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Chariot Oil & Gas: Westhouse Securities awaits farm-in news, upgrades to ‘buy’

Last updated: 15:04 28 Feb 2011 GMT, First published: 16:04 28 Feb 2011 GMT

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Westhouse Securities analyst David Hart upgraded Chariot Oil & Gas (LON:CHAR) to a ‘buy’ in anticipation of a farm-in deal for its offshore assets in Namibia.

This morning, in a pre-close trading statement, Chariot told investors that talks are on-going with multiple potential farm-in partners for its offshore exploration assets in Namibia.

It said it is very encouraged by the high level of interest, which peaked with the identification of the Nimrod prospect - a ‘mega-structure’ - and active due diligence that has been carried out by a large number of major international oil companies.

The company reiterated its plan to conclude a farm-out agreement in the first quarter of 2011.

In a note to clients Hart said: “we believe that the announcement of farm-in partners in the near term will serve as a positive catalyst for Chariot. 

“Although the timing of these agreements is taking longer than anticipated, we believe the extra time will result in more competition between potential partners for a deal with Chariot, which in turn will achieve better value for the company. 

“Given the first of these deals is likely to be announced within the next month, we are updating our recommendation on the company to a ‘Buy’.

In this morning’s pre-close trading update, ahead of it full year results, Chariot also highlighted that it is making considerable progress in its exploration work on the assets.

Just last week Chariot revealed a resource update that gave its prospects 13.9 billion barrels of gross mean un-risked prospective oil resources. The update, which was result of ongoing seismic data interpretation, added 700 million barrels of oil to its prospective resources in the Northern licences.

 

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