RE: evi4 Apr 2022 21:43
CHAR - ARTICLE COPIED OUT........
Hitting pay dirt: Chariot on fire
An African-focused energy group has announced yet more positive drilling news for its low-cost flagship Moroccan gas development
March 31, 2022
By Simon Thompson
• Anchois-2 well encounters high-quality gas reservoirs with net gas pay upgraded to 150m
• Quality dry gas confirmed with more than 96 per cent methane
• Gas composition allows gas to be processed through single processing facility
Chariot (CHAR:17.6p), an African-focused energy group, has announced yet more positive drilling news for its low-cost flagship Anchois Gas development, offshore of Morocco.
Firstly, the gas samples taken from the Anchois-2 well contained gas with greater than 96 per cent methane in all seven discovered reservoirs. Importantly, the gas doesn’t contain any hydrogen sulfide or carbon dioxide (which in the presence of air and moisture can form acids that are capable of corroding equipment and pipelines). This means that the gas is 'pipeline spec', so should be able to be transported and processed through a single gas processing facility. The implication being that initial capital expenditure of $300mn (£228mn) and ongoing operating costs could be lower than originally planned.
Secondly, the Anchois-2 well encountered multiple high-quality gas reservoirs with a calculated net gas pay far higher than originally envisaged. Net gas pay is a key parameter in reservoir evaluation as it identifies penetrated geological sections that have sufficient reservoir quality and interstitial hydrocarbon volume to produce commercial quantities of hydrocarbon. The new net pay estimates for Anchois-2 well have been raised from 100m to 150m. It should have a positive impact on the size of the resource and the project economics.
Investors reacted positively, marking the share price up 25 per cent to 17.6p, well up on the 10.1p level when I last reiterated my buy call (‘Bargain Shares: Hitting pay dirt’, 10 January 2022). The price could go materially higher still given that analyst James McCormack at house broker Cenkos Securities has a conservative looking 51p a share target. This is based on first gas from Anchois coming onstream in 2024 and only takes account of the 40mn standard cubic feet (scf) per day 20-year off-take provisional agreement (under a Memorandum of Understanding) with a leading international energy group.
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