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Chariot Limited – Near Term Production, Long Term Scalability – Shares Are Valued Almost Seven Times Current Price 

“Our primary purpose is to connect the abundance of Africa’s energy resource with energy-hungry urban and industrial sectors as well as underserved populations.” 

Chairman George Canjar of Chariot Limited (LON:CHAR)  

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The company declares that its mission is to create value and deliver positive change through investment in projects that are driving the energy revolution. 

It claims that energy security and sustainability are at the top of the global agenda, and affordable, accessible energy is critical to enabling the ongoing energy transition. 

The Business 

The Guernsey-based Chariot is an Africa-focused transitional energy group with three business streams, Transitional Gas, Transitional Power and Green Hydrogen. 

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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 cashflow and material exploration upside. 

Its Lixus Offshore license covers an area of approximately 1,794 sq.km. The area has data coverage with 3D seismic data covering approximately 1,425 sq.km and five exploration wells, including the Anchois-1 and Anchois-2 discovery wells. 

Transitional Power – is focused on providing competitive, sustainable and reliable energy and water solutions across the continent through building, generating and trading renewable power. 

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, the Project Nour covering two onshore areas over 5,000 sq.km across Northern Mauritania, and it is progressing pilot projects in Morocco. 

Deal With Vivo Energy 

Last week the group announced that it had signed a Heads of Terms agreement with Vivo Energy regarding future natural gas offtake from the Loukos Onshore licence in Morocco.  

Vivo Energy, is a market-leading, pan-African retailer and distributor of high-quality fuels and lubricants with a long-standing presence in Morocco’s petroleum products’ sector.  

Through Vivo Energy Maroc, it operates a network of over 400 service stations, supplying commercial and industrial customers across a number of sectors in the Kingdom. 

The aim of the agreement is to set out the next steps for implementing a gas-to-industry strategy business, through commercialisation of domestic gas and the creation of a midstream compressed natural gas partnership to supply Morocco’s growing industrial energy needs.  

Chariot intends to sell initial volumes of up to 3MMscf/d to the midstream CNG business; additionally, Vivo Energy intends to design, fund, construct and operate a CNG plant and virtual distribution network to transport natural gas.  

This midstream CNG business would be operated though a special purpose vehicle in which Chariot can participate up to a 49% interest. 

The group will be able to leverage Vivo’s existing Moroccan customer base, allowing it to quickly gain traction into a rapidly growing market. 

News Due With Joint Venture Partner Energean  

Chariot and its JV partner Energean are expected to spud the offshore Anchois East appraisal/development well in August.  

The drilling and testing campaign will further appraise the existing gas sands and target undrilled prospective resources to potentially increase the Anchois gas development to >1Tcf.  

Success has the potential to upscale the development and lead to FID shortly thereafter, unlocking further material cash flows from the Energean partnering transaction. 

Analyst’s Views 

Stephane Foucaud at Auctus considers that the Chariot Core NAV is 30p and the Sum of the Parts valuation is 50p per share. 

The high impact Anchois East well continues to be expected to spud in August. A drilling success could increase the size of Anchois to over 1 tcf (300 bcf net to Chariot).  

Its overall unrisked NAV for Anchois, including Anchois East Footwall and Anchois East North Flank, is £0.42 per share, which represents nearly six times the current share price. 

Foucaud notes that testing of the company’s Dartois discovery onshore Morocco is expected to take place in 3Q24. 

At Cavendish Capital Markets analyst James McCormick has a 57.7p Price Objective out on the company’s shares, which are now trading at around at 7.0p, valuing the whole group at a mere £75m. 

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