WTI $39.57 +$1.01, Brent $41.20 +74c, Diff -$1.63 -27c, NG $3.02 u/c

Oil price

See-saw oil markets prevail, after Monday’s fall yesterday crude rose around a dollar, this morning another fall of c.$1.50. Even Zeta can’t beat the massively high rising number of COVID-19 cases worldwide hitting economic growth pretty much wherever you look.

After hours the API stats provided another bloody nose, a rise in crude stocks of 4.6m was nearly four times the forecast and products also rose substantially, it never rains…With the US election now less than a week away and polls showing Democratic leads even in traditional Republican states, it looks as if oil is in for further challenges from a candidate who is no friend of hydrocarbons…

Chariot Oil & Gas

The company says that it has received a non-binding Expression of Interest (EOI) letter from Africa Finance Corp (AFC) a pan-African Multilateral Development Financial Institution, for the provision of development debt finance for the Anchois Gas Discovery, located within the Lixus Offshore Licence, Morocco (“Lixus”), and the development of future discoveries from the wider prospect portfolio of the Licence.

In addition, Chariot has received a non-binding EOI for the provision of Reserves Base Lending for the development of the Anchois Gas Discovery with a Multinational Investment Bank. Chariot say that both EOI’s take into account estimated capex costs of bringing the development online a number believed to be c.$300-500m.

The Lixus licence is identified as being ‘an important strategic asset, with strong Environmental, Social and Governance (ESG) credentials, that has the potential to help Morocco transition to a low carbon economy, as it seeks to satisfy an anticipated doubling in domestic demand for energy over the next 20 years’.

Adonis Pouroulis, Acting CEO, commented:
“Following on from the recent Anchois resource upgrade, I am very pleased to announce that we have received expression of interest letters from two highly regarded institutional lenders. Africa Finance Corporation has played a pivotal role in helping to unlock some of Africa’s most promising energy projects, with AFC currently having investments of over US$1 billion in projects ranging from upstream/midstream oil & gas, to power generation. The Multinational Investment Bank is a leading provider of finance in the oil and gas sector with both global reach and profound market expertise within the EMEA region. Both Expression of Interest Letters further endorse our view that the Anchois development is a high value project, with the potential to deliver near term cash flows to Chariot and also transform Morocco’s power sector.

Today’s announcement is also further evidence of the Company delivering on what it said it would do, namely, advancing the commerciality of the Lixus asset and generating value to shareholders in the process. This is an important first step towards securing financing for the project and we look forward to updating our stakeholders on further developments during the remainder of 2020.”

Ever since the announcement of the company’s acquisition of the Lixus licence and the subsequent significant operational and pre-development progress, and then more recently the increase in resources, whereby the asset is deemed to have north of 1 TCF of gas it looks highly promising. Indeed the market has very much liked the look of Anchois with its significant potential in Morocco, itself a State where positive pricing, strong domestic demand and a better-than-most fiscal policy makes economic returns as good as anywhere worldwide.

The final piece of the jigsaw has been the negotiations over a potential farm-out or partnering process which, whilst inevitably somewhat delayed due to COVID-19 has been ongoing. Today’s announcement shows that this process has been going on and that at least two potential partners have come forward and been prepared to be shown to be involved, albeit at the non-binding stage.

Chariot shares are up something over 25% this morning which in itself is way below the potential value of the company developing Lixus but clearly there are traders taking profits especially given that that the shares have quadrupled since September. Nevertheless Chariot must now be considered a must have stock with deeply embedded value which should become clear as further progress is made and its worth crystallised.

KeyFacts Energy Industry Directory: Malcy's Blog