Chariot Oil & Gas Limited (LON:CHAR) has said it recognises that market conditions may expose value-accretive growth assets, that are a strategic fit, and it will remain open to such opportunities.
The explorer, in a statement, meanwhile highlighted its focus on the Anchois gas development in Morocco – whilst maintaining capital discipline.
It noted that it had US$9.6mln of cash at the end of 2019 and it is tied to no work commitments on any of its licences, plus it is debt free.
To conserve cash Chariot’s directors have agreed to a 50% of remuneration as shares. Additionally, some staff will be released, others will move to consulting arrangements and other costs cutting measures will be sought.
Chariot expects it will be able to cut annual running costs to US$2.5mln, from US$4.5mln.
“These changes significantly reduce our annual running costs, but enable us to retain our core expertise, operating capability and ability for project delivery, meaning we are well placed to deliver on our strategy and generate value for shareholders," Larry Bottomley, Chariot chief executive said in the statement.
Lixus & Anchois
The Anchois gas project, located within the Lixus licence, is described by Chariot as a “material, high-value” development that can be a source of free cash flow.
Recent analysis has also indicated a deeper target for the project, the “O Sand” – not previously tested – which could boost project economics. Satellite oil deposits are also seen as opportunities to add volume to the project.
Partnering talks have seen some delay amidst coronavirus, but Chariot said it will update investors on progress, as appropriate.
"Lixus is a high-quality asset that has the potential to be of strategic significance to the Kingdom of Morocco,” Bottomley added.
“The country has a growing economy and is one of the most attractive places to operate in the world. The partnering process for Lixus has endorsed our excitement for this project, and we remain highly motivated to deliver value from Anchois and the additional potential of the Lixus licence over the coming years.”
Evolving strategies
Chairman George Canjar, in the statement, added: “We are witnessing considerable change in energy markets.
“The combination of (coronavirus) COVID-19, low oil prices and global economies looking to transition to less carbon intensive energy sources, means that companies like ours need to evolve their strategies. This Board decision to refocus the strategy is in response to sector and investor appetite for frontier exploration.
“However, given the significant potential and quality of the Lixus asset, we are well placed to benefit from the transition to natural gas as an important fuel source in the energy matrix and remain well funded to react to any opportunities that might arise in the current environment.”