“The award of the Lixus licence provides Chariot with a discovered resource base offering a low-cost development opportunity and significant upside,” said chief executive Larry Bottomley.
Chariot Oil & Gas Limited (LON:CHAR) has expanded its footprint offshore Morocco, with the award of the Lixus licence.
It will own 75% of Lixus alongside state-backed partner ONHYM (Office National des Hydrocarbures et des Mines) which holds the other 25%.
Lixus is host to the Anchois-1 gas discovery well, which with an estimated 307bn cubic feet contingent resource presents a near-term development opportunity. A further 116bn cubic feet of untested deeper potential has also been identified in the Anchois well area, Chariot noted.
Anchois could provide the basis for a hub-approach to exploration and development, according to Chariot, which highlighted that material tie-back opportunities could exist – with satellite exploration prospects presenting some 527bn cubic feet worth of additional resource potential.
Beyond that, Chariot highlighted that five additional prospects similar to Anchois have been identified, though presently they lack 3D seismic data, and, in the wider licence the explorer sees the potential for ‘giant scale prospective resources’.
“The award of the Lixus licence provides Chariot with a discovered resource base offering a low-cost development opportunity and significant upside,” said Larry Bottomley, Chariot chief executive.
“The commercial attractiveness of the Lixus licence is further enhanced by its position offshore Morocco, a fast growing energy market with high gas prices and a need for increased supply.
“In addition to the development opportunity, the licence offers very low risk exploration tie-back potential in the same play; and higher risk, transformational lead potential in the sub-nappe.”
Chariot noted the “world class” commercial contract terms and that the asset acquisition comes with minimal licence commitments, which will be funded from current cash resources.
It anticipates a future development which would deliver strong returns and significant cash flow.
The Lixus acquisition comes after last summer’s disappointing outcome of the Rabat Deep exploration well, offshore Morocco, and, after the Prospect S well offshore Namibia failed to make a big discovery.
Chariot has other exploration ventures offshore Morocco, though with the acquisition of the Lixus it has added a different kind of project than it has typically pursued in the past.
With existing resources and follow-up opportunity is it a lower risk proposition compared to the ‘wildcat’ drilling that it has been associated with in the past.
Bottomley added: “Our understanding of the Anchois discovery developed when, following the results from the geochemical analysis of the hydrocarbons sampled in the Rabat Deep-1 well, the company investigated nearby wells as part of a technical review of thermogenic hydrocarbons in the region.
“This insight into the geology of the surrounding area has enabled us to identify and capture this immediately value accretive asset.
“We are confident that the commercial viability, which will be fully laid out in the feasibility study being commissioned immediately, will be highly attractive to a wide range of strategic partners across the energy value chain.” Proactive Investors