REG - Chariot Limited - 2021 Final Results
22/06/2022 07:00
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RNS Number : 7104P Chariot Limited 22 June 2022
22 June 2022
Chariot Limited
("Chariot" or the "Company")
2021 Final Results
Chariot (AIM: CHAR), the Africa focused transitional energy company, today
announces its audited final results for the year ended 31 December 2021.
Transitional Gas:
Anchois Gas Development Project
· Successful drilling campaign of the Anchois-2 well, completed safely,
on time and on budget delivering a significant gas discovery.
· An accelerated field development plan underway as the Company looks
to progress the front end engineering design ("FEED"), ahead of the final
investment decision ("FID").
· Discovery exceeded expectations: 150m net pay confirmed across seven
reservoirs, excellent quality and consistent dry gas composition which should
enable a simple development.
· MoU on gas offtake and partnering signed with a leading international
energy group
· Societe Generale appointed as financial advisor to lead the project
financing.
· Collaboration / FEED agreement in place with Subsea Integration
Alliance to progress the front-end design, engineering, procurement,
construction, installation and operation of the development project.
· Management focussed on progressing towards material cashflows as
quickly as possible.
Material upside potential:
· The drilling campaign also directly de-risked a material portfolio of
prospects within the Lixus licence area.
· The Rissana Offshore Licence, Morocco was signed in February 2022
which surrounds the Lixus acreage and captures gas play extensions from the
Anchois wells.
· Potential for multi Trillion Cubic Feet ("TCF") volumes in deeper
plays.
Transitional Power
Renewable Energy for Mining Projects
· Acquisition of AEMP completed in Q2 2021 with the AEMP team now fully
integrated within Chariot's Transitional Power business.
· Projects are developed in strategic partnership with Total Eren, a
global renewable IPP focused on low-risk mining power projects in Africa.
· The partnership was extended in January 2022 to cover a three year
period, with an option to extend for a further two years thereafter. Chariot
has the right to invest between 15-49% into the co-developed projects.
· This partnership is building up a pipeline of African mining power
projects and looking to collaborate on other non-mining energy projects and
transactions across the continent.
· First project in operation, a 15MW solar project, at the Essakane
gold mine in Burkina Faso, successfully generating material returns.
· Two more projects signed in the post-period and in development:
o An MoU signed for a 40MW solar PV project with Tharisa Plc, to provide
power to its chrome and PGM operations in South Africa.
o Partnership in place with First Quantum Minerals to advance the
development of a 430 MW solar and wind power project for its copper mining
operations in Zambia - one of the largest renewable private sector energy
projects in Africa.
Green Hydrogen - Project Nour
· Exclusivity awarded over licences to develop a large scale green
hydrogen project utilising renewable power to split water through
electrolysis.
· Recent Pre-Feasibility Study confirms that Mauritania is
exceptionally well-placed for green hydrogen production due to its unique
solar and wind resources and the project has the potential to produce some of
the cheapest hydrogen in the world.
· Domestic benefits for Mauritania include providing baseload power to
the national grid, diversifying industrial activities (e.g. green steel),
promoting job creation and developing local infrastructure with the potential
to have a significant impact on GDP.
· Framework Agreement in place which defines the terms and guiding
principles to pave the way for the in-depth feasibility study that will be
undertaken over the next 24 months.
· Optimising project fundamentals through reducing acreage position to
5,000km² therefore allowing for a more focused scope
· MoU signed with the Port of Rotterdam International, a global energy
hub and Europe's largest seaport which represents a first step towards
establishing supply chains.
· Partnering process underway with the objective to form a world class
consortium.
Other licences
· Whilst fully written down, Chariot has retained its interest in its
licences in Brazil with no work commitments going forward and will host
datarooms for interested parties as required.
· The Central Blocks in Namibia have expired but Chariot retains a 10%
back in right in the Southern Blocks as a low risk future option.
Corporate
· Further to the successful equity fundraising of US$25.5m and $4
million Open Offer announced in June 2022, the Company is well financed to
take the Anchois Gas Project through to FEED and FID, in addition to
progressing the Company's wider asset portfolio.
· Oversubscribed equity fundraising completed in December 2021.
o Year end cash position as at 31 December 2021 of $19.4 million with no
debt and minimal remaining work commitments.
· Senior leadership team fully aligned with shareholders, with the
Board owning 9.57% of the shares in issue following June 2022 fundraising.
Outlook
Chariot is focused on:
· Delivering prompt FID on the Anchois gas development
· Progressing towards production and material cashflows from Anchois as
quickly as possible.
· Strategic partnering in Morocco to accelerate growth from a portfolio
of high value, low risk upsides
· Further development of the pipeline of Transitional Power projects.
· Evaluation of further value-accretive new ventures in line with the
Company's focus on the theme of energy transition.
Adonis Pouroulis, Acting CEO of Chariot commented:
"During what has been a turbulent macro environment since the onset of the
COVID-19 pandemic, I am very proud of the progress we have made across the
business over the past year, as we continue to establish our transitional
energy platform within Africa. Our mission is to create value and deliver
positive change by investing in projects that are driving the energy
revolution and we are fully committed to executing our plan. Through
progressing and accelerating our gas development offshore Morocco we are
looking to provide a gas hungry market with domestic supply; through our
renewable power projects we are materially reducing the carbon emissions of
mining operations in Africa and with our acreage in Mauritania, we are
progressing what has the potential to be one of the world's largest green
hydrogen projects and a key source of green energy in the future.
As a nimble and entrepreneurial team, we will also continue to leverage our
network and utilise our expertise to seek out new ventures where we can play a
key role and that fit within our ethos and strategy. We are excited about the
potential that sits within our current portfolio, as well as opportunities
that the future holds. We look forward to our ongoing progression and
evolution as a company and we thank our shareholders for their ongoing
support."
Enquiries:
Chariot Limited +44 (0)20 7318 0450
Adonis Pouroulis, Acting CEO
Julian Maurice-Williams, CFO
Cenkos Securities Plc (Nomad and Joint Broker) +44 (0)20 7397 8900
Derrick Lee, Adam Rae (Corporate Finance)
Peel Hunt LLP (Joint Broker)
Richard Crichton, David McKeown +44 (0) 20 7894 7000
Celicourt Communications (Financial PR) +44 (0)20 8434 2754
Mark Antelme, Jimmy Lea
About Chariot
Chariot is an African focused transitional energy group with two business
streams, Transitional Gas and Transitional Power.
Chariot Transitional Gas is focussed on a high value, low risk gas development
project offshore Morocco with strong ESG credentials in a fast-growing
emerging economy with a clear route to early monetisation, delivery of free
cashflow and material exploration upside. Chariot Transitional Power, looking
to transform the energy market for mining operations in Africa, providing a
giant largely untapped market with cleaner, sustainable, and more reliable
power.
Chariot is also partnering with the Government of Mauritania on the potential
development of a 10GW green hydrogen project, Project Nour. The ordinary
shares of Chariot Limited are admitted to trading on the AIM under the symbol
'CHAR'.
CHAIRMAN'S STATEMENT
Chariot's Transition
Chariot's mission is to play a leading role in supporting the energy
transition and since 2020, our focus has been to increase our project exposure
across this sector. We have made significant strides over the past 12-18
months and so have progressed our own transition - moving from high risk oil
exploration to a broad portfolio of transitional energy projects that have the
potential to be both transformational for the company and deliver near-term
value for all our stakeholders.
We have substantially expanded our remit and selection of energy projects.
Within our Transitional Gas business, while maintaining our exploration
vision, we are primarily focused on the development of a material offshore gas
discovery in Morocco and are currently engaging front end engineering design
("FEED") to achieve final investment decision ("FID") as quickly as possible.
Within our Transitional Power business we have recently signed up two new
multi megawatt renewable energy projects in South Africa and Zambia in
partnership with Total Eren, one of which is the largest private sector
renewable development project on the continent to date. The pipeline is
targeting over 1 GW of traditional renewable projects by year end and is
augmented by the maturation of Project Nour in Mauritania, a green hydrogen
development with world class potential.
A diversified but thematic portfolio
While our portfolio is diversified both in scale and resource base, our assets
are linked through the themes that underpin our investment philosophy focused
on the energy transition. In addition, all of our projects are scalable,
demonstrably positive for all stakeholders, and at the same time focus on
generating material returns for our investors.
Access to energy
Access to energy is a universal need, a core pillar of the global economy, and
something which benefits the pan African population. Our projects are
aligned with helping host economies to achieve their growth and
decarbonisation targets. This is a central tenet for Chariot, behind our remit
to take large-scale and first-mover positions in projects that support the
energy transition and can materially contribute to the energy mix. Our assets
straddle the spectrum with natural gas, renewable power and green hydrogen
interests and all have the potential to provide much needed and valuable
sources of energy supply.
Focused on projects that are highly scalable
All our assets are scalable and have significant upside potential. The Anchois
development hub has a pre-drill resource of 2 TCF, the recent appraisal
drilling has derisked a number of large resource prospects within the wider
Lixus licence outlining the potential for multiple TCF volumes. Within the
acreage surrounding Lixus in the Rissana licence, we have additional running
room with additional giant prospective resources. For our Transitional Power
business, the scale of the Sub Saharan mining sector is both vast and untapped
with the power requirement estimated by the World Bank to be over 20GW in
2020. Last year our target was to secure a pipeline of power supply projects
of 500MW however, we have now doubled our scope and target reaching 1GW by the
end of 2022. The hydrogen market is already becoming a key component of the
energy transition with Goldman Sachs estimating a €10 trillion market by
2050. While still nascent, we believe hydrogen will be a foundational energy
source of the future and are progressing our initial project in Mauritania
that has the potential to produce 10GW by 2030.
Sustainable energy - helping to meet carbon emission targets
Morocco has ambitious sustainable development targets, currently aiming for a
45.5% reduction in their greenhouse gas emissions by 2030, as part of their
contribution to the Paris Agreement. At the same time, Morocco's growing
economy and increasing demand for energy is currently supplied by energy
imports and coal. The domestic supply of gas from Chariot's Anchois project
can help provide baseload requirements and could therefore be an important
contributor to rebalancing Morocco's energy mix and assist in reducing
Moroccan emissions going forward.
Mining companies are increasingly focused on reducing their carbon outputs and
have also set out key targets in this regard. Implementing long term cleaner
energy solutions is now high on operational ESG agendas across the sector.
Through partnering with Chariot and Total Eren to build, finance and operate
their energy solutions, these companies are provided with a renewable,
measurable supply to help enable them to meet their goals.
Green hydrogen also has the potential to supplement and replace traditional
fossil fuels in both power generation and manufacturing processes, leading to
a significant reduction in associated emissions of greenhouse gases. Hydrogen
also has the potential to stimulate the development of greener primary
industry (such as green steel and green ammonia production) and can lead to
significant, positive long term impacts for Mauritania as well as the entire
global energy transition.
Energy security
Energy security has become a key topic within the current geopolitical
backdrop. The Anchois gas project is expected to provide a reliable domestic
supply which would bolster Morocco's self-sufficiency and drive further
development of its energy related infrastructure. Chariot's renewable power
projects build bespoke onsite solutions for mining companies, often sited in
locations well away from power grids. Accessing wind and solar power for use
directly on the mine sites removes the dependence on and need for
transportation of carbon heavy fuel to remote destinations. The development of
Project Nour's green hydrogen will provide baseload power to Mauritania's
national grid as well as opening broader development possibilities. Future
demand is also growing as result, as evidenced by the European Commission
recently quadrupling its 2030 hydrogen target to 75GW by 2030, half of which
will be imported.
Outlook
Chariot's business plan is indicative of our commitment to being a significant
and successful part of the energy transition and we are proud of our
positioning within this dynamic and critical sector. We remain ambitious with
our plans to expand and build on our achievements to date as we continue to
evaluate new ventures that fit within our strategy. As ever, we are grateful
to our investors, partners, and the local communities we are involved in, for
their support during what was a significant period of change and growth for us
as a business. We look forward to providing further updates on our exciting
pipeline of projects over the remainder of 2022 and beyond.
George Canjar
Chairman
21 June 2022
Chief Executive Officer's Review
The Energy Transition
Transitional energy is fundamental to the global movement towards a carbon
neutral world. The adoption of cleaner, sustainable energy is an integral part
of achieving net zero goals and this transition needs to facilitate positive
change by reducing emissions whilst enabling growth and development. This also
goes hand in hand with another important global objective, of providing access
to electricity to all.
We are an African focused transitional energy company. To deliver on our
business strategy, we need to find solutions that are suitable for purpose
within the context of Africa's development needs both now and over the longer
term, within the framework of overarching climate goals, and importantly
driving the energy transition utilising the continent's natural resources in a
fair and inclusive way.
The opportunities within the African energy gap
Currently there are over 600 million people without access to electricity in
Africa, and the population is expected to roughly double from around 1.25
billion to approximately 2.5 billion people in the next 25 years. This
establishes a sizeable and growing market but highlights the stark inequality
of those with and without and, as history has shown, one of the first pillars
of alleviating poverty is to provide affordable power. Every effort can be
aligned to reducing Africa's carbon footprint but within the continent it is
simply impracticable to eradicate emissions entirely at this point in time. It
is also clear that a wide range of energy sources are needed to enable
development and ensure accessibility for all. Looking to address this energy
gap is a real opportunity however, and we are focused on rebalancing the
energy mix for two reasons - both to meet the development needs of growing
populations, but importantly through doing this, help to accelerate the
transition of Africa's economy towards carbon neutrality and ability to access
cleaner and greener technologies.
Crucially, further adoption of transitional energy sources should be aligned
with an individual country's ambitions to ensure that each country's resources
help meet the needs of its people and industries in a long term, sustainable
way. Through identifying and developing their resource wealth alongside them
we can facilitate affordable, sustainable energy supplies that can enrich the
lives of many, deliver wide ranging tangible positive impacts and create value
for all stakeholders.
It will take time and significant investment to bridge this energy gap but
this is exactly what Chariot is about and we are focused on this through our
Transitional Gas and Power businesses.
Transitional Gas:
Our significant Anchois gas discovery offshore Morocco took the headlines of
our successful drilling campaign announced in Q1 2022, but to have completed
this drilling programme on time, safely and within budget working around the
constraints of Covid which impacted travel and supply chains at the time was a
notable achievement. Our management team and contractors worked tirelessly on
the planning and execution of these activities and I would like to once again
extend my thanks to all involved.
The results of the drilling programme exceeded our expectations, encountering
all appraisal and exploration targets, confirming the presence of consistent,
excellent quality dry gas and enabled Chariot to report a material upgrade of
the net gas pay estimates. Due to the nature of the gas, the project lends
itself to a simple development, using conventional technology and the campaign
also served to substantially de-risk other targets within the Lixus licence.
We will be announcing independent third party validation of Anchois resources
through a CPR shortly.
In February 2022, we also captured further upside through the signing of the
Rissana licence which surrounds Lixus and has giant potential due to the gas
plays that extend into this acreage. We are also very pleased to have signed
an MoU with a leading international energy group on gas offtake and
partnering.
We are now focused on bringing the Anchois gas project online as quickly as
possible and we have appointed Societe Generale to take the lead on project
financing. We successfully raised US$25.5m via an oversubscribed Placing and
$4m via an Open Offer post period and we are fast-tracking the engineering and
design of the Anchois development together with Subsea Integration Alliance to
reach FID as quickly as possible so we can start to generate the material
cashflows that we expect from the project.
Transitional Power
Providing Renewable Power in Africa
It has been a pleasure to work with Total Eren, a leading player in the
renewable energy industry since we acquired the AEMP team in 2021. We were
pleased to further strengthen our relationship, by extending our partnership
terms for a further three years with an option for an additional two
thereafter. We are also now able to invest up to 49% in each new project and
were delighted to secure new partnerships with Tharisa and First Quantum in
the first half of this year to develop substantial hybrid power sites for
their operations in South Africa and Zambia. Our focus is to deliver reliable,
low cost power solutions that have a wide range of positive ESG impacts for
both the companies and the communities in which they operate. Operations from
the 15MW solar power plant at the Essakane mine in Burkina Faso, in which we
hold a 10% equity stake, continue to generate a number of measurable impacts,
including saving 6 million litres of fuel and a reduction of 18,500 in CO(2)
emissions per year which exemplifies the proof of concept and underlines the
benefits that can be realised from such projects. Tapping into these natural
resources and attracting this renewable focused investment is beneficial for
the countries as well as playing a positive part of a company's ESG remit. We
are currently looking at strategic partnering within the Transitional Power
business to provide equity finance directly into these projects and alongside
Total Eren we are looking at other renewable energy projects across the
continent.
Green Hydrogen - a strategic priority
We are delighted to have secured a strategic position in Mauritania and we now
have a foothold in what we believe will be the next frontier for the energy
sector. Our acreage is in a prime location for both wind and solar power and
we believe we have obtained a critical first mover advantage in Africa.
Mauritania is exceptionally well placed for green hydrogen production which
requires four key characteristics; wind power, solar radiation, land and
water. Mauritania has these in abundance and the scale of this combination is
relatively rare across the globe. As a result, Project Nour has the potential
to become one of largest and lowest cost producers of green hydrogen in the
world. This was recently confirmed by our Pre-Feasibility Study and a
Framework Agreement is now in place which provides a roadmap for the next
phases of development. As part of the Framework Agreement, we have optimised
our positioning for the project and reduced our acreage position to 5,000km²
to enable us to focus our efforts, whilst retaining the potential for 10GW
output capacity. We are currently in discussions with interested parties with
a view to forming a world class consortium to take this project forward. The
range of potential benefits for Mauritania and the region as a whole are
extensive and we are delighted to be partnering with the Government of
Mauritania on this project. We thank the Government of Mauritania for their
continued collaboration and cooperation on Project Nour.
Positive impacts
Another element of the energy transition story is mitigating and developing
resilience to the impacts and challenges of climate change and investment into
the projects that can deliver significant benefits in this regard. Accessing
and sharing power can help to protect against shortages of water and power
supply and Zambia is a great example with First Quantum's project representing
a natural fit with Zambia's hydropower resource seasonality. This is also true
of the complementary wind and solar resources in Mauritania, which generate
power around the clock, with solar produced during the day and wind mainly at
night. Across all our projects there are common attributes of the energy that
we look to supply - reliable, affordable sources of power that can help reduce
carbon footprints and also enable diversification of wider industrial
activities and downstream development.
Whilst our projects will produce valuable power for domestic use, there is
also direct access to export markets to generate further revenues. With a
direct pipeline into Spain from Morocco and access to markets from Mauritania
through the Port of Rotterdam supply chains are already being established,
which is a key benefit to the projects locations in the vicinity of Europe, as
well as having access to the wider African continent. A feature of
transitional power projects is the potential for local communities to benefit
from surplus supply from the mine sites and also potentially inherit the
assets at the end of life of mine.
Chariot's projects can help our partners and mining companies meet their
responsibility objectives. For Governments, these projects could have a
significant impact on accelerating growth and GDP and for shareholders - with
whom we are aligned having supported recent fundraisings - all these positive
impacts have the potential to drive significant value creation.
As our business develops, we are committed to continually improving our
approach and actively managing and looking to mitigate our ESG risks and
impacts. We adopt the IFC Performance Standards, the Equator Principles and
the applicable UN Sustainable Development Goals as guiding principles across
our business and we will continue to strive to achieve best practice
throughout our operations.
Conclusion
I would like to take this opportunity to thank both ONYHM in Morocco, the
Government of Mauritania and all our valued partners, including the Ministries
in Namibia and Brazil, for their ongoing support and collaboration, the
Chariot Board and our team for their dedication, commitment and enthusiasm and
our shareholders for their ongoing support.
Our mission is to create value and deliver positive change through investment
in projects that are driving the energy revolution and we are fully committed
to executing this. As a nimble and entrepreneurial company, we will continue
to leverage our network and utilise our expertise to seek out new ventures
where we can play a key role and that fit within our ethos and strategy. We
are excited about the potential that sits within our current portfolio, as
well as opportunities that the future holds. We look forward to our ongoing
progression and evolution.
Adonis Pouroulis
Chief Executive Officer
21 June 2022
Chief Financial Officer's Review
Funding and Liquidity as at 31 December 2021
The Group entered 2022 with cash of US$19.4 million as at 31 December 2021 (31
December 2020: US$3.7 million) and no debt. The proceeds of US$5 million
raised from the issue of underwriting shares to Magna Capital LDA in the
post-period, as well as the equity fundraising completed in June 2022 of
US$29.5 million means the Group is well capitalised to execute the next phase
of its strategy to both monetise the high value Anchois gas development
project and progress its highly scalable Transitional Power stream and early
stage green hydrogen project.
An extensive cost reduction programme in 2020 provided Chariot with a lower
cost base and leaner foundation whilst still retaining operational capability.
This leaner foundation has been built upon throughout 2021 as the Company has
grown its presence in Morocco and acquired a renewables business.
During 2021, the Group invested c.US$12 million into the business through its
successful appraisal and exploration drilling campaign in Morocco, acquisition
of the AEMP business and administration activities (31 December 2020: c.US$6
million).
As at 31 December 2021, US$5.4 million of the Group's cash balances were held
as security against licence work commitments. The increase from US$0.5 million
at 31 December 2020 was due to an increase in Moroccan bank guarantees.
Financial Performance - Year Ended 31 December 2021
The Group's loss after tax for the year to 31 December 2021 was US$7.0
million, a decrease of US$63.6 million on the US$70.6 million loss incurred
for the year ended 31 December 2020 which was driven by an impairment charge
of US$66.7 million recorded against the full book value of Namibian and
Brazilian exploration assets. This equates to a loss per share of US$(0.01)
compared to a loss per share of US$(0.19) in 2020.
The share-based payments charge of US$0.8 million for the year ended 31
December 2021 was US$0.6 million higher than the US$0.2 million in the
previous year due mostly to the granting of employee and Directors' deferred
share awards in the current year.
Other administrative expenses of US$5.7 million for the year ended 31 December
2021 are higher than the previous years' US$3.7 million driven mainly by
business development projects and acquisition costs as the Company looked to
expand its Transitional Gas and Transitional Power business units, combined
with costs of pre-feasibility studies expensed on the green hydrogen project.
Finance expenses of $0.5 million (31 December 2020: income of US$0.5 million)
relates to the holding of cash balances in Sterling to meet administrative
expenses in the current year, resulting in higher foreign exchange losses,
inclusive of US$0.1 million (31 December 2020: US$0.1 million) unwinding of
the discount on the lease liability under IFRS 16.
Exploration and Evaluation Assets as at 31 December 2021
Having impaired the non-core exploration activities in Namibia and Brazil in
2020, the increase in carrying value of the Group's exploration and evaluation
assets in 2021 relates entirely to the Morocco geographic area reflecting
US$18.9 million invested in the successful appraisal and exploration drilling
of Anchois and other licence costs which were capitalised.
Business acquisition - AEMP
In June 2021 the Company completed the acquisition of the business of Africa
Energy Management Platform ("AEMP") which has been accounted for as an
acquisition of a business under IFRS 3. Accordingly, at acquisition the total
identifiable assets and liabilities assumed were US$0.5 million, the majority
of which was attributable to the 10% project equity held in the operational
Essakane power project. The balance of the consideration of US$0.4 million at
the time of acquisition was allocated to goodwill. No impairment of the
investment in power projects or goodwill was identified in the period from
acquisition to 31 December 2021.
The total consideration payable was US$0.9 million, of which US$0.1million was
paid in cash, US$0.7million in new ordinary shares issued and US$0.1 million
as deferred consideration payable in equity (shares to be issued reserve).
Further contingent payments relating to the acquisition will be recognised as
share based payments and a charge of US$0.1 million has been included in the
period to 31 December 2021.
Post the year end two Memorandum of Understandings ("MoUs") were announced
indicating the value that is already being generated from the acquisition,
with a 40MW solar project to sell solar power to the Tharisa mine in South
Africa and a 430MW project to sell low carbon energy to First Quantum
Minerals' mining operations in Zambia. Both projects are large scale, early
stage and are in partnership with Total Eren, with no commitments in the near
term.
Other Assets and Liabilities as at 31 December 2021
In 2021, wellheads and casing valued at a total of US$1.2 million were held in
inventory relating to the Anchois drilling campaign in Morocco, as compared
with Nil at the end of 2020, when inventory disposed of for scrap value had
resulted in a charge of US$0.5 million to the income statement.
As at 31 December 2021, the Group's net balance of current trade and other
receivables and current trade and other payables shows a net current liability
position of US$14.2 million (31 December 2020: US$0.2 million) with the
increase due primarily to outstanding payables for the Moroccan drilling
campaign.
Under IFRS 16 the Group has recognised a depreciating right-of use asset of
US$0.3 million (31 December 2020: US$0.7 million) and a corresponding lease
liability based on discounted cashflows of US$0.4 million (31 December 2020:
US$0.8 million), with the reductions resulting from depreciation and rental
commitments paid that are partially offset by unwinding of the discount on the
lease liability.
Outlook
The recent announcement of Societe Generale being appointed to lead debt
financing of the Anchois gas project in Morocco demonstrates the project's
bankable economic fundamentals. We are pleased to be part of the solution to
Morocco's domestic energy needs and a part of the wider European supply.
The fundraise completed in June 2022 of US$29.5 million means Chariot is
funded to accelerate the FEED programme to FID,and fast-track to cashflows
from production into the gas hungry Moroccan and European markets. There is
much hard work ahead as we enter into the next phases of the project including
negotiations on gas sales and project finance but we move forward encouraged
and emboldened by a highly successful drilling result which has potentially
opened up a new gas basin and a much larger resource base than pre-drill
estimates had planned for. We are equally enthused by the progress being made
in the Transitional Power business as two world class projects have already
been announced in early 2022 which demonstrate the bank of projects in the
pipeline being accelerated in partnership with Total Eren. We will also look
to strategically partner at the subsidiary level within the Transitional Power
business.
Julian Maurice-Williams
Chief Financial Officer
21 June 2022
Technical Director's Review of Operations
Transitional Gas
Overview:
Chariot has operated upstream projects in Morocco since 2013, with the current
portfolio now comprising the Lixus Offshore and Rissana Offshore licences.
Lixus Offshore was awarded in 2019, secured after our team re-assessed the
commercial potential of the on-block Anchois gas discovery (made in 2009) and
identified a low-risk follow-on portfolio in the same play system. Following
the reprocessing and reinterpretation of 3D seismic data, Anchois was
estimated to contain 361 Bcf of 2C Contingent Resources, by independent
assessment from NSAI in 2020. With 75% working interest (operator), Chariot
works alongside partners Office National des Hydrocarbures et des Mines
("ONHYM"), who hold a 25% carried interest in the 1,794km² area licence
block.
The Anchois-2 appraisal and exploration drilling campaign was successfully
completed in January 2022 with operations being conducted by the Chariot team,
safely, on time and on budget. The well encountered the previously discovered
A & B gas sands, confirming the extension of the gas bearing intervals,
and identified new gas-bearing reservoirs in the lower B sands and also in the
C, M and O sands exploration objectives.
In 2022, Chariot was awarded the Rissana Offshore licence (as operator with
75% interest, ONHYM 25%), an extensive licence area of ~8,500km², fully
encompassing the maritime borders of Lixus, thereby capturing the upside
potential of the proven gas bearing tertiary fairways at Anchois, as well as
providing exciting new play opportunities.
Anchois Drilling Results:
An appraisal campaign was initiated on the Anchois gas field in December 2021,
led by Chariot's Group Drilling Manager David Brecknock and a highly
experienced team including many personnel from our previous drilling campaign
in Namibia in 2018. This campaign comprised a new appraisal and exploration
well, Anchois-2, with additional plans to assess the potential of the original
Anchois-1 discovery well to be a producer in any subsequent development of the
field.
The Anchois-2 well was drilled to a Total Depth (TD) of 2,512m by the Stena
Don semi-submersible drilling rig in 381m of water. Following a comprehensive
pre-campaign design and planning phase, the drilling operations were completed
in 31 days, which is approximately half the time of the original discovery
well. Of particular importance was the drilling efficiency, which allowed all
the reservoir objectives to be drilled in a single hole section, with TD
reached in 17 days from the rig arriving on location, permitting a single
comprehensive wireline evaluation programme across all reservoir zones. The
operations were conducted on time and on budget, during heavy travel
restrictions due to the Covid pandemic, including the emergence of the Omicron
variant, demonstrating the nimbleness and exemplary contingency planning from
the team.
In the appraisal objectives, the well successfully encountered the A and B gas
sands, discovered in the original Anchois-1 well. This demonstrated the
extension of these accumulations and permitted recovery of important
subsurface data missing from the original well, such as reservoir pressures
and gas samples from the A sand interval, considering the well was not
optimised for an evaluation of that interval. Within the primary objective,
the B gas sands, a new "lower B sand" reservoir was encountered, with a deeper
gas-water contact (GWC) than seen in the original well. Porosity and
permeability confirmed good reservoir quality, consistent with Anchois-1, with
over 55 m of net gas pay identified in the Anchois-2 B sands from subsurface
data, comparing favourably to the original well which had 33 m of net gas pay
in the B sands.
In the exploration objectives, the well successfully identified new
discoveries in the C, M and O gas sands. Of these, the C and M sands were the
primary pre-drill targets at this location and related to thin gas pays and
water-bearing sands in the Anchois-1 well, respectively. Chariot's
interpretation of the reprocessed seismic data identified locations within the
Anchois structure where the seismic attributes suggested that reservoir
quality improved in the C sands and that the M sands could be gas-bearing in
an up-dip location. These reservoirs were found to be entirely gas-bearing and
thicker than pre-drill expectations. Drilling continued into the O sands,
largely as a stratigraphic test to confirm the presence of reservoir since
this location was not optimised to test a specific closure. However,
gas-bearing reservoir zones were encountered, above a thick section of good
porosity, water-bearing reservoir, which continued to TD.
Data acquired from subsurface electrical logging underpins our understanding
of the reservoir and fluid properties. A comprehensive evaluation of the well
was undertaken through wireline logging, subsurface formation testing,
including reservoir pressures and gas sampling, sidewall cores, and well bore
seismic profiles. The data acquired from the well were analysed through a
post-drilling evaluation programme, resulting in a total calculated net gas
pay of approximately 150m, compared to 55m in the original Anchois-1 discovery
well. Additionally, the gas sampled within the seven gas-bearing zones were
found to be of high quality, with a consistent composition throughout the
well, with >96% methane (dry gas) and without problematic impurities such
as hydrogen sulphide or carbon dioxide.
Anchois-2 was suspended for potential future re-entry and completion as a
production well in the development of the field. Subsequent to the Anchois-2
operations, the Anchois-1 gas discovery well integrity was assessed also left
suspended for future potential re-entry as a producer.
Development Plan:
As part of the initial exploration period work commitments on Lixus, and in
anticipation of the appraisal drilling campaign, Chariot performed pre-FEED
studies on a development of the Anchois field with Xodus in 2020. This work
validated the subsea-to-shore development concept for the Anchois gas field
and was used to estimate development costs and schedule to support the
economic viability of the project. In early 2021, Chariot entered into a
Collaboration Agreement with the Subsea Integration Alliance (SIA), a
non-incorporated alliance of leading gas development contractors, with the aim
of the SIA and Schlumberger supplying front-end engineering and design (FEED);
engineering, procurement and construction (EPC); and operations and
maintenance (O&M) for the Anchois development project. These activities
laid the foundations for the opportunity of a fast-track development
programme, prior to success at Anchois-2.
Following the drilling campaign, Chariot is now focussed on progressing with a
development plan for the Anchois gas resources, including both the original
gas sands and potentially also the newly-discovered reservoirs, considering
that the consistent high quality gas composition would allow all reservoirs to
be developed through the same infrastructure. This plan considers an initial
development with two or more subsea producers tied to an onshore Central
Processing Facility ('CPF') with a capacity to process 70 mmscfd. An onshore
pipeline would connect the CPF to the existing Maghreb-Europe gas pipeline,
giving access to both Moroccan domestic markets and export routes into Spain.
Activity for the remainder of 2022 will include FEED engineering on all
aspects of the development, including drilling and completion, subsea
production systems, offshore flowline and umbilical, onshore gas processing
plant and the onshore export pipeline. One of the benefits of working with the
SIA is the ability to utilise standardised equipment and to shorten cost and
timing uncertainty associated to engineering and procurement activities.
Gas Commercialisation:
In Morocco, alongside a growing renewable power programme, imported fossil
fuels dominate and the country relies on imports for over 90% of its primary
energy needs. The Maghreb-Europe Pipeline ("GME") was a key import route for
Morocco from Algeria for power generation, with domestic power stations at Ain
Beni Mathar and Tahaddart consuming up to 100 mmscfd since 2012, representing
approximately 10% of Morocco's national power generation capacity. However, at
the end of October 2021, the long-standing gas sales agreement between Morocco
and Algeria ended, meaning the loss of gas supply to those power plants.
With the potential to provide a material local gas production, Chariot's
projects fit in with the Kingdom of Morocco's national strategy of industrial
development, economic decarbonisation and diversification of the energy mix,
allowing the reduction of dependency on imported fuels for both power
generation and industrial consumption.
Chariot licences are located within an important industrial region along
Morocco's Atlantic coast. The stretch from Kenitra to Casablanca, adjacent to
Anchois, represents approximately two-thirds of Morocco's GDP and population;
it is anticipated that industrial gas demand will grow significantly. The
initial Anchois field gas volumes were regarded sufficient to meet expected
domestic demands, however, with the confirmed discovery increasing volumes,
Chariot has identified the opportunity to supply surplus gas into the European
market, via the GME connection with Spain. This represents a very large and
increasingly attractive market which could both take surplus gas over and
above domestic demand from the initial Anchois development and also provide a
rapid commercialisation route for any additional discoveries to be tied-back
to the Anchois infrastructure.
The industrial demand for gas is fast growing with prices already established
in the region of US$10-11/mcf. Lixus boasts excellent contract terms in what
is widely known internationally to be a favourable fiscal environment. There
is at present a 10-year corporate tax holiday from the commencement of
production and a low 3.5% royalty on gas produced offshore at the water depth
of the Anchois discovery, with ONHYM paying its 25% share of the development.
The 10-year tax holiday is an important incentive to encourage the initiation
of a domestic offshore gas supply.
The importance of Lixus to the Chariot Group as a strategic asset has
increased considerably since the discovery at Anchois-2, but moreover to the
Kingdom of Morocco, given the strong ESG credentials and ability to alleviate
the growing energy demand, which is anticipated to double by 2040.
Gas Market:
Domestic markets in Morocco offer attractive gas prices to both the industrial
and power markets; the current pre-drill economic model is supported by
audited 2C 361Bcf estimate base case resource, with 70mmscf per day potential
at US$8-15 per mcf to power and industry.
In October 2021, Chariot signed a gas sales agreement with a leading
international energy group for gas offtake. The MoU will underpin the
development as part of a long-term partnership, which offers an important
opportunity to sell surplus gas above domestic requirements into the European
market, utilising the connection of the Maghreb-Europe (GME), which provides
direct access to Europe via Spain.
With gas prices in Spain typically ranging from 20 to 60 US$/mmbtu during Q4
2021 to Q1 2022 , and with the widely-held expectation that European gas
prices will remain high for the medium term, selling surplus gas into the
European market provides an extraordinary opportunity for Chariot to play a
role in the diversification of Europe's gas supplies and for this market to
provide a catalyst to deliver accelerated growth from the upsides in the
exploration portfolio.
The Anchois Development project is targeting first gas from as early as 2024.
Exploration Portfolio:
In Morocco, Chariot has built an extensive library of seismic data, including
>4,000 km² of 3D and nearly 20,000 km of 2D regional seismic data. Access
to this vast dataset has been crucial in understanding the on-block play types
and maturing a material prospect portfolio. With the intention to acquire more
data over areas that have already revealed significant prospectivity and play
extensions, the team are currently focussed on maturing exploration
opportunities over the Lixus and Rissana blocks.
Lixus:
Following the positive drilling results of 2022, additional exploration
prospects within the Lixus licence area with similar seismic attributes to the
Anchois discovery are now considered to be low risk. Accordingly, extensive
work is ongoing to extrapolate the lessons learnt from drilling results and
the application of seismic attribute analysis to de-risk and rank the
follow-on portfolio. This work includes conventional seismic interpretation,
revision of the depth model of the 3D dataset reprocessed in 2020, and
advanced analysis such as AVO, seismic inversion and spectral decomposition.
The focus areas de-risked by the Anchois-2 well are the so-called "hubs",
groups of prospects that can be tied-back through a potential development
initially unlocked by one anchor prospect, which itself would provide the
flowlines to the onshore CPF:
· The Anchois Hub consists of the "Anchois Satellites", which are
extensions of the discovered sand intervals into adjacent fault blocks and are
typically within 5-10km of the existing Anchois wells. The satellite prospects
encompass stacked targets within the Miocene reservoirs (A, B, C, M and O
sands). These targets and have been discretely mapped and can be calibrated to
the gas bearing intervals at Anchois, with upside contributions from younger,
shallower Pliocene sands which also exhibited strong attribute support for
gas-bearing reservoir.
· The Maquereau Hub is located on the NE boundary of the larger
Mio-Pliocene basin in the central part of the block, approximately 20 km
north-east of Anchois. Prospects are formed of clastic turbidite systems that
were deposited in the same environment and basin as the Anchois sands, however
redirected to the north, due to growing accommodation space from listric
faulting. The primary target within this hub is Maquereau Central.
· The Shallow Hub hosts key shallow water prospects Anguille and
Tombe; these clastic channel prospects are in a basin east of Anchois, within
10km of the coast, in water depths of <100m. The reservoir targets can be
correlated across the basin to good quality sands intersected in the 2011 Deep
Thon-1 well. The primary target within this hub is Anguille.
Rissana:
The Rissana Offshore licence was awarded to Chariot with 75% interest and
operatorship in February 2022; the block has a total area of 8,489km².
Surrounding the Lixus Offshore licence, Rissana holds significant volumes of
on block 3D data, including recaptured areas of the recently reprocessed 2020
and 2017 3D cubes from the Lixus licence and Chariot's historical licence
areas respectively.
Rissana hosts a substantial portfolio of exploration prospects in a variety of
different plays, including an extension of the Anchois gas play that was
confirmed by the Anchois-2 gas discovery in 2022. Other plays include Miocene
- Pliocene clastic sand systems further north, where prospects have reservoirs
of similar age to prospects on the Lixus block across a wide range of trapping
styles, with characteristic supporting seismic attributes.
One of the key prospects on Rissana is Emissole, located in the north-eastern
corner of the 3D dataset. This tilted fault block structure holds 5 stacked
reservoir intervals set in an unconformity sub-crop setting. Emissole has
several visible flat spots and AvO anomalies, supporting significant volumes
in shallow water depths of approximately 150m and with several follow-up
opportunities.
Legacy 3D prospects from the previous Mohammedia licence have also been
reintegrated into the Chariot portfolio. The shallow marine, clastic deltaic
prospects add giant-scale volumetric potential to the exploration portfolio.
Other Blocks:
Brazil:
The Barreirinhas basin licence blocks are currently in a period of suspension
and future extensions are possible due in part to the impacts of the COVID-19
pandemic.
Namibia:
Chariot has made the decision not to renew operatorship of the 2312 A & B
"Central Blocks" that comprise the PEL 71 licence. Chariot retains the
option to back-in to the 2714 A & B "Southern Blocks" licence.
Duncan Wallace
Technical Director
21 June 2022
Transitional Power
Strategic partnership with Total Eren
Further to the acquisition of AEMP last year, Chariot's Transitional Power
team has continued to go from strength to strength, building up the team, and
developing its plans and objectives as well as further strengthening its
strategic partnership with Total Eren, a leading France based renewable energy
Independent Power Producer to work together on the joint origination and
development of wind and solar projects for mining clients in Africa. This
partnership is in place for the next three years, with the option to extend
for a further two thereafter and Chariot has the right to invest between
15-49% into the co-developed projects.
To date, the partners have built an active pipeline of 485 MW of African
mining power projects and are targeting 1GW by the end of the year. Chariot
and Total Eren also have ambitions to collaborate on other projects and
transactions in Africa.
ESSAKANE PROJECT: BURKINA FASO
Chariot's first renewable project supplies 15MW of solar power as part of a
hybrid solar-thermal power solution to IAMGOLD's Essakane gold mine in Burkina
Faso. On commissioning, the project was the largest hybrid Photo Voltaic-Heavy
Fuel Oil power plant in the world and one of the largest solar facilities in
sub-Saharan Africa with 130,000 solar panels.
Chariot holds 10% equity in this award-winning project, with Total Eren
holding the remaining 90%. Chariot has been involved in the project since the
origination of the mine, including: designing the size and determining the
operating philosophy of the hybrid power plant; obtaining local authorisations
and permits; selection of the engineering, procurement and construction
contractor; financing; and, operating post-completion. The project's
successful completion and generation of returns provide proof of concept and a
valuable showcase from which replication and scale-up is anticipated.
100% of permanent Essakane project staff are nationals, demonstrating the
benefit to local communities, while 1% of project revenues are dedicated to
community investment, such as tree planting campaigns and the distribution of
solar kits to schools. Carbon credits are also registered with the UN to raise
funds for community developments.
THARISA: SOUTH AFRICA
In February 2022, Chariot and Total Eren jointly announced the signing of a
Memorandum of Understanding ("MoU") with Tharisa plc, the platinum group
metals and chrome producer, to develop, finance, construct, own, operate and
maintain a solar photovoltaic (PV) project for the supply of electricity to
the Tharisa mine, in the North West Province, South Africa. The solar PV
project is initially anticipated to be 40 MW with demand expected to increase
over the life of the Tharisa Mine. This MoU is the first step towards the
implementation of the Project and signing of a long-term Power Purchase
Agreement (PPA) for the supply of electricity on a take-or-pay basis and
project development is already well underway.
Adonis Pouroulis, Acting CEO of Chariot, beneficially owns a substantial
proportion of the total voting rights in Tharisa.
FIRST QUANTUM: ZAMBIA
As also announced post period in March 2022, Chariot and Total Eren have
established a partnership with First Quantum Minerals ("FQM"), a global mining
and metals company, to advance the development of a 430 MW solar and wind
power project for its mining operations in Zambia.
This flagship project has the potential to complement and expand Zambia's
existing renewable energy capacity and would provide FQM with competitive and
sustainable power for its Zambian mining operations, delivering on FQM's
commitment to decarbonisation as it seeks to reduce its carbon footprint and
improve energy security through diversification of supply.
Green Hydrogen Project
Project Nour
Chariot's Green Hydrogen project, "Project Nour", spans two onshore areas
totalling approx. 5,000 km(2), across northern Mauritania; a location that
takes advantage of the wide scale wind and solar potential, important for
large-scale renewable energy generation and low-cost hydrogen production.
Project Nour also benefits from geographical proximity to Nouadhibou
(Mauritania's deep-sea port) and to large European markets, with the potential
to make Mauritania one of the world's main producers and exporters of green
hydrogen.
Chariot is working in partnership with the Government of Mauritania to support
their ambition to become a leading producer and exporter of green hydrogen,
the latter strengthened through the MoU signed with the Port of Rotterdam in
April 2022, which was a first step in establishing supply chains to enable the
sale of green hydrogen and its derivative products (notably ammonia) into
Europe.
Project Nour has the ability to create a range of positive impacts through
socio-economic development in Mauritania through increased investment, job
creation, skill development and increased government revenues, and its world
class potential was verified by the Pre-Feasibility Study ("PFS"), as
announced in May 2022. A Framework Agreement is now in place which defines the
terms and guiding principles to pave the way for the in-depth feasibility
study that will be undertaken over the next 24 months and a partnering process
is underway with the objective of forming a world class consortium to further
develop the project.
Green Hydrogen Market
Green hydrogen is predicted to play a vital role in the global energy
transition; the results of the PFS show the potential scale of Project Nour,
with up to 10 GW of installed electrolysis to produce green hydrogen and green
ammonia, Project Nour could become one of the largest global projects of its
kind by 2030.
The International Renewable Energy Agency projects that the combined value of
hydrogen and its derivatives will be larger than the fossil fuel market by
2050.
Pre-Feasibility Study:
The PFS for Project Nour, completed in 2022, confirmed the project's ability
to produce some of the cheapest green hydrogen in the world:
· Unique and complementary wind and solar conditions, underpinning
attractive project economics
· Possibility of production of competitive green ammonia for export
· Partnering process underway with the objective to form a
world-class consortium
Chariot recently signed a Framework Agreement with the Government of
Mauritania, paving the way for the in-depth feasibility study that will seek
to confirm the potential for installing up to 10GW of electrolyzer capacity.
Chariot Limited
Consolidated Statement of Comprehensive Income for the Year Ended 31 December
2021
Year ended 31 December 2021 Year ended 31 December 2020
Notes US$000 US$000
Share based payments 21 (760) (222)
Loss on disposal of inventory 14 - (524)
Impairment of exploration asset 10 - (66,666)
Other administrative expenses (5,688) (3,678)
Total operating expenses (6,448) (71,090)
Loss from operations 4 (6,448) (71,090)
Finance income 6 - 543
Finance expense 6 (512) (72)
Loss for the year before taxation (6,960) (70,619)
Tax expense 8 - (1)
Loss for the year and total comprehensive loss for the year attributable to (6,960) (70,620)
equity owners of the parent
Loss per Ordinary share attributable to the equity holders of the parent - 9 US$(0.01) US$(0.19)
basic and diluted
All amounts relate to continuing activities.
The notes form part of these financial statements.
Chariot Limited
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2021
Share based payment reserve Total attributable to equity holders of the parent
For the year ended 31 December 2020 Foreign exchange reserve
Share capital Share premium Contributed equity Retained deficit
US$000 US$000 US$000 US$000 US$000 US$000 US$000
As at 1 January 2020 6,268 356,503 796 5,408 (1,241) (281,174) 86,560
Loss and total comprehensive loss for the year - - - - - (70,620) (70,620)
Share based payments - - - 222 - - 222
Transfer of reserves due to issue of share awards 281 3,106 - (3,387) - - -
Transfer of reserves due to lapsed share options - - - (796) - 796 -
Transfer of reserves - - - 1,241 (1,241) -
As at 31 December 2020 6,549 359,609 796 1,447 - (352,239) 16,162
Share based payment reserve Total attributable to equity holders of the parent
For the year ended 31 December 2021 Shares to be issued reserve
Share capital Share premium Contributed equity Retained deficit
US$000 US$000 US$000 US$000 US$000 US$000 US$000
As at 1 January 2021 6,549 359,609 796 1,447 - (352,239) 16,162
Loss and total comprehensive loss for the year - - - - - (6,960) (6,960)
Issue of capital 5,147 25,585 - - - - 30,732
Issue costs - (1,876) - - - - (1,876)
Share based payments - - - 760 - - 760
Share based deferred consideration - - - 142 - 142
As at 31 December 2021 11,696 383,318 796 2,207 142 (359,199) 38,960
The following describes the nature and purpose of each reserve within owners'
equity.
Share capital
Amount subscribed for share capital at nominal value.
Share premium Amount
subscribed for share capital in excess of nominal value.
Contributed equity Amount
representing equity contributed by the shareholders.
Share based payments reserve Amount representing the cumulative charge
recognised under IFRS2 in respect of share option, LTIP and RSU schemes.
Foreign exchange reserve Foreign exchange differences
arising on translating into the reporting
currency.
Retained deficit
Cumulative net gains and losses recognised in the financial statements.
Shares to be issued reserve Deferred consideration on
acquisition recognized in equity
The notes form part of these financial statements.
Chariot Limited
Consolidated Statement of Financial Position as at 31 December 2021
31 December 2021 31 December 2020
Notes US$000 US$000
Non-current assets
Exploration and evaluation assets 10 31,750 12,822
Investment in power projects 11 450 -
Goodwill 11 380 -
Property, plant and equipment 12 84 43
Right of use asset 16 328 655
Total non-current assets 32,992 13,520
Current assets
Trade and other receivables 13 1,167 811
Inventory 14 1,183 -
Cash and cash equivalents 15 19,406 3,740
Total current assets 21,756 4,551
Total assets 54,748 18,071
Current liabilities
Trade and other payables 17 15,358 1,060
Lease liability: office lease 16 430 409
Total current liabilities 15,788 1,469
Non-current liabilities
Lease liability: office lease 16 - 440
Total non-current liabilities - 440
Total liabilities 15,788 1,909
Net assets 38,960 16,162
Capital and reserves attributable to equity holders of the parent
Share capital 18 11,696 6,549
Share premium 383,318 359,609
Contributed equity 796 796
Share based payment reserve 2,207 1,447
Shares to be issued reserve 11 142 -
Retained deficit (359,199) (352,239)
Total equity 38,960 16,162
The notes form part of these financial statements.
The financial statements were approved by the Board of Directors and
authorised for issue on 21 June 2022.
George Canjar
Chairman
Chariot Limited
Consolidated Cash Flow Statement for the Year Ended 31 December 2021
Year ended 31 December 2021 Year ended 31 December 2020
US$000 US$000
Operating activities
Loss for the year before taxation (6,960) (70,619)
Adjustments for:
Loss on disposal of inventory - 524
Impairment of exploration asset - 66,666
Finance income - (543)
Finance expense 512 72
Depreciation 358 387
Share based payments 760 222
Net cash outflow from operating activities before changes in working capital (5,330) (3,291)
Increase in trade and other receivables (116) (34)
Increase / (decrease) in trade and other payables 445 (728)
Increase in inventories (1,183) -
Cash outflow from operating activities (6,184) (4,053)
Tax payment - (1)
Net cash outflow from operating activities (6,184) (4,054)
Investing activities
Finance income - 29
Payments in respect of property, plant and equipment (72) (8)
Payments in respect of exploration assets (5,301) (1,971)
Net cash consideration on acquisition (21) -
Net cash outflow used in investing activities (5,394) (1,950)
Financing activities
Issue of ordinary share capital net of fees 28,175 -
Payments of lease liabilities (419) (337)
Finance expense on lease (46) (72)
Net cash from financing activities 27,710 (409)
Net increase / (decrease) in cash and cash equivalents in the year 16,133 (6,413)
Cash and cash equivalents at start of the year 3,740 9,635
Effect of foreign exchange rate changes on cash and cash equivalents (466) 518
Cash and cash equivalents at end of the year 19,406 3,740
The notes form part of these financial statements.
Chariot Limited
Notes forming part of the financial statements for the year ended 31 December
2021
1 General information
Chariot Limited is a company incorporated in Guernsey with registration number
47532. The address of the registered office is Oak House, Hirzel Street, St
Peter Port, Guernsey, GY1 2NP. The nature of the Company's operations and its
principal activities are set out in the Report of the Directors and in the
Technical Director's Review of Operations.
2 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with UK Adopted
International Accounting Standards.
In accordance with the provisions of section 244 of the Companies (Guernsey)
Law, 2008, the Group has chosen to only report the Group's consolidated
position, hence separate Company only financial statements are not presented.
The financial statements are prepared under the historical cost accounting
convention on a going concern basis.
Going concern
As at 31 December 2021 the Group had cash of US$19.4 million, no debt and
minimal licence commitments.
In June 2022 an equity fundraise completed which raised US$29.5 million.
The Directors have reviewed the cash-flow projection for the Group to consider
if it has sufficient finance in place to meet its financial commitments for at
least 12 months.
The Group has recently completed a successful appraisal drilling campaign at
Anchois and is now funded to advance the engineering and design of the Anchois
Gas Development, including FEED project, project financing, gas sales and
updated reserves report, to reach FID. The Company continues to focus on
partnering in both the Transitional Gas and Transitional Power business
streams, and the Board has the reasonable expectation of generating future
value and cash from this strategy. Based on these forecasts the Board has a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future.
For these reasons, the Directors continue to adopt the going concern basis in
preparing the Annual Report and Accounts.
New Accounting Standards
The following new standards and amendments to standards are mandatory for the
first time for the Group for the financial year beginning 1 January 2021. The
implementation of these standards and amendments to standards has had no
material effect on the Group's accounting policies.
Standard Effective year commencing on or after
Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 1 January 2021
7, IFRS 4 and IFRS 16)
Certain new standards and amendments to standards have been published that are
mandatory for the Group's accounting periods beginning after 1 January 2022 or
later years to which the Group has decided not to adopt early when early
adoption is available.
The implementation of these standards and amendments is expected to have no
material effect on the Group's accounting policies. These are:
Standard Effective year commencing on or after
Annual Improvements 2018-2020 Cycle 1 January 2022*
IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended 1 January 2022*
Use)
IFRS 3 Business Combinations (Amendment - Reference to the Conceptual 1 January 2022*
Framework)
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment - 1 January 2022*
Onerous Contracts - Cost of Fulfilling a Contract)
*Endorsed for use in the EU but not in the UK.
IFRS 16 - Leases
Under IFRS 16 lease liabilities are initially measured at the present value of
the remaining lease payments and discounted using an incremental borrowing
rate at the date of recognition. Associated right-of-use assets are measured
at an amount equal to the lease liability adjusted for any prepaid or accrued
lease payments.
Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to profit or loss over the lease period to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
The Group has elected not to recognise right-of-use assets and liabilities for
leases where the total lease term is less than or equal to 12 months, or for
leases of low-value assets. Low-value assets comprise IT equipment and small
items of office furniture. Payments associated with short-term leases and
leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss.
Further details on the lease liability can be found in note 16.
Exploration and evaluation assets
The Group accounts for exploration and evaluation costs in accordance with the
requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources.
Any costs incurred prior to obtaining the legal rights to explore an area are
expensed immediately to the Income Statement. All expenditures relating to the
acquisition, exploration and appraisal of oil and gas interests, including an
appropriate share of directly attributable overheads, are recognised as
exploration and evaluation assets and initially capitalised by reference to
appropriate geographic areas. Costs recognised as exploration and evaluation
assets are transferred to property, plant and equipment and classified as oil
and gas assets when technical feasibility and commercial viability of
extracting hydrocarbons is demonstrable.
Costs recognised as exploration and evaluation assets are tested for
impairment whenever facts and circumstances suggest that they may be impaired.
Where exploration wells have been drilled, consideration of the drilling
results is made for the purposes of impairment of the specific well costs. If
the results sufficiently enhance the understanding of the reservoir and its
characteristics it may be carried forward when there is an intention to
continue exploration and drill further wells on that target.
Where farm-in transactions occur which include elements of cash consideration
for, amongst other things, the reimbursement of past costs, this cash
consideration is credited to the relevant accounts within the geographic area
where the farm-in assets were located. Any amounts of farm-in cash
consideration in excess of the value of the historic costs in the geographic
area are treated as a credit to the Consolidated Statement of Comprehensive
Income.
Investment in power projects
The Group, through its subsidiary AEMP Essakane Solar SAS, holds a 10%
investment in the Essakane solar project, Burkina Faso. This investment is
recognised at fair value with any movement in fair value subsequently
recognised in the Consolidated Statement of Comprehensive Income.
Further details on the investment in power projects can be found in note 11.
Inventories
The Group's share of any material and equipment inventories is accounted for
at the lower of cost and net realisable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred
in bringing the inventories to their present location and condition.
Taxation
Income tax expense represents the sum of the current tax and deferred tax
charge for the year.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax
bases, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that have been enacted or
substantively enacted and are expected to apply in the year when the liability
is settled or the asset realised. Deferred tax is charged or credited to the
Consolidated Statement of Comprehensive Income, except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Foreign currencies
Transactions in foreign currencies are translated into US Dollars at the
exchange rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated into US Dollars
at the closing rates at the reporting date and the exchange differences are
included in the Consolidated Statement of Comprehensive Income. The functional
and presentational currency of the parent and all Group companies is the US
Dollar.
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost or fair value on acquisition
less depreciation and impairment. Depreciation is provided on a straight line
basis at rates calculated to write off the cost less the estimated residual
value of each asset over its expected useful economic life. The residual value
is the estimated amount that would currently be obtained from disposal of the
asset if the asset were already of the age and in the condition expected at
the end of its useful life.
Property, plant and equipment are depreciated using the straight line method
over their estimated useful lives over a range of 3 - 5 years.
The carrying value of property, plant and equipment is assessed annually and
any impairment charge is charged to the Consolidated Statement of
Comprehensive Income.
Goodwill
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
Share based payments
Where equity settled share awards are awarded to employees or Directors, the
fair value of the awards at the date of grant is charged to the Consolidated
Statement of Comprehensive Income over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity
instruments expected to vest at each balance sheet date so that, ultimately,
the cumulative amount recognised over the vesting period is based on the
number of awards that eventually vest. Market vesting conditions are factored
into the fair value of the awards granted. As long as all other vesting
conditions are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not adjusted for
failure to achieve a market vesting condition.
Where the terms and conditions of awards are modified before they vest, the
increase in the fair value of the awards, measured immediately before and
after the modification, is also charged to the Consolidated Statement of
Comprehensive Income over the remaining vesting period.
Where shares already in existence have been given to employees by
shareholders, the fair value of the shares transferred is charged to the
Consolidated Statement of Comprehensive Income and recognised in reserves as
Contributed Equity.
Basis of consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if it has power over the investee
and it is exposed to variable returns from the investee and it has the ability
to use its power to affect those variable returns. Control is reassessed
whenever facts and circumstances indicate that there may be a change in any of
these elements of control. The consolidated financial statements present the
results of the Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between the Group
companies are therefore eliminated in full.
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
Trade and other receivables
Trade and other receivables are stated initially at fair value and
subsequently at amortised cost.
Financial instruments
The Group's financial assets consist of a bank current account or short-term
deposits at variable interest rates and other receivables. Any interest earned
is accrued and classified as finance income.
The Group's financial liabilities consist of trade and other payables. The
trade and other payables are stated initially at fair value and subsequently
at amortised cost.
Joint operations
Joint operations are those in which the Group has certain contractual
agreements with other participants to engage in joint activities that do not
create an entity carrying on a trade or business on its own. The Group
includes its share of assets, liabilities and cash flows in joint
arrangements, measured in accordance with the terms of each arrangement, which
is usually pro rata to the Group's interest in the joint operations. The Group
conducts its exploration, development and production activities jointly with
other companies in this way.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experiences and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
deviate from these estimates and assumptions. If these estimates and
assumptions are significantly over or under stated, this could cause a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year. The areas where this could impact the Group are:
a) Areas of judgement
i. Recoverability of exploration and evaluation assets
Expenditure is capitalised as an intangible asset by reference to appropriate
geographic area and is assessed for impairment when management assesses that
circumstances suggest that the carrying amount may exceed its recoverable
value.
ii. Treatment of farm-in transactions
All farm-in transactions are reflected in these financial statements in line
with the accounting policy on Exploration and Evaluations assets. Farm-in
transactions are recognised in the financial statements if they are legally
complete during the year under review or, if all key commercial terms are
agreed and legal completion is only subject to administrative approvals which
are obtained within the post balance sheet period or are expected to be
obtained within a reasonable timeframe thereafter.
iii. Business combinations
The assessment of the purchase price allocation in the acquisition of AEMP
included a number of judgements and estimates exercised by management
including assessment of fair value of the investment in the Essakane power
project and goodwill.
3 Segmental analysis
With the acquisition of AEMP and updated strategy, the Group has three
reportable segments being transitional gas, transitional power and corporate
costs (2020: two being exploration and appraisal and corporate costs). The
operating results of each of these segments are regularly reviewed by the
Board of Directors in order to make decisions about the allocation of
resources and assess their performance.
31 December 2021
Transitional Gas Transitional Power Corporate Total
US$000 US$000 US$000 US$000
Share based payments - (85) (675) (760)
Administrative expenses (553) (212) (4,923) (5,688)
Finance expense (31) (9) (472) (512)
Loss after taxation (584) (306) (6,070) (6,960)
Additions to non-current assets 18,928 - 72 19,000
Total assets 34,687 973 19,088 54,748
Total liabilities (14,384) (158) (1,246) (15,788)
Net assets 18,792 680 19,488 38,960
31 December 2020
Exploration and Appraisal Corporate Total
US$000 US$000 US$000
Share based payments - (222) (222)
Loss on disposal of inventory (524) - (524)
Impairment of exploration asset (66,666) - (66,666)
Administrative expenses (182) (3,496) (3,678)
Finance income - 543 543
Finance expense - (72) (72)
Tax expense - (1) (1)
Loss after taxation (67,372) (3,248) (70,620)
Additions to non-current assets 1,224 8 1,232
Total assets 12,822 5,249 18,071
Total liabilities (366) (1,543) (1,909)
Net assets 12,456 3,706 16,162
4 Loss from operations
31 December 2021 31 December 2020
US$000 US$000
Loss from operations is stated after charging:
Loss on disposal of inventory - 524
Impairment of exploration asset - 66,666
Depreciation of property, plant and equipment 31 59
Depreciation of Right of Use asset 327 328
Share based payments - Long Term Incentive Scheme 533 200
Share based payments - Restricted Share Unit Scheme 142 22
Share based payments - deferred consideration 85 -
Auditors' remuneration:
Fees payable to the Company's Auditors for the audit of the Company's annual 84 60
accounts
Audit of the Company's subsidiaries pursuant to legislation 17 15
Total payable 101 75
5 Employment costs
Employees 31 December 2021 31 December 2020
US$000 US$000
Wages and salaries 1,095 1,444
Payments in lieu of notice / compromise payments - 487
Pension costs 62 94
Share based payments 170 156
Sub-total 1,327 2,181
Capitalised to exploration costs (656) (773)
Total 671 1,408
Key management personnel 31 December 2021 31 December 2020
US$000 US$000
Wages, salaries and fees 1,574 916
Payment in lieu of notice - 468
Social security costs 199 179
Pension costs 46 18
Benefits 6 -
Share based payments 505 66
Sub-total 2,330 1,647
Capitalised to exploration costs (365) (119)
Total 1,965 1,528
The Directors are the key management personnel of the Group. Details of the
Directors' emoluments and interest in shares are shown in the Directors'
Remuneration Report.
6 Finance income and expense
Finance income 31 December 2021 31 December 2020
US$000 US$000
Foreign exchange gain - 518
Bank interest receivable - 25
Total - 543
Finance expense 31 December 2021 31 December 2020
US$000 US$000
Foreign exchange loss 466 -
Finance expense on lease 46 72
Total 512 72
7 Investments
The Company's wholly owned subsidiary undertakings at 31 December 2021 and 31
December 2020, excluding dormant entities, were:
Subsidiary undertaking Principal activity Country of incorporation
Chariot Oil & Gas Investments (Namibia) Limited Holding company Guernsey
Chariot Oil & Gas Investments (Morocco) Limited Oil and gas exploration Guernsey
Chariot Oil and Gas Statistics Limited Service company UK
Enigma Oil & Gas Exploration (Proprietary) Limited(1) Oil and gas exploration Namibia
Chariot Oil & Gas Investments (Brazil) Limited Holding company Guernsey
Chariot Brasil Petroleo e Gas Ltda Oil and gas exploration Brazil
Chariot Oil & Gas Finance (Brazil) Limited(1) Service company Guernsey
Chariot Oil & Gas Holdings (Morocco) Limited Oil and gas exploration UK
Chariot Rissana Limited Oil and gas exploration UK
Chariot Transitional Power Limited Holding company UK
AEMP Essakane Solar SAS(1) Holding company France
Africa Energy Management Platform(1) Service company Mauritius
( )
( 1)Indirect shareholding of the Company.
( )
8 Taxation
The Company is tax resident in the UK, however no tax charge arises due to
taxable losses for the year (31 December 2020: US$Nil).
No taxation charge arises in Morocco or the group subsidiaries as they have
recorded taxable losses for the year (31 December 2020 in Brazil: US$1,000)
There was no deferred tax charge or credit in either period presented.
Factors affecting the tax charge for the current year
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the UK applied to losses for the year
are as follows:
31 December 2021 31 December 2020
US$000 US$000
Tax reconciliation
Loss on ordinary activities for the year before tax (6,960) (70,619)
Loss on ordinary activities at the standard rate of corporation tax in the UK (1,322) (13,418)
of 19% (31 December 2020: 19%)
Non-deductible expenses 212 12,882
Difference in tax rates in other jurisdictions - -
Deferred tax effect not recognised 1,110 537
Total taxation charge - 1
The Company had tax losses carried forward on which no deferred tax asset is
recognised. Deferred tax not recognised in respect of losses carried forward
total US$8.7 million (31 December 2020: US$7.6 million). Deferred tax assets
were not recognised as there is uncertainty regarding the timing of future
profits against which these assets could be utilised.
9 Loss per share
The calculation of basic loss per Ordinary share is based on a loss of
US$6,960,000 (31 December 2020: loss of US$70,620,000) and on 519,854,783
Ordinary shares (31 December 2020: 379,349,854) being the weighted average
number of Ordinary shares in issue during the year. Potentially dilutive share
awards are detailed in note 21, however these do not have any dilutive impact
as the Group reported a loss for the year, consequently a separate diluted
loss per share has not been presented.
10 Exploration and evaluation assets
31 December 2021 31 December 2020
US$000 US$000
Net book value brought forward 12,822 78,264
Additions 18,928 1,224
Impairment - (66,666)
Net book value carried forward 31,750 12,822
As at 31 December 2021 the net book value of the Moroccan geographic area is
US$31.8 million (31 December 2020: US$12.8 million).
In the prior year the activities in Namibia and Brazil were assessed as
non-core with substantive expenditure not planned in the near term, and as
such full impairments were recorded against each respective geographic area.
11 Business Combination
On 25 June 2021 the Company completed the acquisition of the business of
Africa Energy Management Platform ("AEMP") including the related 10% holding
in the Essakane project. AEMP is a renewable and hybrid energy project
developer with an ongoing strategic partnership with Total Eren, a leading
global player in renewable energy, and qualifies as a business as defined in
IFRS 3. AEMP was acquired as an extension of the updated strategy to have a
positive impact on the environment, the countries and the communities in which
the Company operates.
Consideration and fair value of assets and liabilities acquired
As initial consideration for the acquisition the Company paid US$0.1 million
in cash and issued 9,196,926 new ordinary shares at a value of US$0.7 million.
Deferred consideration representing 1,982,096 new ordinary shares is payable
dependent on certain project pipeline targets being met, which has been
recognized in equity. The consideration shares were valued at US$0.07 (5.16p)
being the close price on the day preceding completion of the acquisition.
At acquisition, total identifiable assets and liabilities assumed were US$0.5
million, the majority of which was attributable to the 10% project equity held
in the operational Essakane power project which was recognised at fair value
based on assessment of the underlying cashflows. The balance of the
consideration of US$0.4 million has been allocated to goodwill. None of the
goodwill is expected to be deductible for income tax purposes. No impairment
of the investment in power projects or goodwill was identified in the period
from acquisition to 31 December 2021. If the deal had been completed at the
start of 2021 the impact on revenue and profit of the combined Group would be
less than US$10,000.
The amounts recognized in respect of the identified assets acquired and
liabilities assumed are set out in the table below.
25 June 2021
US$000
Investment in power projects 450
Trade receivables 5
Cash 69
Trade payables (12)
Total identifiable assets acquired and liabilities assumed 512
Goodwill 380
Total consideration 892
Satisfied by:
Cash 90
New ordinary shares 660
Deferred consideration payable in shares to be issued 142
Total consideration transferred 892
Contingent payments
Further contingent payments representing a maximum of 3,964,192 new ordinary
shares are payable to key members of the AEMP team dependent on their
retention and certain project pipeline targets being met and will be
recognised as share based payments in the Consolidated Statement of
Comprehensive Income over the retention period. See note 21 for further
details.
12 Property, plant and equipment
Fixtures, fittings and equipment Fixtures, fittings
and equipment
31 December 2021 31 December 2020
US$000 US$000
Cost
Brought forward 1,356 1,348
Additions 72 8
Disposals - -
Carried forward 1,428 1,356
Depreciation
Brought forward 1,313 1,254
Charge 31 59
Carried forward 1,344 1,313
Net book value brought forward 43 94
Net book value carried forward 84 43
13 Trade and other receivables
31 December 2021 31 December 2020
US$000 US$000
Other receivables and prepayments 1,167 811
The fair value of trade and other receivables is equal to their book value.
14 Inventory
31 December 2021 31 December 2020
US$000 US$000
Wellheads and casing 1,183 -
Remaining items of inventory from earlier drilling campaigns were disposed of
in 2020 resulting in a loss on disposal of US$0.5 million.
15 Cash and cash equivalents
31 December 2021 31 December 2020
Analysis by currency US$000 US$000
US Dollar 15,567 1,844
Euro 135 -
Sterling 3,130 1,815
Moroccan Dirham 538 -
Other 36 81
19,406 3,740
As at 31 December 2021 and 31 December 2020 the US Dollar and Sterling cash is
held in UK and Guernsey bank accounts. All other cash balances are held in the
relevant country of operation.
As at 31 December 2021, the cash balance of US$19.4 million (31 December 2020:
US$3.7 million) contains the following cash deposits that are secured against
bank guarantees given in respect of exploration work to be carried out:
31 December 2021 31 December 2020
US$000 US$000
Moroccan licences 5,350 500
5,350 500
The funds are freely transferable but alternative collateral would need to be
put in place to replace the cash security.
16 Leases
The lease relates to the UK office.
Right-of-use asset:
31 December 2021 31 December 2020
US$000 US$000
Brought forward 655 983
Depreciation (327) (328)
Carried forward 328 655
Lease liability:
31 December 2021 31 December 2020
US$000 US$000
Current 430 409
Non-current - 440
Total lease liability 430 849
The maturity analysis of the lease liability at 31 December 2021 is as
follows:
31 December 2021 31 December 2020
US$000 US$000
Maturity analysis - contractual undiscounted cash flows
Less than one year 453 454
Between one and two years - 453
Between two and three years - -
Total undiscounted lease liabilities 453 907
Effect of interest (23) (58)
Total lease liability 430 849
17 Trade and other payables
31 December 2021 31 December 2020
US$000 US$000
Trade payables 9,470 816
Accruals 5,888 244
15,358 1,060
The fair value of trade and other payables is equal to their book value.
18 Share capital
Allotted, called up and fully paid
31 December 2021 31 December 2021 31 December 2020 31 December 2020
Number US$000 Number US$000
Ordinary shares of 1p each(1) 759,587,023 11,696 388,367,946 6,549
1. The authorised and initially allotted and issued share capital on
admission (19 May 2008) has been translated at the historic rate of US$GBP of
1.995. The shares issued since admission have been translated at the date of
issue, or, in the case of share awards, the date of grant and not subsequently
retranslated.
Details of the Ordinary shares issued are in the table below:
Date Description Price US$ No. of shares
31 December 2019 367,532,909
27 April 2020 Issue of share award 0.18 463,768
27 April 2020 Issue of share award 0.42 133,334
27 April 2020 Issue of share award 0.53 154,285
27 April 2020 Issue of share award 4.38 42,000
27 April 2020 Issue of share award 0.50 913,822
27 April 2020 Issue of share award 0.33 700,000
27 April 2020 Issue of share award 0.39 937,500
27 April 2020 Issue of share award 0.12 1,352,875
27 April 2020 Issue of share award 0.20 1,369,541
27 April 2020 Issue of share award 0.05 864,134
27 April 2020 Issue of share award 0.02 2,958,329
27 April 2020 Issue of share award 0.11 278,082
27 April 2020 Issue of share award 0.19 1,168,142
27 July 2020 Issue of share award 0.39 411,011
27 July 2020 Issue of share award 0.15 411,011
27 July 2020 Issue of share award 0.07 1,564,286
27 July 2020 Issue of share award 0.10 1,318,841
27 July 2020 Issue of share award 0.20 1,825,000
27 July 2020 Issue of share award 0.16 1,495,693
27 July 2020 Issue of share award 0.03 2,473,383
31 December 2020 388,367,946
25 June 2021 Issue of initial consideration shares for acquisition of AEMP 0.07 9,196,926
25 June 2021 Issue of shares at £0.055 in Placing, Subscription, Open Offer and fees 0.08 238,512,856
19 July 2021 Issue of shares at £0.055 in Placing, Subscription, Open Offer and fees 0.08 645,351
15 December 2021 Issue of shares at £0.07 in Placing, Subscription and fees 0.09 101,639,842
22 December 2021 Issue of shares at £0.07 in Open Offer 0.09 21,224,102
31 December 2021 759,587,023
19 Related party transactions
Key management personnel comprises the Directors and details of their
remuneration are set out in note 5 and the Directors' Remuneration Report.
Magna Capital LDA (of which Adonis Pouroulis, Acting CEO, has a substantial
interest), underwrote an equity fundraising in June 2021 to ensure that the
total fundraising equated to approximately US$23 million. The underwriting
commitment was fulfilled by subscription of shares after the balance sheet
date and the Company received proceeds totalling US$5 million, as detailed in
note 23. The underwriting commitment constitutes a related party transaction.
Kinsella Consulting Limited, a company of which Adonis Pouroulis is a
Director, incurred costs on behalf of Chariot Ltd for which it was reimbursed
during the year of US$8,813 (31 December 2020: US$Nil). The amount outstanding
as at 31 December 2021 was US$Nil (31 December 2020: US$Nil).
There were no related party transactions during the year ended 31 December
2020.
20 Financial instruments
The Board of Directors determine, as required, the degree to which it is
appropriate to use financial instruments or other hedging contracts or
techniques to mitigate risk. Throughout the year ending 31 December 2021, no
trading in financial instruments was undertaken (31 December 2020: US$Nil).
There is no material difference between the book value and fair value of the
Group cash balances, short-term receivables and payables.
Market risk
Market risk arises from the Group's use of interest bearing and foreign
currency financial instruments. It is the risk that future cash flows of a
financial instrument will fluctuate because of changes in interest rates
(interest rate risk) and foreign exchange rates (currency risk). Throughout
the year, the Group has held surplus funds on deposit, principally with its
main relationship bank Barclays, on fixed short-term deposits. The credit
ratings of the main relationship bank the Group holds cash with do not fall
below A or equivalent. The Group does not undertake any form of speculation on
long term interest rates or currency movements, therefore it manages market
risk by maintaining a short-term investment horizon and placing funds on
deposit to optimise short term yields where possible but, moreover, to ensure
that it always has sufficient cash resources to meet payables and other
working capital requirements when necessary. As such, market risk is not
viewed as a significant risk to the Group. The Directors have not disclosed
the impact of interest rate sensitivity analysis on the Group's financial
assets and liabilities at the year-end as the risk is not deemed to be
material.
This transactional risk is managed by the Group holding the majority of its
funds in US Dollars to recognise that US Dollars is the trading currency of
the industry, with an appropriate balance maintained in Sterling, Euro and
Moroccan Dirham to meet other non-US Dollar industry costs and ongoing
corporate and overhead commitments.
At the year end, the Group had cash balances of US$19.4 million (31 December
2020: US$3.7 million) as detailed in note 15.
Other than the non-US Dollar cash balances described in note 15, no other
material financial instrument is denominated in a currency other than US
Dollars. A 10% adverse movement in exchange rates would lead to a foreign
exchange loss of US$380,000 and a 10% favourable movement in exchange rates
would lead to a corresponding gain; the effect on net assets would be the same
as the effect on profits (31 December 2020: US$190,000).
Capital
In managing its capital, the Group's primary objective is to maintain a
sufficient funding base to enable it to meet its working capital and strategic
investment needs. The Group currently holds sufficient capital to meet its
ongoing needs for at least the next 12 months.
Liquidity risk
The Group's practice is to regularly review cash needs and to place excess
funds on fixed term deposits. This process enables the Group to optimise the
yield on its cash resources whilst ensuring that it always has sufficient
liquidity to meet payables and other working capital requirements when these
become due.
The Group has sufficient funds to continue operations for the forthcoming year
and has no perceived liquidity risk.
Credit risk
The Group's policy is to perform appropriate due diligence on any party with
whom it intends to enter into a contractual arrangement. Where this involves
credit risk, the Group will put in place measures that it has assessed as
prudent to mitigate the risk of default by the other party. This could consist
of instruments such as bank guarantees and parent company guarantees.
As such, the Group has not put in place any particular credit risk measures in
this instance as the Directors view the risk of default on any payments due
from the joint venture partner as being very low.
21 Share based payments
Long Term Incentive Scheme ("LTIP")
The plan provides for the awarding of shares to employees and Directors for
nil consideration. The award will lapse if an employee or Director leaves
employment.
Shares granted when an individual is an employee will vest in equal
instalments over a three year period from the grant date and shares granted
when an individual is a Director or otherwise specified will vest three years
from the end of the year or period the period to which the award relates.
The Group recognised a charge under the plan for the year to 31 December 2021
of US$533,000 (31 December 2020: US$200,000).
The following table sets out details of all outstanding share awards under the
LTIP:
31 December 2021 31 December 2020
Number of awards Number of awards
Outstanding at beginning of the year 7,401,780 25,000,645
Granted during the year 20,841,085 5,431,712
Shares issued for no consideration during the year - (20,835,037)
Lapsed during the year - (2,195,540)
Outstanding at the end of the year 28,242,865 7,401,780
Exercisable at the end of the year 7,379,562 6,044,990
Non-Executive Directors' Restricted Share Unit Scheme ("RSU")
The plan provides for the awarding of shares to Non-Executive Directors for
nil consideration. An award can be Standalone or Matching.
Standalone share awards are one-off awards to Non-Executive Directors which
will vest in equal instalments over a three year period and will lapse if not
exercised within a fixed period on stepping down from the Board.
Matching share awards will be granted equal to the number of existing Chariot
shares purchased by the Non-Executive Director in each calendar year capped at
the value of their gross annual fees for that year. The shares will vest in
equal instalments over a three year period and will lapse if not exercised
prior to stepping down from the Board or if the original purchased shares are
sold prior to the vesting of the relevant Matching award. Any potential
Matching awards not granted in a calendar year shall be forfeited and shall
not roll over to subsequent years.
The Group recognised a charge under the plan for the year to 31 December 2021
of US$142,000 (31 December 2020: US$22,000).
The following table sets out details of all outstanding share awards under the
RSU:
31 December 2021 31 December 2020
Number of awards Number of awards
Outstanding at beginning of the year 2,839,875 2,839,875
Granted during the year 5,915,281 -
Outstanding at the end of the year 8,755,156 2,839,875
Exercisable at the end of the year 2,623,568 2,407,860
Post-acquisition share-based payment charge
Contingent payments representing a maximum of 3,964,192 new ordinary shares
are payable to key members of the AEMP team dependent on their retention and
certain project pipeline targets being met and will be recognised as share
based payments in the Consolidated Statement of Comprehensive Income over the
retention period. The Group recognised a charge of US$85,000 in the year to 31
December 2021.
22 Contingent liabilities
From 30 December 2011 the Namibian tax authorities introduced a withholding
tax of 25% on all services provided by non-Namibian entities which are
received and paid for by Namibian residents. From 30 December 2015 the
withholding tax was reduced to 10%. As at 31 December 2021, based upon
independent legal and tax opinions, the Group has no withholding tax liability
(31 December 2020: US$Nil). Any subsequent exposure to Namibian withholding
tax will be determined by how the relevant legislation evolves in the future
and the contracting strategy of the Group.
23 Events after the balance sheet date
The Directors consider these events to be non-adjusting post balance sheet
events.
a) Significant gas discovery at Anchois-2 well
On 10 January 2022 the Company announced a significant gas discovery at the
Anchois-2 gas appraisal and exploration well in the Lixus Offshore licence,
Morocco. On 31 March 2022 the Company announced an upgrade to the net gas pay
estimates previously announced and confirmed excellent quality gas with
further analysis ongoing to understand the positive impact on gas resources.
b) Issue of Underwriting Shares (the "Underwriting Commitment")
Magna Capital LDA (of which Adonis Pouroulis, Acting CEO, has a substantial
interest), underwrote the June 2021 equity fundraising to ensure the total
fundraising equated to approximately US$23 million. Accordingly, 33,742,396
new Ordinary shares were admitted on 31 January 2022 and 33,742,396 new
Ordinary shares were admitted on 3 March 2022 and the Company received
proceeds totalling US$5 million. The Underwriting Commitment constitutes a
related party transaction.
c) Award of Rissana Offshore Licence ("Rissana")
On 28 February 2022 the Company announced that a wholly owned subsidiary of
Chariot Ltd had been formally awarded a 75% interest and operatorship of the
Rissana licence, Morocco in partnership with the Office National des
Hydrocarbures et des Mines ("ONHYM") which holds a 25% carried interest.
d) Placing, subscription and open offer (the "Fundraising")
On 10 June 2022 the Company announced the approval by shareholders at a
General Meeting of an equity Fundraising for 130,930,606 new Ordinary Shares
at a price of 18 pence per share. The new Ordinary Shares were admitted and
the Company received gross proceeds totalling US$29.5 million.
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