remain the key near-term catalysts and would take our Core NAV to ~£0.60 per share. Each onshore prospect has an unrisked value of £0.02 per share. Our SoP valuation is unchanged at £0.51 per share and includes only two onshore wells with a conservative 50% chance of drilling success.
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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