The strong investor support for Chariot Ltd (AIM:CHAR, OTC:OIGLF) should be no surprise to anyone, that’s according to Liberum analyst Sam Wahab, who described the AIM-share’s compelling opportunity.
With a ‘buy’ recommendation and a 41p price target the broker estimates sees nearly 17% upside to the current price of 15.3p.
Chariot on Tuesday confirmed it had raised at least £11.7mln (US$15mln) with up to another £2.3mmln potentially following via an open offer share sale to qualifying existing shareholders.
The raise was executed successfully in what Wahab described as a challenging market backdrop, especially for ‘pre-revenue’ growth companies.
“Chariot’s confirmed fundraise demonstrates the ongoing investor support the company enjoys from existing and new shareholders,” the Liberum analyst said in a note.
“This comes as no surprise to us given compelling project economics of Moroccan focussed energy security through transitional gas production, in addition to low-cost exposure to renewables across wider Africa.”
In Morocco, the focus is on bringing the Anchois gas field to development. Advancing into the development timeline is expected to drive a re-rating in the value of Chariot’s shares.
Anchois is 75%-owned by Chariot, presently, and it is host to some 637 billion cubic feet of contingent gas resources (meaning those resources that will be accessible to the proposed development). On top of that, the area surrounding the project is estimated to have more than 4.5 trillion cubic feet of further ‘exploration upside’.
The field was discovered and proven by five exploration wells, and, the commercial case was confirmed by Chariot with the Anchois-2 well in 2022.
Whilst this week’s equity raise is important ‘tick over’ money for the Chariot team, a breakthrough on Anchois project financing will likely be more impactful in terms of taking the project into the next phase of work.
Chariot hired SocGen in early 2022 to assist in the financing effort though, as highlighted by Wahab, industry-based funding may also be a feature – indeed, he notes that the company may soon select its ‘preferred bidder’.
“The project finance process remains ongoing, attracting interest from a variety of Moroccan and European banks.
“We also note that the project has been validated through a number of third party farmout offers. The partnering process has been competitive; with the company confirming that c.40 companies have accessed the data room and multiple offers were received from significantly larger E&P companies.”
Wahab added: “This process has served to both technically validate Chariot's development plan, as well as the exploration potential within Lixus and Rissana and selection of the preferred bidder is now in the final stages.
“The offers, should they proceed to completion, anticipate that Chariot would retain a material stake in the licences and that there would be an upfront cash consideration. In addition, any farmout may provide the financing of the anticipated development capital expenditure to first gas.”
So, with multiple catalysts potentially around the corner its perhaps unsurprising that Chariot has continued to find support amongst investors and brokers, and, as such, it remains a small-cap stock to watch in the coming weeks and months.