The possibility of a farm out could breathe new life into Chariot Oil & Gas (LON:CHAR) shares, according to City broker Northland Capital.
Analyst Andrew McGeary says this morning’s results statement did not reveal any surprises.
The statement, for the twelve months to December 31 2012, reflected on a tough period for Chariot in which hotly anticipated drilling in Namibia proved unsuccessful.
Although the Namibian well results were extremely disappointing McGeary believes the large amount of data gathered through the process will aid future exploration.
Chariot expects analysis of the Kabeljou-1 well to be completed this month, and its farm-out efforts will resume in the third quarter.
In the meantime, the AIM quoted explorer says, with US$68.3mln at the end of December, it is fully funded through to the end of 2014. It also highlighted that third party drilling on nearby acreage could boost its prospects.
“The company could have a farm out proposal in a matter of months that, if achieved, should certainly provide a positive catalyst,” McGeary said.
“Whilst cash burn remains significant the recovery of an element of back costs could also help. Given the pain of dry wells, it means it is sensible for the company to await the HRT programme that will test analogous targets.
“Share price seems to be largely tracking the cash position which is understandable but punitive. We continue to see attractions.”
Elsewhere, another City broker was more sceptical, saying that the Chariot story lacks catalysts for investors in the near term.
“Given that the only highlight in 2013 will be the well results from Kabeljou-1 in 2Q’13, the outlook for activity is bleak until 2014; its drilling programme starts again in 2014,” Fox Davies said in a note.
“As such we believe that there will be better locations for investors to put their money for the next 12 months.”