Chariot Limited (AIM: CHAR): Potentially entering Namibia offshore and boosting balance sheet
• Chariot has raised US$6.4 mm of new equity (US$7 mm before expenses) priced at 6.5 p per share.• Management and insiders have contributed ~US$1 mm to the raise. The company was initially looking to raise only US$6 mm (before expenses) but the fundraising was oversubscribed.
• Up to an additional US$2 mm could be raised through an open offer.
• The proceeds from the fundraising will (1) boost the balance sheet ahead of the commencement of drilling at Anchois, (2) progress the commercialisation of onshore gas in Morocco and (3) secure a material new high impact opportunity offshore Namibia.
• While the targeted acreage has not been disclosed, we note that Chariot holds a 10% back in right in its previously operated Blocks 2714A&B in Namibia. This acreage is adjacent to Block PEL83 where Galp and Sintana Energy have encountered at least 2 bn boe recoverable resources. Galp is planning an extensive appraisal drilling programme in 4Q24 to map the precise extent of the discovery. Rhino Resources and Azule Energy (Eni/BP) are also planning to drill an exploration well in the area in 3Q24.
• We view the current weakness of the share price as an opportunity given the materiality of the near term newsflow. With a stronger balance sheet, the company is expected to test the Dartois discovery (£0.04 per share unrisked NAV) in 3Q24. In addition, the high impact Anchois East well will spud mid 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 £0.40 per share.
• We have changed our target price to £0.45 per share in line with our ReNAV. This incorporates the dilution associated with the new equity raise.
Cash and cashflow
On submitting FID at Anchois, Chariot expects to receive US$15 mm from Energean. 3 mmcf/d gross production onshore Morocco 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.
Valuation
Our Core NAV and Sum of the Parts valuations are at £0.28 per share and £0.47 per share. We are not attributing any value to the potential new opportunity in Namibia pending further visibility.
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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