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Oil price

Crude had the smallest of rallies today after a decent draw in the API crude inventories. 

Chariot

Chariot has provided an update regarding the Anchois-3 well currently being drilled at the Anchois gas project in the Lixus Offshore licence, offshore Morocco (Energean 45%, Operator, Chariot 30%, ONHYM 25%). 

Chariot confirms that operations in respect of the Anchois-3 well are ongoing.

• Main Hole (“Anchois-3ST”) operations are under way as per the operational plan. Preliminary interpretation indicates the presence of gas bearing reservoirs in the B sands, being an appraisal objective of the well and further detailed work will be needed to understand the impact of these results. Drilling operations continue to evaluate deeper appraisal and exploration objectives.
• The primary objective of the initial Pilot Hole was to evaluate the upside exploration potential of reservoirs in the Anchois Footwall prospect, which were found but are interpreted to be water bearing. This hole was plugged and abandoned prior to sidetracking and drilling the Main Hole.
• Further updates will be provided as appropriate.

While today’s announcement is clearly a disappointment for Chariot in that the exploration upside has not been found one must bear in mind that the well is still drilling and there are opportunities for a development that although not as large as had been originally hoped for.

Although this news may have had to go out early for Energean’s results purposes, it may be that the partners can continue drilling and do the further work and analysis that it so clearly needs.

In their call Energean have said that it is early days and although not going to be what was hoped for it really does depend on the gas price negotiated with the Moroccan Government and therefore might still fly. A slightly more encouraging comment was that this was only a ‘heads-up’ and it is early days.

It’s worth doing a ‘what if’ analysis and for Chariot that means unless it is a total write-off then fair enough, but if it’s not that bad then, and assuming Energean exit stage left, Chariot regain the licence and will go back to the drawing board.

Obviously one doesn’t want to think about that, but management have been progressing their new venture in Namibia which we know is a very exciting piece of real estate at the moment and Chariot could have a meaningful project there which could come along quite quickly.

Finally, the company have been diligently working away at the financing for the power business and this will give them scope for moving on in that area one way or another, this is not an insignificant area for Chariot and would, in tandem with other parts of Chariot offer real scope for growing the company. All these mean that Chariot has opportunities for diversification which offer real and long term chances of moving on from Anchois if that happens.

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