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Chariot Oil & Gas will have to be pulled along by others

Published: 12:02 22 Apr 2013 BST

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With few catalysts of its own, Chariot Oil & Gas (LON:CHAR) will have to be pulled along by the efforts of others in the months ahead.

In a note to clients analysts at UBS highlight that Chariot has one of the larger portfolios of exploration acreage in West Africa, spanning three high potential frontiers, but it must secure partners to advance its projects.

“Chariot needs partners to finance its drilling. Its ability to raise funds will be influenced by read through from up to 15 competitor wells to be drilled across the three countries over the next 12-18 months,” Daniel Ekstein said in the note.

“A commercial discovery would make its job much easier but the converse also holds true.”

UBS identified three specific programmes which it believes will be particularly important from Chariot’s point of view.

The broker says these wells will be important drivers of sentiment and stock performance.

The first is currently being drilled by Brazilian oil firm HRT. The second will be Tullow’s well in Mauritania which is due to start in the second half of this year.

The third is the upcoming programme in Morocco which involves Cairn, Kosmos, Genel and Galp.

UBS reckons Chariot has ‘high potential’ but there is limited clarity over portfolio progression, and the broker has a neutral stance on the stock until the investment case and risks become clearer.

 

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