Additional Information
Market: AIM
Sector: Energy
EPIC: CHAR
Latest Price: 81.00p  (0.62% Ascending)
52-week High: 234.00p
52-week Low: 67.25p
Market Cap: 162.24M
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Chariot Oil and Gas
www.chariotoilandgas.com

Chariot Oil and Gas is an independent oil and gas exploration company with interests strategically positioned within the South Atlantic Margins.

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Chariot Oil & Gas still a ‘buy’ after sell off, says Collins Stewart

24th Jun 2011, 12:50 pm by Jamie Ashcroft Chariot revealed revealed that it has struck a deal to farm out two offshore licences yesterday

The scale of the opportunity offered by Chariot Oil & Gas (LON:CHAR) shares outweigh risks associate with its prospective frontier assets, according to Collins Stewart analyst Thomas Martin.

The AIM-listed explorer, who has eight licences hosting an estimated 15.5 billion barrels of oil, yesterday revealed that it has struck a deal to farm out two offshore licences. As negotiations, for a third farm-out licence, is ongoing the precise details of the deal couldn’t be disclosed.

Investor’s didn’t appreciate the ambiguity of the announcement, and in an already weak market, there was a significant sell-off. The shares dropped over 20 percent in Thursday’s trading.

“Frustration surrounding the ongoing delays to completion of the farm-out process, combined with an emergency release of oil stocks and a weak general market saw Chariot sell off strongly yesterday,” Martin said in a note to clients.

“In a ‘risk-off’ environment companies with 100% exposure to exploration are clearly vulnerable to changes in sentiment.”

The analyst added: “Whilst approval of a farm-out will provide an independent validation of the company’s acreage position, we have been concerned the implied value of the farm-out would not underpin the company’s equity value. 

“Following the sell-off we believe there is now a much greater likelihood the farm-out will be supportive of the market value.”

Collins Stewart repeated a ‘buy’ recommendation and a 350 pence target price.

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