Chariot Ltd (AIM:CHAR, OTC:OIGLF) won a vote of confidence from Cavendish on Tuesday, as the broker hiked its target price to 8.3p while leaving earnings forecasts unchanged.
The shares stood at 1.9p, up 12%, as Cavendish reiterated its 'buy' rating and tweaked its valuation model after the energy group doubled its economic footprint in Angola.
At the heart of the update is a framework agreement to support Etu Energias in acquiring Chevron's 31% operating interest in Block 14 and a 15.5% stake in Block 14K.
That transaction entitles the explorer to future cash flows equivalent to 4,000 barrels of oil per day in return for providing operational and technical expertise.
Combined with an earlier Azule Energy deal, the upstream producer will now be economically exposed to 8,000 barrels of oil per day on a pro-rata basis.
Those barrels are expected to generate $14 million in distributable cash flows by 2027, rising to $26 million the following year, assuming a flat $70 oil price.
To cushion the balance sheet, Shell Trading is stepping in to bankroll the entire acquisition debt funding in return for future offtake barrels, completely removing near-term financing risks.
In the same note, the broker flagged material development upside from the PKBB discovery and neighbouring fields that could seamlessly tap into existing processing capacity.
Looming over the timeline, the anticipated first-quarter 2027 completion of the acquisition is the ultimate catalyst for unlocking these lucrative future cash flows.
