Chariot Oil & Gas, the Atlantic margins focused oil and gas exploration company, has signed a farm-out agreement with Eni which will acquire operatorship, and a 40% equity interest in the Rabat Deep Offshore exploration permits I-VI, offshore Morocco, in return for a capped carry on drilling the JP-1 prospect.
Eni will also carry Chariot for other geological and administrative costs relating to work commitments in the next licence period of Rabat Deep and will pay a contribution which will equate to Chariot’s investment to date and be used for the continued development of Chariot’s portfolio. This agreement demonstrates Chariot’s ability to deliver on its strategy; seeking third party investment in order to de-risk and progress its assets towards drilling in order to provide the opportunity for transformational growth.
Following completion of this agreement the licence ownership will be as follows: Eni (operator, 40% equity interest), Woodside (25% equity interest), Chariot (10% equity interest) and Office National des Hydrocarbures et des Mines (ONHYM) (25% carried interest).
The Rabat Deep Offshore licence area is located approximately 30km offshore in water depths ranging from 150m to 3,500m. The JP-1 prospect has been described following detailed processing and interpretation of 3D seismic data as a large, four-way dip closed structure of approximately 200 square km areal extent, with Jurassic carbonate primary reservoir objectives.
Based on this data, Netherland Sewell and Associates Inc. conducted an independent Competent Person’s Report and has estimated a gross mean prospective resource of 768mmbbls for JP-1. The prospect sits adjacent to a source kitchen modeled to be oil generating and third party drilling offshore Morocco has confirmed that the Jurassic can have excellent reservoirs and the presence of a light oil charge, hence the focus on this play within Chariot’s acreage.
Chariot said that retaining a 10% equity interest in the drilling of this well has the potential to create transformational value in the success case due to the large scale of prospective resources, excellent contract commercial terms and robust economics even in the current lower oil price environment. Additional prospects and leads have been identified within the Jurassic fairway and any success in JP-1 would also materially de-risk these other targets and offer significant follow-on exploration potential in both Rabat Deep and the neighbouring Mohammedia permit (Chariot, Operator with 75% equity interest).
The completion of this farm-out agreement remains subject to both the approval of the Moroccan authorities and various conditions precedent.
Larry Bottomley, CEO commented: “We are very pleased to have signed this farm-out agreement with Eni as the future operator of our Rabat Deep acreage. We look forward to working with them and our other partners, Woodside and ONHYM, to progress to drilling the JP-1 prospect which, subject to the relevant approvals, well planning and securing a drill rig, we anticipate to occur in 2017. The response we had to the partnering initiative and subsequently securing this deal endorses our technical view of the asset and is another milestone in delivering on our strategy. Eni is a world-class explorer and an experienced operator focused on projects with the potential for material production.
“Despite the challenges posed by current market sentiment, Chariot’s high quality assets continue to attract industry investment. We are excited that we now have an opportunity to see one of our priority targets through to drilling at near zero cost to the Company, with the agreed cap above recent drilling cost estimates provided by an independent party.”