Chariot Oil & Gas keeps discipline ahead of 2018 drilling

Chariot Oil & Gas, the Atlantic focused oil and gas explorer, trumpeted its continued strong balance sheet at the half-year stage as its looked forward to positive production developments offshore Morocco.

The AIM listed company saw its bank balance remain healthy at $21.7m cash at 30 June 2017, though down from $29m a year earlier and $25m six months earlier.

Net cash outflow of $1.3m was lower than the $2m in the equivalent prior period due to a focus on costs and efficiencies.

A loss of $53m was reported after Chariot relinquished the Southern Blocks offshore Namibia and took a $51.3m non-cash impairment against previously capitalised costs compared to $5.2 million in 2016 due to the relinquishment of the C-19 licence in Mauritania for no financial consideration.

In terms of operational development, the company said it anticipated first 'spud' drilling of the Rabat Deep offshore exploration prospect in the first quarter of 2018 after agreeing a farm-out to Eni during the period.

Having farmed out operatorship and 40% equity to Eni in return for a drilling carry and the recovery of back costs across the larger Rabat Deep permit, the Italian oil giant has secured the Saipem 12000 ultra-deepwater drilling rig to probe the JP-1 prospect, which has an audited gross mean prospective resource of 768m barrels (mmbbls).

Chariot was also awarded the Kenitra Offshore Exploration permit in Morocco, and carried out 2D and 3D seismic campaigns to mature this new asset where the company sees the 'LKP' prospects that extend from Mohammedia into this area and the Kenitra-A lead, all of which have the potential to be significantly de-risked by the drilling of the RD-1 well.

The LKP-1a prospect under the Mohammedia Permits "is drill-ready", with preparation for drilling underway, while preparation for drilling in the second half of 2018 is underway at Namibia's central blocks with the process to agree an additional partner "ongoing".

In the face of the low oil price environment, chief executive Larry Bottomley stressed the company was focusing on remaining strategically disciplined.

"As a result of rigorous and continued focus on risk management and capital discipline, Chariot has been able to use a strong cash position and clear strategic objectives to continue to invest in the portfolio despite the prevailing 'lower for longer' oil price business environment".

After securing Eni as drilling partner Rabat in January, he added: "With the RD-1 well now carried and due to spud in the latter part of Q1 2018, our near-term focus will be to secure partners on additional priority prospects in Namibia and Morocco."

As Chariot begins preparations for drilling in Namibia and Morocco, Bottomley has hired experienced drilling manager David Brecknock to manage the process in-house.

Brecknock has 20 years of international experience gained with Enterprise, Shell, BG, Devon, Perenco and Ophir.