Chariot Ltd. (CHAR:AIM) is expected to announce a partner soon after having received multiple offers, from various companies, to acquire an interest in the Anchois gas development project in Morocco, reported Auctus Advisors analyst Stephane Foucaud in a June 21 research note.
"We anticipate that this would be a rerating event," Foucaud wrote.
Currently, the Australian oil and gas explorer is trading at about £0.15 per share, and Auctus' target price on it is £0.55 per share. This price difference implies a significant return of 267%.
Another upcoming catalyst is Chariot finalizing gas sales agreements and announcing the agreed upon prices, noted Foucaud.
Ideal partnership agreement
In choosing a partner, Chariot is first looking for it to be able to fund and deliver Anchois quickly. Also, the arrangement should allow for Chariot to maintain a project stake, the size of which is another of the energy company's considerations.
Last, because Chariot has already spent about US$50 million on Anchois and expects to recover much of that amount, it would like the partner to pay an amount upfront in cash. The amount of this payment, which would be in addition to a carry, is another factor in Chariot's choice of partner.
"The combination of the carry and the upfront payment reduce[s] materially the risk of any significant dilution for Chariot shareholders," Foucaud wrote.
He noted that the group of inquiring companies included explorer-producers that are larger than Chariot. Some of these prospects could fund development of Anchois "from their balance sheet."
Advancing entire portfolio
Chariot has made progress with all of its other, non-oil and gas, projects, Foucaud reported.
Specifically, regarding its Tharisa project in South Africa, it is on track for production to start around year-end 2023. As for Chariot's power business, the company is seeking a partner. Similarly, with its green hydrogen project in Mauritania, Chariot is looking for offtake partners.
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