Shares in oil explorer Chariot Oil & Gas (CHAR:AIM) gushed up 7.1% to 24.1p on a read-through from Brazilian firm HRT's own exploration efforts in Namibia, the group's main area of focus. A relatively upbeat appraisal of the group's prospects in today's AGM statement from chief executive officer (CEO) Larry Bottomley added fuel to the rally.
Results (20 May) from the Wingat well, drilled by HRT in partnership with large Portuguese firm Galp Energia, did not reveal a commercial success but did demonstrate the presence of oil generating source rock off the coast of the West African country. This is a key element in identifying a working petroleum system, or in other words a commercial discovery. Broker Jefferies, which has a buy recommendation on Chariot and a price target of 50p, says: 'We believe this gives encouragement to the potential of Chariot's 90% owned central blocks and could assist in finding a farm-in partner, a process which is expected to begin in the third quarter.'
Bottomley acknowledged there would be no drilling from his company in 2013 but flagged a 'busy year' of evaluating 3D seismic data and analysis of well results, including that of third parties like HRT. He flagged cash preservation as a priority with a planned 2013 spend of $25 million underpinned by 2012's year-end cash position of $68.3 million.
The shares have lost more than 90% of their value since they peaked above 300p in March 2011. Investors dumped the stock en masse after it delivered two dry holes in a highly anticipated drilling campaign offshore Namibia last year.
