Chariot's Angola deal "transforms the narrative" and takes the firm upstream - ICYMI

Chariot's Angola deal "transforms the narrative" and takes the firm upstream - ICYMI Proactive uses images sourced from Shutterstock

Chariot Ltd (AIM:CHAR, OTC:OIGLF) this week announced a funding agreement that gives the company economic exposure to producing oil assets offshore Angola, marking what CEO Adonis Pouroulis described as a “transformative deal” and a pivotal step in the company’s upstream strategy.

The company has agreed to provide $12 million in acquisition funding, alongside transaction costs, to support Etu Energias in securing a 20% interest in Block 14 and a 10% interest in Block 14K offshore Angola. The funding will be repaid from future cash flows, while Chariot will gain exposure to production economics equivalent to up to 4,000 barrels of oil per day.

Pouroulis said the transaction delivers on the company’s previously stated objective of bringing oil production into its upstream portfolio. He described the agreement as “the seed of a company maker,” adding that it “transforms our narrative” by introducing a cash-generative production stream.

The Chariot boss joined us in the Proactive studio to tell us more, here we take a closer look at what was said.

Proactive: Adonis, it's very good to speak with you today and exciting updates out after the market closed yesterday. Can you talk us through your announcements, please?

Adonis Pouroulis: Yes, of course. Thank you. We announced our plans to provide the acquisition funding for an oil-producing asset offshore Angola. We've just completed an oversubscribed placing. We are working alongside Shell Trading to provide finance and support to Etu Energias, a 100% owned Angolan E&P company, to secure a material interest in a producing asset offshore Angola.

Etu is acquiring a 20% interest in Block 14 and a 10% interest in Block 14K, and we are supporting the transaction by providing $12 million of funding, along with transaction costs, which will be repaid from future cash flows. In return, we secure exposure to the economics of material production equivalent to up to 4,000 barrels of oil a day.

Fundamental to this deal is the backing from Shell Trading, one of the world’s largest energy traders, which is providing an acquisition financing package of up to $170 million in return for future offtake of barrels. This marks a new era for the company, introducing economic exposure to a cash-generative production stream into the portfolio and significantly transforming the upstream business.

Proactive: What does this transaction mean for the company and its strategy?

Adonis Pouroulis: Last year, we announced that we were going to rescope our upstream remit and bring oil production into the portfolio for the first time. With this transaction, we are delivering on our strategy. This is a key first step in that direction.

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On completion of the acquisition by Etu, we will gain exposure to future cash flows from producing assets located in a prolific oil-producing region. Block 14 and Block 14K are well-established assets and have produced nearly a billion barrels of oil to date. The Block 14 licence has recently been extended to 2038, and we see substantial and mature upside in the transaction.

This marks a first step into Angola, a highly attractive and well-established oil and gas jurisdiction. We are delighted to be working with Etu and alongside Shell. Overall, the deal aligns directly with our strategy of targeting cash-generative production opportunities, and we will grow from here.

Proactive: How should investors think about the impact of this transaction on the business going forward?

Adonis Pouroulis: This is indeed a transformative deal. It is the seed of a company maker with this transaction. It transforms our narrative and delivers on what we told shareholders we would do — going upstream into production.

Going forward, the upstream portfolio can include substantial economic exposure to producing assets in Angola, alongside prospective acreage in Morocco and interests in Namibia. We remain very committed to the Moroccan assets, continuing work on the onshore project and the Rissana licence, while pursuing partnering opportunities across licences, including the back-in right in Namibia’s Golden Province, where major discoveries have been made.

We remain focused on splitting the renewable energy business out of Chariot Hold Co to create value for both businesses. Fundamentally, we have further growth plans focused on adding what we call “barrels on the book.”

I would also like to thank shareholders for their ongoing support. This transaction is a key turning point for the company. There is an open offer available to existing shareholders on the same terms as the placing, and we welcome retail participation.3

Proactive: Adonis, congratulations on this latest development.

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