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Chariot Oil & Gas focused on delivering an exploration well in Morocco

The company has identified an inventory of prospects in the Rabat 1 play, offshore Morocco. Chariot is targeting the drilling of the Mohammedia licence prospect MOH-B, which has a gross mean prospective resource of 637mln barrels in two targets
Offshore rig
Chariot continues to analyse how it can again benefit from the low cost environment for offshore rigs

Chariot Oil & Gas Limited (LON:CHAR) has conducted a thorough analysis of drilling cost estimates for its key prospects.

In a statement issued ahead of the year-end, the company conceded it had been a disappointing year in which the two wells it drilled were duds but thanks to partnering arrangements and the low-cost nature of the drilling off the coast of Namibia, the costs of the failures were not too onerous.

READ: Chariot Oil & Gas reveals disappointing Prospect S well result

"Clearly it has been very disappointing not to have delivered a transformational discovery from the two deep-water wells that we have participated in this year; however, one of these wells was delivered at zero-cost, and the other was drilled significantly under-budget for what is likely to become a new benchmark for the sector,” said Larry Bottomley, the chief executive officer (CEO) of Chariot.

“In Namibia, Chariot also demonstrated it is capable of safely and efficiently operating a deep-water well, delivering the operation within a short time-frame to capture the optimum point of the cost cycle,” he added.

Chariot, which retains a portfolio of highly prospective assets in Morocco and Brazil, said it is keen to take advantage of rig rates, which currently at historic lows. Its in-house subsurface team continues to develop an inventory of drill-ready prospects with material follow-on potential and has initiated partnering processes in Morocco and Brazil.

Chariot has launched drilling preparations in its operated Morocco assets through the approval of the drilling environmental impact assessment, long lead items identification and other operational arrangements. The company’s management believes that this preparatory work will enable Chariot to avoid unnecessary delays associated with its plans to drill in the near term.

“Importantly, the Rabat Deep 1 well has demonstrated a new petroleum system in the offshore sector of Morocco, one [of] which may be significantly more robust than that previously extensively explored by the industry, which materially de-risks the Mohammedia and Kenitra licences,” Bottomley said.

“Looking ahead, we are focused on delivering an exploration well in Morocco utilising our established in-house drilling team to deliver this programme safely, efficiently and cost-effectively.

“With all licence commitments now met across the entire portfolio, the company is fully-funded to progress our assets in Morocco and Brazil whilst remaining vigilant to other value accretive opportunities," the Chariot CEO added.

The company has a strong cash position, with unaudited year-end cash estimated to be US$19 million. The company remains debt free with no licence commitments across its entire portfolio.

"At YE18 Chariot anticipates retaining cash of c$19m, well ahead of our previous forecast of $12.9m owing to efficient drilling operations at the recently completed Prospect S offshore Namibia," said broker, Peel Hunt.

"Until greater clarity is provided around the sustainability of the business strategy, however, including how it intends to evolve and grow following this year’s drilling disappointments, we keep our recommendation under review," the broker added.

Shares in Chariot were off 0.15p in early deals at 2.5p.

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Chariot Oil and Gas plc Timeline

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