Chariot makes solid development progress across portfolio

Atlantic margin-focussed oil and gas company Chariot Oil & Gas said that the addition of discovered resources in the “significant” Anchois gas discovery at the Lixus Offshore licence in Morocco had “rebalanced” its portfolio as it updated shareholders on Tuesday.

The AIM-traded firm said that rebalancing provided a “sustainable footing” to continue to pursue its high-impact exploration portfolio.

It had secured the Lixus licence following the investigation of oil shows in the Rabat Deep 1 well in April.

The company, which was holding its annual general meeting, explained that to progress the evaluation of that potential development, in May it announced the completion of an independent competent persons report by Netherland Sewell & Associates.

The third-party report upgraded the total remaining recoverable resource to more than one trillion cubic feet for Anchois and its satellite prospects, comprising 2C contingent resources and 2U prospective resources.

In June, Chariot announced the completion of a development feasibility study and a gas market assessment for the Anchois gas field.

“These studies, which were carried out by third parties, demonstrated the technical feasibility and commercial attractiveness of developing the Anchois gas discovery, which is anticipated to deliver strong returns and significant cash flow, with the potential to offer a strategically important indigenous source of gas into Morocco's developing energy market,” the board told investors ahead of Tuesday’s meeting.

“The company is undertaking a further competent persons report on an additional five prospects in the Lixus licence, which should be completed in the fourth quarter of 2019 and the environmental impact assessment to facilitate appraisal operations in 2020 has been initiated.

“The partnering data-rooms, for the Lixus licence, are open and the Chariot team is pleased with the level of interest seen to date from a wide range of businesses.”

At the company's other Moroccan licences, Mohammedia and Kenitra, Chariot said geochemical analysis indicated a hydrocarbon charge from cretaceous or younger source rock, with the cretaceous known as a “world class” source rock, according to the board.

Additionally, “excellent quality” upper Jurassic sandstone reservoirs and effective seal identified in the Rabat Deep 1 well “significantly” de-risked the clastic prospects and leads, with prospects MOH-B - gross mean prospective resource of 637 million barrels - and KEN-A - gross mean prospective resource of 445 million barrels - described as priority targets.

In Brazil, both an integrated seismic interpretation and a competent persons report had been completed, with a large four-way dip-closed structure identified and a portfolio consisting of seven reservoir targets individually ranging up to 366 million barrels of gross mean prospective resource.

“A single vertical well located at Prospect 1 can penetrate the TP-1, TP-3 and KP-3 stacked targets which have a summed on-licence gross mean prospective resource of 911 million barrels,” the board said.

In Namibia, Chariot added that it had recently demonstrated its “strong” operational capability with the “efficiently drilled” Prospect S well, which came in on time and significantly below budget.

“Whilst the results of the well degraded some of the prospects, there remains significant prospectivity within the substantial Central Blocks licence which spans a total of 16,800 square kilometres.

“Namibia remains a region of significant industry interest.”

The company said partnering processes were ongoing across the portfolio, with the board set to update the market on developments as appropriate.

“Chariot continues to exercise capital discipline in all areas of the business, ending 2018 debt free and with $19.8m in cash.

“The company maintains tight control over its cost base and remains fully funded for its current work commitments, which are less than $1m.

“Chariot continues to seek additional value accretive opportunities, to broaden the risk profile of the company.”