Chariot Oil & Gas Limited (LON:CHAR) confirmed it is working to take advantage of the current historically low costs for deep-water well drilling, as it advances towards an expected March 2018 spud for the Rabat Deep exploration well offshore Morocco.
“Having previously taken advantage of the low seismic acquisition rates, Chariot is now focusing on the supply and demand dynamics of the deepwater drilling rig market.
“With rig rates at historic lows, Chariot has initiated a process to analyse how the company can benefit from this lower cost environment.”
Chariot added that it continues to have strict capital discipline, reducing annual cash overhead for the fourth year in a row. It said it has a strong cash position and remains debt free.
Chief executive Larry Bottomley said: “Over the last two years, Chariot has been able to capitalise on the low cost base for seismic acquisition and processing, and has consequently been able to mature its portfolio and build a drilling inventory of potentially transformational prospects.
“This readjustment of costs following the oil price fall of 2014 has now affected the drilling market, and the company is looking to capitalise on drilling costs as successfully as we delivered in our seismic campaigns.”
“Looking ahead, we are focused on delivering three exploration wells in the near-term and have established an in-house drilling team to deliver this programme safely, efficiently and cost-effectively.”
At Rabat Deep, where Chariot is partnered with ENI, drilling is due to start in March. The well is targeting the JP-1 prospect which has the potential for 768mln barrels of crude and is one of the sectors larger wells in the schedule for 2018.
Chariot highlighted the significant follow-on potential, should Rabat Deep prove successful, as there are six further leads in the same play which will all be de-risked by a discovery.
Separately, also offshore Morocco, Chariot is also advancing Kenitra where drilling could take place in the first half of 2019. Here, a partnering process is now underway and early pre-drill preparations have started.
Offshore Namibia, a partnering process is also underway for the Central Blocks - blocks 2312 and 2412A – and the company is targeting a well in the second half of 2018, for Prospect S which is estimated at some 459mln barrels.
A further partnering process could get underway in the first half of next year, for the group’s exploration assets in Brazil. It will come after Chariot’s work to date, which has seen an evaluation of proprietary 3D seismic data across four exploration areas.
Chariot said it has identified large structural prospects, with multiple targets. Those prospects will now be assessed independently for a resource estimate and the partnering process will then follow.