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Chariot Oil & Gas Announces H1 2020 Results

Source: www.gulfoilandgas.com 9/29/2020, Location: Africa

Chariot Oil & Gas Limited, the Atlantic margins focused energy company, announces its unaudited interim results for the six-month period ended 30 June 2020.

- New Executive Team appointed with new values, mission and energy to create growth and deliver positive change through investment in projects that are driving the energy revolution
- Upgrade of audited total remaining recoverable resource to in excess of 1 Tcf for Anchois, representing a 148% increase (comprising 361 Bcf 2C contingent resources and 690 Bcf 2U prospective resources)
- New ventures are being evaluated, defined by Chariot's values, strengths and the scalability of the opportunities

Adonis Pouroulis, Acting CEO of Chariot commented:
"This is an exciting phase in the evolution of the Company as the new team takes action to drive the Lixus opportunity forward and bring in value-accretive new ventures that play into the energy transition theme. With each day that passes more potential in the Lixus licence is uncovered, delineating a major gas resource with strong ESG credentials and national significance for Morocco.

Africa is the one continent where population growth and demand for power are rising rapidly and are projected to continue to rise throughout this century. With this, Chariot is ideally placed with its Moroccan gas development foothold to reach out and invest into other alternative projects that embody our core values, demonstrate our vision and create value for shareholders as we seek to make the Company more relevant to future energy needs.

The work the team has undertaken to advance the Anchois project during the period, in what is shaping up to be a multi-Tcf prospective licence area, has served to enhance its commerciality and bring a highly scalable, fundable development opportunity onto the radar of institutional financing. We look forward to further project endorsements and hope to announce more progress in the coming months as the gap narrows between the market's perception of the Company and what management feel is currently a vastly undervalued clean energy investment proposition."

Anchois Gas Field Development

Resources
- 3D PSDM seismic reprocessing and updated Independent Assessment completed, by Netherland Sewell & Associates Inc. ("NSAI"), with material upgrade of audited total remaining recoverable resource to in excess of 1 Tcf for Anchois (comprising 361 Bcf 2C contingent resources and 690 Bcf 2U prospective resources)
- Ability for the low-risk prospective targets (C, M and O sands) to be drilled at low cost as part of any appraisal or development drilling activity on the Anchois Discovery (A and B sands); the development of which brings the potential for material free cash flow
- Existing exploration upside of a combined 1.8Tcf 2U audited prospective resource in other Lixus prospects further added to with the identification of additional Mio-Pliocene gas play prospects, with a preliminary internal Chariot estimate of c.1Tcf

Development Plan
- Reservoir and integrated asset modelling completed, Pre-FEED study commissioned and optimised development concept finalised with a major engineering consultancy, with initial reference base case economics highly encouraging
- 70MMscfd base case production rate, equivalent to a power generating potential of c.600MW electricity and with capex reduced c.30% relative to 2019 feasibility study. Work continues to further reduce uncertainties in the range of costs

Gas Market
- Large and growing energy market in Morocco with attractive indicative pricing of US$8/mmbtu in power generation and US$10-11/mmbtu in industry based on public information of other operators in Morocco
- Engagement continues with potential off-takers both within the domestic Moroccan gas market and through the Maghreb-Europe pipeline to potential off-takers in the European gas market

Funding
- Discussions continue with a variety of parties for the provision of development debt finance. The feedback is encouraging and demonstrates the project's fundability and materiality at an institutional level
- An active E&P partnering process is ongoing to fund the appraisal well. New pre-stack depth migration ("PSDM") reprocessed data with material resource upgrade has encouraged further groups to come into the data room

New Business
- Team continues to evaluate new value-accretive business opportunities that play to our strengths as energy professionals and our long-standing presence and experience across the African continent

Capital Discipline Maintained
- Unaudited cash balance as at 30 June 2020 of US$5.8 million
- No debt or remaining work commitments
- Restructuring in April 2020 brought organisational and other savings to reduce annual cash overheads by c.45%, from US$4.5 million to US$2.5 million
- Key skills retained and operating capability to scale up when appropriate, with prevailing market conditions making preservation of cash an imperative

Exploration Portfolio
- Non-cash impairments of US$66.7 million in respect of Namibia and Brazil, reflective of change in strategic direction and Management's approach to non-core assets in the current challenging market environment
- Despite write-downs, Chariot will retain its interest in Namibia and Brazil with no work commitments going forward and will continue to host data-rooms for marketing of both assets
- Key third-party offset wells are expected in 2020-2021 in Brazil and Namibia which will help to inform prospectivity and value of Chariot's acreage
- A further non-cash impairment of US$0.5 million has been booked against drilling inventory held from previous drilling campaigns

Board Changes in the Post Period
- Adonis Pouroulis, previously Non-Executive Director and the Company founder, took over as Acting CEO in July 2020
- To further strengthen the Company's leadership team, both Julian Maurice-Williams and Duncan Wallace joined the Board in July as executive directors in roles of Chief Financial Officer and Technical Director respectively

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