Chariot Oil & Gas (CHAR) has increased its estimated gross mean unrisked prospective resources for its Northern licence offshore Namibia by 700 million barrels of oil, taking the estimated total of that licence to 2.631 billion barrels, and Chariot’s estimated resources as a whole to a massive 13.9 billion barrels of oil (10.4 billion attributable by Chariot).

Chariot has 5 prospects and 2 leads within it’s Northern Nambian Licence, which together make the 2.631 billion barrel total, at between a 12% and 23%  chance of success. Chariot currently owns 100% of its North Namibian Licences, but is searching for farm in partners in order to secure funding for further drilling.

Success of all the Namibian drills could be worth as much as £2.49 billion to Chariot, or 1724p a share, based on a recovery factor of 35%, oil at $8.80 a barrel and Chariot having farmed out 50% (generally conservative figures). This is a huge increase over its closing price today of 252p, and the value of 1724p a share is for the North Namibian prospects alone, which are not even half of Chariots total prospects. Of course, it is very unlikely that Chariot would be successful with all its drills, given that the mean chance of success for the North Namibian prospects is around 15%. It is then therefore important to calculate the risked value of the North Namibia Licences, 1724p divided the mean chance of success, which comes to a risked value of 258.6p; not far above Chariots current price of 252p.

These calculations are only for Chariots Northern licences offshore Namibia of course, and when taking into account Chariots other prospects, the potential share price is far, far higher. Taking Chariots current net attributable resources of 10.44 billion barrels of oil, and presuming half of that would be farmed out, the net value of Chariots resources would be £9.87 billion or 6840p a share; showing Chariots truly huge potential. As has been said before though, its is very unlikely that Chariot will be completely successful, and therefore based on a chance of success across the board of 15%, Chariots resources could be estimated to be worth as much as 1026p a share.

With Chariot showing such massive potential from its current share price, it would come as no surprise to ShareRoundup if a takeover was mooted, most likely after farm in partners had been secured and the risk reduced, but Chariot’s share price could be and should be on the way to our target of 1026p before then; making the future look very bright for Chariots shareholders.

 

RNS:

Chariot Oil & Gas Limited (AIM: CHAR), the Africa focused oil and gas exploration company, is pleased to announce an increase of a further 700 million barrels from 1.940 to 2.631 billion barrels, up 36%, in its estimate of gross unrisked mean prospective resources in its Northern licence offshore Namibia. This increase has resulted from continued technical work undertaken on the 3D seismic data acquired across these blocks which has also led to a significant improvement in the chance of success. Chariot’s gross mean unrisked prospective resource volume now totals 13.9 billion bbls (10.4 billion bbls net to Chariot).

 

Concurrent to the work which identified the Nimrod prospect, a mega structure located in block 2714A with an attributable gross mean prospective resource potential of 3.7 billion barrels as announced on 13 January 2011, Chariot has continued to evaluate a number of other plays within its Northern and Southern licence areas.

 

In the Northern licence areas, blocks 1811 A & B, seismic data inversion and attribute analysis has led to identification of additional Late Cretaceous/Palaeogene fan systems exhibiting Amplitude Versus Offset (“AVO”) anomalies consistent with hydrocarbon-filled sands. These overlie older Cretaceous structural closures and subsequently enhance the stacked target potential. In addition this work has further de-risked the Tapir and Tapir N prospects with the chance of success increasing from 14% to 23%.

 

Paul Welch, CEO of Chariot commented, “This additional resource upgrade further increases the value contained within our asset portfolio. The amplitude anomalies identified and now quantified on the 3D seismic are encouraging regarding potential hydrocarbon fluid content.  This has allowed us to significantly de-risk this area ahead of drilling. Our technical work continues and we anticipate further upgrades within our Southern licences once a similar exercise has been completed there.”