On Friday 19th July, Chariot Limited (LON:CHAR), the African-focused transitional energy company, announced a Placing, Subscription and Open Offer for new shares at 6.5p in a $9m plus fundraising.
The net proceeds of the issue are to be used to strengthen the balance sheet to continue to progress and deliver value from Chariot’s portfolio of projects, to secure a material new venture opportunity with multi-billion-barrel potential, and to progress onshore gas commercialisation plans in Morocco to build a gas-to-industry supply.
The shares were instantly Placed, as well as Directors taking up the $1m Subscription stock, while the $2m Open Offer was almost twice oversubscribed – which was very positive.
There were 106,704,899 new shares issued by way of the fundraising.
On Monday 12th August, CFO Julian Maurice-Williams stated that:
“We are grateful to our shareholders for their considerable support, which has enabled Chariot to deliver a further $2m via this significantly oversubscribed Open Offer, bringing the total fundraise to $9m gross.
This is an exciting period for the Company, and we look forward to updating all our stakeholders on the imminent drilling campaign at Anchois, alongside progress across the wider Group, over the coming months.”
The Business
Chariot is an Africa-focused transitional energy group with three business streams: Transitional Gas, Transitional Power and Green Hydrogen.
Chariot Transitional Gas is focused on high value, low risk gas development projects in Morocco, a fast-growing emerging economy, with a clear route to early monetisation, delivery of free cash flow and material exploration upside.
Chariot Transitional Power is focused on providing competitive, sustainable and reliable energy and water solutions across the continent through building, generating and trading renewable power.
Chariot Green Hydrogen is partnering with TEH2 (80% owned by TotalEnergies, 20% by the EREN Group) and the Government of Mauritania on the potential development of a 10GW green hydrogen project, Project Nour in Mauritania, and is progressing pilot projects in Morocco.
Anchois Drilling
On Tuesday 20th August, the group announced that the Stena Forth drillship had arrived on location and that drilling operations had commenced on the Anchois East well (now named “Anchois-3”) at the Anchois gas project in the Lixus Offshore licence, offshore Morocco (Energean 45%, Operator, Chariot 30%, ONHYM 25%).
The Anchois-3 drilling and flow testing operations should take around two months, with Chariot expected to be fully carried for the anticipated costs of the drilling campaign.
CEO Adonis Pouroulis stated that:
“We are very pleased to commence this highly anticipated well at the Anchois gas field.
We see significant upside potential and value from the prospective resources in the pilot hole and main hole targets which could increase the resource base to over 1Tcf and we look forward, on success, to moving towards a Final Investment Decision as quickly as possible.”
Analyst Views
James McCormack at Cavendish Capital Markets is extremely bullish about the prospects for the group – having fixed a Price Objective of 47.9p on its shares.
He notes that the overriding objective of the Anchois campaign is to unlock a Final Investment Decision on an expanded gas development project.
His estimates for the current year to end-December see the group reduce by a third its annual adjusted pre-tax loss to $10.2m ($15.6m).
David Mirzai at SP Angel notes that Chariot’s shares remain just above the level of last month’s capital raise as investors await the outcome of key catalysts coming up over the next few months that have the potential to transform the growth profile of the business.
He states that the appraisal well will undertake a drill stem test and target relatively low risk upside in the Anchois Footwall and Anchois North Flank prospects, which would likely lead to a scaling of the development project to 1Tcf on success.
Chariot is fully carried for the upcoming well and has provisional capex financing to first gas from Energean, which is a high-profile partner with a proven track record in delivering this kind of offshore development.
“We think that moving the Company’s proposed Anchois gas project offshore Morocco towards a final investment decision remains the key value driver for investors in 2024.”
At Auctus Advisors, analyst Stephane Foucaud considers that the Anchois project is one of the most material wells to be drilled by a company in his coverage universe.
He reckons that the total unrisked NAV of the well represents 7.5x the current share price and has re-iterated that the Auctus Price Objective of 45p a share is in line with the ReNAV.
In My View
The group, which is due to hold its AGM on Tuesday 10th September, saw its shares trading at 17.48p this time last year.
It will only take a couple of positive news items to help to get its shares returning rapidly to trade around the 2024 peak of 10.40p and then edging higher.
They are now bang on the 6.5p recent issue price – with a lot of upside on offer.