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UPDATE - Chariot Oil & Gas’s Morocco farm out gets green light

Last updated: 09:23 24 Dec 2014 GMT, First published: 10:23 24 Dec 2014 GMT

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--ADDS BROKER COMMENT--

Chariot Oil & Gas (LON:CHAR) shares advanced 15% as the company got a pre-Christmas cash boost.

The company’s farm-out of a stake in the Rabat Deep project, offshore Morocco, has been approved by the authorities.

Australian oil and gas firm Woodside will now be able to earn 25% of the project by paying for a 3D seismic programme.

Funds have already been received by Chariot, which now expects to end the year with US$52mln of cash.

Andrew McGeary, analyst at Northland Capital, highlights that Chariot’s year-end cash will equate to 13p per share – which, as he says, is a substantial premium to last night close of 7.25p.

“A shift to higher margin production (from shale to offshore) is envisaged by management to benefit Chariot. 

“There is still timing uncertainty on planed farm outs as management also realistically pointed out majors will require more clarity as to the base oil price before firming up capital programmes but, as we stated, large exploration prospects are necessary for long term reserves replacement for the majors and Chariot offers an abundance of these.”

McGeary repeated a ‘buy’ recommendation, and set a 19.7p price target.

Chariot is the operator of Rabat Deep with 50% of the venture, alongside Morocco’s Office National des Hydrocarbures et des Mines (ONHYM) and Woodside which own 25% each.

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on 29/1/24