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LONDON (Alliance News) - Chariot Oil & Gas Ltd on Wednesday said its loss widened in the first half of 2016 following a large impairment being booked but said it remains debt free and fully funded as it aims to drill three wells over the next two years.
The company had an impressive cash pile of USD29.0 million at the end of June, comfortably exceeding its licence commitments, but the business is still being disciplined with capital through "rigorous tendering" and by reducing general and administrative costs through the "optimisation" of the board and staff.
Administrative costs were reduced in the first six months of the year to USD2.0 million from USD2.5 million but a USD5.2 million impairment was booked after it relinquished the C-19 licence in Mauritania in the period. That led the operating loss to balloon to USD7.6 million from USD3.0 million.
No finance costs were booked in the period as a result of having no debt, compared to last year when it booked USD1.8 million worth of charges, and finance income rose as a result of the healthy cash balance to GBP2.3 million from only GBP704,000.
The pretax loss for the half amounted to USD5.3 million, compared to the USD4.2 million loss in the same period last year.
Chariot decided not to move into the next phase of exploration in Mauritania - the reason for the impairment - and made minor changes to its portfolio. The business subsequently secured the Mohammedia exploration permits in Morocco and is now focused on "high margin, deep water assets" which "remain economically robust in the lower oil price environment".
An updated competent persons report is being compiled for Mohammedia and Chariot is hoping to secure a partner before undertaking any drilling.
Sourcing partners is helping to keep progression going and costs down and Chariot teamed up earlier this year with Italian giant Eni SpA on the Rabat Deep exploration permits offshore Morocco. Chariot is carried on the first well that will be drilled on the JP-1 prospect in 2017.
The environmental impact assessment process is underway for Rabat Deep and should be completed in the fourth quarter of this year.
Chariot is also involved in some light exploration assets in Namibia and Brazil, where seismic data was acquired in the period for a low cost.
"Our technical work over the last few years has laid the foundations of a strong company with a portfolio of assets capable of delivering transformational growth. The next phase across our portfolio is to create value with the drill bit and our aim is to partner with a target of drilling three wells within the next two years," said Chief Executive Larry Bottomley.
Chariot currently has four "drill-ready" prospects within its portfolio and is aiming to drill three in the next two years, it said.
Chariot shares were up 8.2% to 6.30 pence per share on Wednesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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