Chariot Ltd. (OIGLF)

[douginil]

A strategic updat and response to market conditions from Chariot Oil & Gas

[[ Thanks to Malcys Blog ]]

April 9, 2020

A strategic update and response to market conditions from Chariot this morning who say that their corporate strategy is to focus on monetising the potential of the Lixus licence and maximise value for investors by developing a Moroccan gas business. All this is to be delivered with continued focus on capital discipline whilst retaining key players, operating capabilities and a continuing reduction in annual running costs by c.45% from $4.5m to $2.5m.

Part of this process involves the board seeing a cash reduction in fees and salaries by 50% and being replaced by shares, an important, meaningful cut to an already lean G&A figure. Chariot has cash of $9.6m in the balance sheet, no debt and no work commitments which mean that this is a realistic cut and because of the flexible nature of the company with no obligations outside of their control.

This is a response to the changing risk profile required from investors, the development of the Moroccan gas business in general and Anchois development specifically is all about capital discipline, focused risk and delivery of Lixus whilst preserving cash. Anchois has a total remaining recoverable resource of 423 Bcf and the company has performed a PSDM on legacy 3D data which has materially improved the dataset and has already highlighted additional potential within the Anchois area including identifying the additional, deeper target the ‘O’ sand. This may have best estimate (2U) prospective resources of 159 Bcf taking the total to 582 Bcf with the addition of the resources assigned to the O Sand to the NSAI 2C estimates for the discovered A & B Sands and 2U estimate for the undrilled C Sand.

All this shows that the project has the potential for near-term, substantial returns and strong partnering interest, whilst somewhat modestly delayed by COVID-19 is very much on the cards as Chariot shares the risk. The company appears to be most impressed by the breadth and width of the potential partners who appreciate the opportunity to join with a company with access to a top quality Moroccan gas business with strong ESG credentials, not to be ignored nowadays.

Finally, it must not be forgotten that Anchois has ‘additional running room’ in the Anchois satellites and additional prospects which would gain from the growing Moroccan gas market with its attractive gas pricing. To me Chariot has addressed the situation and is moving as fast as is possible to be a Moroccan gas market player whilst reducing the overall cost base of the company.


Read at:
https://www.malcysblog.com/2020/04/oil-price-chariot-igas-pantheon/