WTI (Mar) $66.43 +$1.24, Brent (Apr) $71.66 +$1.31, Diff -$5.23 +7c
USNG (Mar) $3.00 -24c, UKNG (Mar) 82.0p +2.05p, TTF (Mar) €33.58 +€0.725

Oil price

Oil rose sharply yesterday as it looked like the US patience over Iran was wearing a bit thin, later Trump said that he would decide ‘within 15 days’ about what to do about it, the USS Gerald R Ford is said to be nearby and ready to take part.

The EIA inventory stats were way better than the spotty youths could even calculate, they even got the sign wrong, not for the first time…a draw of 9.014m barrels against the whisper of a build of 2.1m b’s indicates a tighter market than even the so called experts are saying…

Chariot

Chariot yesterday announced its intention to provide acquisition funding for an oil producing asset offshore Angola. To part finance the acquisition, Chariot is undertaking a fundraise by way of an equity placing and a direct subscription of, in aggregate, approximately US$20 million (£14.8 million) net of expenses, and an open offer of up to approximately US$4 million (approximately £3 million) (the Placing, the Subscription and the Open Offer, together the. The Company expects to issue approximately 1,132,275,133 New Ordinary Shares pursuant to the Placing and the Subscription; and up to 225,449,336 New Ordinary Shares  pursuant to the Open Offer, in each case at an issue price of 1.4 pence per share.

In addition, investors in the Fundraising will receive one warrant for every New Ordinary Share issued pursuant to the Fundraising. Each Warrant shall entitle the relevant warrantholder to subscribe for one Ordinary Share at an exercise price of 2.4 pence and will expire on 9 April 2029.

The Placing will be conducted in accordance with the terms and conditions set out in Appendix 2 to this announcement by way of an accelerated bookbuild at the Issue Price which will be launched immediately following this Announcement. The timing of the closing of the Bookbuild and the allocations are at the absolute discretion of Hannam & Partners and the Company. The results of the Placing and Subscription will be announced as soon as practicable after the close of the Bookbuild.  The Placing is not being underwritten.

Highlights:

• Chariot is working alongside Shell Trading to support Etu Energias S.A, a 100% owned Angolan E & P company, to secure a material interest in producing assets offshore Angola
• Chariot is providing funding to Etu Energias in connection with Etu Energias’ acquisition of a working interest in Blocks 14 and 14K offshore Angola with production of circa 8,000 barrels of oil per day
• As a result of the Transaction, and in exchange for providing the initial funding, Chariot will be entitled to the economics associated with material production from the working interest to be acquired equivalent to up to 4,000 bopd
• In addition to the funding provided by Chariot, Shell Western Supply and Trading Ltd is providing an acquisition financing package of up to US$170m (the “Shell Facilities”) in return for future offtake barrels
• This marks a new era for Chariot’s upstream business by introducing an economic exposure to a producing asset with strong cashflow into the portfolio
• The net proceeds of the Fundraising will be used to:
  • Part finance the acquisition of the working interest;
  • Cover the costs involved with the Transaction;
  • Provide additional corporate working capital
• As part of the Subscription, certain Directors and senior managers of the Company intend to subscribe for Subscription Shares for approximately US$2.7 million (£2.0 million), of which Adonis Pouroulis intends to subscribe for approximately US$2.5 million (£1.9 million)
• As part of the Fundraising, the Company proposes to raise up to approximately US$4 million (approximately £3 million) by the issue of Open Offer Shares pursuant to an Open Offer to Qualifying Shareholders at the Issue Price. The Open Offer will be on the basis of 1 Open Offer Share for every 7 Existing Ordinary Shares held1
• Following the close of the Bookbuild, the Company expects to send the Circular, containing a notice of General Meeting, on or about 23 February 2026. Full details of the Open Offer, a proxy form and (where applicable) an Open Offer application form will also be included within, or sent with, the Circular

(1) In the event that the rate of British Pounds Sterling to United States Dollars fluctuates significantly before the date of the Circular, the number of Open Offer Shares issued may change.

Commenting on the Fundraising, Adonis Pouroulis, CEO of Chariot, said:
“In working alongside Shell Trading to fund this deal we are accessing the opportunity to secure a transformational transaction in a prolific producing asset offshore Angola. Shell Trading is providing a substantial acquisition finance package in exchange for offtake barrels, Etu Energias is securing additional production and further cementing its position as a prominent Angolan E & P player and by part financing this acquisition, we will have a substantial economic exposure to cash generative assets that have significant upside.

With this transaction we are working with a pre-eminent partner in Etu Energias and delivering on our stated objective of building out our upstream business. As set out last year, we re-scoped our strategy to encompass oil production assets thereby widening our investment case across the full value chain. These assets are highly attractive, combining a strong production profile with substantial development value and we are delighted to be working alongside Etu Energias with Shell Trading providing acquisition financing and offtake as part of the transaction structure. Together, we have a great balance of extensive local knowledge, deep funding capability and a wide technical network. Importantly, this marks a strategic first step into Angola’s oil sector for us. We very much look forward to finalising this transaction as well as future opportunities that this collaboration could unlock.”

Well, this is a fascinating deal and Chariot deserves much credit for both finding it and arranging a smart way of financing it. By funding Etu Energias to acquire a Working Interest in blocks 14 and 14K offshore Angola, with production of circa 8,000 barrels of oil per day Chariot get a WI themselves equivalent to 4,000 b/d, in effect half the economics. Plus I understand that they also get the funding provided to Etu returned.

In turn Shell Trading provides acquisition funding of up to $170m in return for future offtake barrels, this gives ‘deal certainty’ and with it being dated January 1st 2025 allows a great deal of latitude so it probably only a portion will be drawn down.

There are a number of significant benefits that occur as a result of dong this deal, not least the optionality that it affords Chariot in terms of placing a footprint in the area and giving the opportunity to do follow-up deals. Apart from anything else it has partnered up with two major players in the area which may lead to other upstream plays for Chariot. 

The company say that ‘this marks a new era for Chariot’s upstream business by introducing an economic exposure to a producing asset with strong cashflow into the portfolio’ I see them getting their cash back in good time and thus being able to reinvest in other projects. 

It also means that the company, having done this deal, will be changing its priorities somewhat, the renewables business will now be sold and the proceeds will be used to fund further deals such as those mentioned above.

I understand that the placing went very well, institutions from both the US and the UK have subscribed and with it raising $20m at 1.4p, with a potential further $4m to come from the Open Offer Chariot is now in a strong financial position. 

Readers know how positive I have been about Angola with recent deals having shown how good the opportunities in-country are and with plenty more on the horizon. This deal gives access to 4/- b/d in a great consortium and it funds material changes for Chariot, I am highly positive and think that shareholders will be most pleased, there looks to be substantial upside here for opportunities these as well as the other assets in the portfolio. 

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog