Chariot Limited (AIM: CHAR): One step closer to FID – Production ramp-up quicker than expected
• Chariot has completed the Front-End Engineering and Design (FEED) on the key components of the Anchois gas development project.• The FEED confirms a plateau production of 105 mmcf/d from three wells including the existing Anchois-2 well, subsea infrastructure to an onshore central processing facility and an onshore gas pipeline to the Maghreb Europe Gas Pipeline (tie-in agreement already signed). This is in line with previous indications.
• We are currently assuming that production will initially be ~70 mmcf/d for up to two years. This is likely to be too conservative as production could reach >100 mmcf/d in just a few months.
• There is also upside to the production plateau given that (1) the wells could deliver much higher production and (2) the pipeline to shore could take ~150 mmcf/d. The European market through the Maghreb Europe Gas Pipeline could also absorb a much higher level of production. The onshore facility that is being sized to handle 105 mmcf/d would be the main bottleneck but it is modular in design and its capacity could be increased quickly.
• The onshore and offshore baseline surveys have been conducted. They are part of the Environmental, Social and Impact Assessment. The Field Development Plan is being finalized. The future development drilling at Anchois will also target 754 bcf of additional gross 2U prospective resources with 49-61% chance of success.
• Chariot continues to be a value story with very near-term catalysts. We re-iterate our target price of £0.55 per share.
Imminent key next steps
Chariot anticipates taking FID on Anchois in 1H23. The company is currently in detailed discussions with potential farm in partners and we understand that the process is competitive. Detailed discussions are also taking place with regards to gas contracts with ONHYM (60 mmcf/d) and European buyers (~40 mmcf/d).
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 project remain the key near-term catalysts and would take our Core NAV to ~£0.65 per share. Taking FID on the South Africa, Zambia and Zimbabwe power projects would add respectively £0.02/sh, £0.06/sh and £0.01-0.15 per share with each further MW adding 0.1p/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.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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