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Friday, August 29, 2014
Chariot Oil & Gas issued an update on its Namibian portfolio, its repositioning in the region, and forward work programs across its licenses. The company said that these steps will aid in improving its negotiating position in partnering discussions and provide further commercial optionality. The move also aligns this part of Chariot’s portfolio with its strategy of being a fast follower and managing risk while retaining significant equity and acreage positions. In line with this strategy, Chariot will aim to proceed towards the drilling phase across its Namibian acreage following appropriate geological and financial de-risking.
Within its Central blocks, Chariot has been awarded a new license covering Blocks 2312 A&B and the 2412 A&B northern halves, and these have been renamed as Blocks 2312 and 2412A. At the end of August 2014, the preceding license was due to enter into the drilling phase. In order to ensure that Chariot is able to maintain a leveraged position and secure the best possible commercial terms during partnering negotiations, management determined that it would be strategically advantageous to remove this obligation from the license. As a result, and in alignment with its partner, AziNam, the company chose to relinquish the license and secure a new license with no well commitment in the initial exploration phase.
As a result of the reapplication and successful re-award of this license, Chariot’s wholly owned subsidiary, Enigma Oil & Gas, remains operator with a 65% equity interest in the blocks, AziNam holds 20%, Namcor and local partner Ignitus Oil & Gas hold a 10% and 5% carried interest respectively. As a result of this new award, the license enters the initial exploration period which has a duration of three years and a work program commitment requiring the acquisition and processing of up to 1,500 sq km of 3D seismic within this timeframe. This agreement covers the same area as the previous license of 16,800 sq km and commenced as of August 27.
Chariot said industry interest in Namibia remains high with several major oil companies having recently entered the country. These companies have entered on seismic options allowing them to act as fast followers. For this reason, Chariot has also positioned itself in the Central Blocks in order to provide this optionality to interested parties that may seek further technical development on the license prior to drilling. Discussions with interested parties continue and Chariot will update the market with progress on partnering as appropriate.
In the South the partnership of Petrobras, BP, and Chariot elected not to apply for entry into the second renewal exploration period for Block 2714A, which would have triggered a well commitment. Following the integration of the Kabeljou well results and recent third party drilling, Chariot continues to see significant potential within this block as well as in the adjacent Block 2714B. As a result it has reapplied for and was awarded Block 2714A, under the new license granted to Chariot’s wholly owned subsidiary, Enigma. In doing this Chariot is now exposed to, and operator of, both the deeper, Kudu play prospectivity and the Cretaceous fan fairway identified in the shallower petroleum system within this Southern region.
The license covers the same area of 5,480 sq km and commenced on August 27. The initial exploration period has a three-year duration with a work program requiring the acquisition, or cost equivalent, of acquiring 2,000 line km of 2D seismic data. This will allow the company to evaluate the prospectivity of the Southern Blocks with a broader view prior to designing its 3D survey and maturing its prospect selection in this region further.
In the Northern Blocks the results of the recently drilled Welwitschia well are being incorporated with Chariot’s proprietary data to evaluate remaining prospectivity. An update for this license area will be provided in due course.
Chariot’s dataset in Namibia, which consists of two sets of well results and 8,000 sq km of 3D seismic data, alongside that of third party activity over the last 18 months, has provided evidence that all elements of three working petroleum systems are present offshore Namibia. It is this prospectivity that has encouraged the recent surge in industry interest and supports Chariot’s optimism on the potential of the region, particularly within the company’s asset set. With these new license positions, Chariot retains its large equity holdings with the ability to deliver transformational growth while partnering at all future significant phases of investment.
Larry Bottomley, CEO commented: “Namibia continues to be a sizeable part of our portfolio and we see the potential for transformational value within our acreage. Namibia remains a frontier area for exploration, and managing the associated risks remains the focus of the Company. These awards allow us to position our Namibian portfolio as a fast follower, and continue our strategy of sharing risk through partnering. The combination of our knowledge, low-level commitments and recently enhanced financial strength form a solid foundation for our partnering negotiations and decision making.
We would like to thank the Ministry for its continued support in granting these new licenses in the Central Blocks and Southern Block 2714A and look forward to working with our partners in progressing the technical maturity and drilling opportunity in these regions. These re-awards are indicative of our long standing relationship with the Namibian government, the work we have carried out there to date and also our commitment to developing the exploration sector over the longer term.”
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