Malcy4 Apr 2019 08:01
Chariot Oil & Gas
A most interesting move by Chariot this morning as it announces that it has been awarded the Lixus licence offshore Morocco. Lixus brings a gas discovery, Anchois-1 with 307 bcf of contingent resources in gas sand A and gas sand B whilst gas sand C in the deeper potential adds another 116 bcf making 423 bcf in the vicinity. Anchois and its other satellites are an amplitude-supported discovery and prospect inventory with remaining recoverable resources of >900 Bcf whilst the eastern area prospects add around 800 bcf.
So, phase 1 with four production wells gives production from the original 307 bcf at 70 mmscf/d over ten years and adding the extra 116 bcf to make 423 bcf would take production to 90 mmscf/d. Phase 2 adds another 674 bcf and 90 mmscf/d for twenty years. This makes this project highly appealing and potentially very profitable.
The only commitments at this stage are a seismic campaign at a cost of <$1m which would lead to an Anchois-2 appraisal well, currently scheduled for 2H 2020. With such a high percentage of the licence, (75%) it is clear that Chariot will seek to find ‘strategic partnerships’ for funding of the longer term process but this should be a good deal easier than in previous high risk wells. With a very strong gas market in Morocco with high prices and a supportive Government to cut down on fossil fuel imports, the potential pool of investors is substantial and brings in many new institutions.
With both these thoughts in mind, Chariot have Netherland Sewell completing an up-to-date CPR and will have a gas market analysis within 3 months. Overall this looks good to me, Lixus brings what should be a marketable discovery with lots of potential upside, more importantly it changes Chariot’s risk profile which needed doing. The company will continue with other parts of the portfolio but this brings a bit lower risk and more balance, maybe the right thing to be doing right now.
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