TIDMCHAR
RNS Number : 0085K
Chariot Oil & Gas Ld
11 December 2018
11 December 2018
Chariot Oil & Gas Limited
("Chariot", the "Company" or the "Group")
Pre-Close Operational Update
Chariot Oil & Gas Limited (AIM: CHAR), the Atlantic margins
focused oil and gas exploration company, today provides an
operational update prior to its 31 December year end.
Overview
Over the past 12 months Chariot has continued to invest in its
portfolio to capitalise on the current low cost environment. The
Company has participated in two deepwater exploration wells, one in
Morocco in a fully carried well operated by Eni, and the other in
Namibia operated by Chariot. Disappointingly both wells were
unsuccessful, but the financial impact was significantly reduced
through partnering and, in Namibia, delivering what is likely to be
one of the lowest cost deepwater drilling operations carried out
anywhere this year.
Outlook
Chariot retains a portfolio of highly prospective assets in
Morocco and Brazil. The Chariot in-house subsurface team continues
to develop an inventory of drill-ready prospects with material
follow-on potential, and have initiated partnering processes in
Morocco and Brazil.
With rig rates remaining at historic lows, Chariot continues to
analyse how the Company can again benefit from this low cost
environment. Utilising the experience gained in Namibia and drawing
on the Company's in-house knowledge, Chariot has conducted a
thorough analysis of drilling cost estimates for its key prospects,
feeding this data into the current partnering processes.
Chariot has launched drilling preparations in its operated
Morocco assets through the approval of the drilling Environmental
Impact Assessment, long lead items identification and other
operational arrangements. Management believes that this preparatory
work will enable Chariot to avoid unnecessary delays associated
with its plans to drill in the near term and to continue to
capitalise on the current low-cost environment for drilling.
Chariot continues to apply the strict capital discipline
demonstrated during the drilling of Prospect S in Namibia and its
significantly reduced annual cash overhead. As a result, the
Company has a strong cash position, with unaudited year-end cash
estimated to be US$19 million. The Company remains debt free with
no licence commitments across its entire portfolio.
Larry Bottomley, CEO, commented:
"Clearly it has been very disappointing not to have delivered a
transformational discovery from the two deepwater wells that we
have participated in this year. However, one of these wells was
delivered at zero-cost, and the other was drilled significantly
under-budget for what is likely to become a new benchmark for the
sector. In Namibia, Chariot also demonstrated it is capable of
safely and efficiently operating a deepwater well, delivering the
operation within a short timeframe to capture the optimum point of
the cost cycle.
Importantly, the Rabat Deep 1 well has demonstrated a new
petroleum system in the offshore sector of Morocco, one which may
be significantly more robust than that previously extensively
explored by the Industry, which materially de-risks the Mohammedia
and Kenitra licences.
Looking ahead, we are focused on delivering an exploration well
in Morocco utilising our established in-house drilling team to
deliver this programme safely, efficiently and
cost-effectively.
With all licence commitments now met across the entire
portfolio, the Company is fully-funded to progress our assets in
Morocco and Brazil whilst remaining vigilant to other value
accretive opportunities."
Asset Summary
Morocco
In Morocco, the Rabat Deep partnership drilled the Rabat Deep 1
well using the Saipem 12000 drillship. The prospect targeted had
the potential to be transformational for the Company in the success
case and was closely watched by the industry as one of the largest
prospects to be drilled anywhere in the world during 2018. The well
was unsuccessful as the primary Jurassic carbonate was tight. This
result has downgraded the remaining prospectivity in the Jurassic
carbonate prospects and leads, and as a consequence the partnership
has elected to allow the Rabat Deep licence to lapse.
While the well was unsuccessful, geochemical analysis of
hydrocarbons extracted from sidewall cores indicates the potential
for hydrocarbon migration from a Cretaceous or younger source rock,
which would represent a new petroleum system for offshore Morocco.
The well also encountered excellent quality Upper Jurassic
sandstone reservoirs and an effective seal which significantly
de-risks the clastic prospects and leads identified in the
Mohammedia and Kenitra licences.
During the year, Chariot interpreted both 2D and 3D seismic data
acquired during 2017 over Mohammedia and Kenitra to investigate the
extent of the prospectivity in this new play identified from the
Rabat Deep 1 well - Upper Jurassic clastic prospects charged from
the world-class Cretaceous source rocks of Cenomanian-Turonian age
matured by burial below the Alpine fold-belt. The Company has
identified an inventory of prospects in this play, which are
supported by seismic anomalies calibrated to the Rabat Deep 1 well
which are consistent with the presence of hydrocarbons.
Chariot is targeting the drilling of the Mohammedia licence
prospect MOH-B, which has a gross mean prospective resource of 637
mmbbls in 2 targets as part of a larger portfolio in the Mohammedia
and Kenitra licences totalling 2.4 billion barrels of gross mean
prospective resources. A partnering process has been initiated and
drilling preparations have begun.
Namibia
In the Central Blocks offshore Namibia, Chariot safely and
efficiently drilled Prospect S using the Ocean Rig Poseidon on
behalf of our partners Azinam, NAMCOR and Ignitus. The prospect
that this well targeted had the potential to be transformational
for the Company in the success case and was also closely watched by
the industry. The well was unsuccessful as the Cretaceous clastic
targets were water bearing. Extensive post-well analysis is
underway to determine the impact on the remaining prospectivity of
the Central Blocks.
The well was drilled within 17 days, with a final gross cost of
approximately US$16 million, around US$10 million below budget.
Also in Namibia, Chariot retains an option to back-in for 10%
equity at no cost after exploration drilling in the Southern
Blocks, in return for which the Company will facilitate the
partnering programme led by NAMCOR, the Namibian State Oil
company.
Brazil
In Brazil, Chariot has completed the evaluation of the
proprietary 3D seismic data across its four exploration concessions
and identified a large structural prospect comprised of seven
targets with individual on-concession gross, mean prospective
resource ranging up to 366mmbbls. Three of these targets stack into
a single prospect with a gross, mean prospective resource of
911mmbbls.
The partnering programme on these concessions is underway.
New Ventures
In Mauritania, Chariot secured an option to back-in for between
10% to 20% equity in the new C-19 block in Mauritania that was
recently awarded to Shell Exploration and Production Mauritania
(C19) B.V.
While securing this option was a testament to the quality of the
work conducted by the Chariot technical team, Chariot has elected
not to participate on this project. The expected cost of access and
maturation, the time needed to progress to optional drilling and
the likely scale of the prize, particularly following any
partnering as part of the Company's risk management strategy, meant
that this option was incompatible with the Company's focus on
value, risk management and capital discipline.
The Company is currently in negotiation on a new licence in the
Atlantic margins, and continues to evaluate new venture
opportunities to further enhance the value of its portfolio on a
case by case basis.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
For further information please contact:
Chariot Oil & Gas Limited
Larry Bottomley, CEO +44 (0)20 7318 0450
finnCap (Nominated Adviser and Broker)
Matt Goode, Christopher Raggett, Anthony Adams
(Corporate Finance) Andrew Burdis (ECM) +44 (0)20 7220 0500
Celicourt Communications (Financial PR)
Henry Lerwill +44 (0)207 520 9261
NOTES TO EDITORS
ABOUT CHARIOT
Chariot Oil & Gas Limited is an independent oil and gas
exploration group. It holds licences covering two blocks in
Namibia, two blocks in Morocco and four blocks in the Barreirinhas
Basin offshore Brazil. All these blocks are currently in the
exploration phase.
The ordinary shares of Chariot Oil & Gas Limited are
admitted to trading on the AIM, a market operated by the London
Stock Exchange under the symbol 'CHAR'.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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