TIDMCHAR
RNS Number : 9673H
Chariot Oil & Gas Ld
20 March 2015
20 March 2015
Chariot Oil & Gas Limited
("Chariot", the "Company" or the "Group")
Final Results
Chariot Oil & Gas Limited (AIM: CHAR), the Atlantic margins
focused oil and gas exploration company, today announces its
audited final results for the 12 months ended 31 December 2014.
2014 and Post Period Highlights:
Successful Partnering
-- Woodside in Rabat Deep Offshore permits, Morocco - 25% equity
for reimbursement of all back costs and a carry on additional data
acquisition (Chariot retains a 50% operating interest)
-- AziLat Limited ("AziLat") in four offshore permits, Brazil -
AziLat to acquire a 25% stake in licences (subject to various
approvals) in return for paying back costs and 50% of upcoming 3D
seismic programme (Chariot retains a 75% operating interest)
Ongoing Portfolio Management
-- Long licence periods with low commitments and advantageous
commercial terms secured across all licences
-- Addition of the Mohammedia Reconnaissance licence
("Mohammedia"), Morocco, covering play extension to Rabat Deep and
Loukos; relinquishment of high risk Northern Blocks, Namibia, with
a final impairment of US$33.6 million on this licence
-- Fast follower positioning achieved throughout the portfolio:
o Re-award of Central Blocks 2312 & 2412A and Southern Block
2714A, Namibia
Capital Discipline
-- Debt free with a cash balance of US$53.5 million as at 31 December 2014:
o Placing completed in August 2014 raising gross proceeds of
US$15 million
o Farm-out to Woodside brought Chariot close to "zero cost" in
Morocco with US$10.7 million of cash received to date and remaining
funds to be received in H1 2015
o Fully funded for all commitments with sufficient cash to
pursue additional opportunities
Strong Leadership Team in Place
-- Bill Trojan and Dave Bodecott appointed as Non-Executive
Directors - enhancing the Board's breadth of technical
expertise
Continued Development of High Potential Portfolio
Morocco
-- Farm-out completed on Rabat Deep - near zero cost expenditure for Chariot achieved to date
-- Award of Mohammedia Reconnaissance licence
-- All licence commitments fulfilled:
o Reprocessing of legacy 2D seismic complete; 1,700km(2) new 3D
seismic acquired, interpretation underway
-- Giant prospectivity and priority drilling target JP-1 in
Rabat Deep permit described with follow-on Prospect JP-2 identified
in Mohammedia
-- Dataroom due to open in Q2 2015 to seek partners for Mohammedia and Loukos
Mauritania
-- Specialised processing and iterative interpretation of the 3D
volume has yielded an extensive prospect portfolio including four
prospects, each in excess of 400mmbbls gross mean prospective
resources (internal estimates)
-- All licence commitments fulfilled
-- Dataroom opened for potential drilling partners
Brazil
-- Farm-out to AziLat on all four licences (subject to various approvals)
-- Completed reprocessing and interpretation of legacy 2D
seismic data across all licences - initial lead inventory
identified
-- Submitted Environmental Impact Assessment ("EIA") for the upcoming 3D seismic programme
-- Dataroom opened to introduce an additional seismic partner
-- Used lower cost of seismic services in the market to enhance shareholder value
Namibia
-- Southern Blocks - all licence commitments fulfilled following
acquisition of 2D seismic in order to optimise 3D seismic programme
location
-- Central Blocks - acquisition of 1,700km 2D programme
completed to define key targets to optimise 3D seismic programme
location
-- Dataroom reopened on Central Blocks to secure seismic/drilling partners
New Ventures
-- Continuing new venture screening process for value accretive assets
-- Focus on diversifying the portfolio by broadening and balancing risk profile
Outlook
-- Continue to develop and de-risk the portfolio in line with the strategy:
o Seek additional partners to share in the risk and costs of
exploration
o Further define and mature asset descriptions to optimise the
chance of success with the drill bit
-- Refocusing of the New Venture effort to capture opportunities
coming available in current business environment
-- Adhere to strict capital discipline
o Continue stringent cost control on G&A and operational
expenditure
Larry Bottomley, Chief Executive of Chariot, commented:
"Chariot has continued to deliver on its focused strategy by
partnering in Morocco and Brazil, maintaining a strong balance
sheet through capital discipline, maturing its assets and
demonstrating high margin, giant potential prospectivity at the
same time as positioning the entire portfolio to ensure low
commitments and long licence periods.
Current market conditions in the oil and gas industry are
challenging, and we will look to manage those that affect our
business accordingly, but we also see this as a time of real
opportunity for well funded and well positioned companies such as
Chariot. We will continue to progress our existing portfolio, as
well as look to capitalise on our position of strength and take
advantage of prospective assets that have the potential to create
shareholder value over the longer term."
For further information
please contact:
Chariot Oil & Gas Limited
Larry Bottomley, CEO +44 (0)20 7318 0450
finnCap (Nominated Advisor)
Matt Goode, Christopher
Raggett +44 (0)20 7220 0500
GMP Securities (Joint
Broker)
Rob Collins, Emily Morris +44 (0)20 7647 2835
Jefferies International
Limited (Joint Broker)
Chris Zeal, Max Jones +44 (0)20 7029 8000
EMC2 Advisory
Natalia Erikssen +44 (0)78 0944 0929
NOTES TO EDITORS
About Chariot
Chariot Oil & Gas Limited is an independent oil and gas
exploration group. It holds licences covering four blocks in
Namibia, one block in Mauritania, three blocks in Morocco and four
licences in the Barreirinhas Basin offshore Brazil. All of these
blocks are currently in the exploration phase.
The ordinary shares of Chariot Oil & Gas Limited are
admitted to trading on the AIM Market of the London Stock Exchange
under the symbol 'CHAR'.
Chairman's Statement
The past 12 months have seen Chariot continue to deliver solid
results consistent with its strategy to de-risk the business,
mature its assets and actively manage the portfolio. These results
exhibit the primacy of capital discipline combined with the
effective transition to optimised tactical positioning in each
project area.
Chariot now holds assets with giant potential in four countries,
in different geological basins, with varying levels of maturity and
risk. The Company has no debt, a strong cash position, is fully
funded to carry out all of its commitments and holds licences with
excellent commercial terms. In the near term, this means that
Chariot is well positioned to withstand and capitalise on current
market conditions. In the longer term, the Company aims to further
develop a balanced, robust and sustainable business that provides
the Company the opportunity to deliver on its giant potential
through the drill bit.
Consistent Delivery on the Strategy: Managing Risk and Enhancing
the Portfolio
Chariot's goal is to create transformational value through the
delivery of material hydrocarbon accumulations. Through its focus
on opportunities in new and emerging basins the Company has built a
portfolio of high margin, giant-potential prospects and leads. This
type of exploration is high risk and, as a consequence, Chariot's
focus is on de-risking the Company's assets as far as possible
while enhancing and maturing the portfolio. This year we have
continued to do this in a number of ways:
Successful Partnering
By securing industry partners, the Company shares the financial
and technical risk associated with each asset at each phase of
exploration and this has been a key component of de-risking the
portfolio to date. By interacting with the industry in this way,
the Company is able to obtain third party validation and
endorsement of the technical potential of its assets. In addition,
our partners bring additional expertise to further mature and
optimise the technical progression to drill ready prospects.
Funds received from leveraged partnerships aim to cover back
costs and a share or carry of future expenditure. In addition to
Cairn Energy Plc's ("Cairn") participation in Mauritania, this year
Chariot also secured Woodside as a seismic partner offshore Morocco
(with an option to carry Chariot on a well) and AziLat in Brazil
(subject to various approvals). As a result, Chariot is currently
at near zero cost in Mauritania and Morocco, half cost in Brazil
and retains option acreage for partnering on both seismic and
drilling in offshore Namibia.
Portfolio Management and Strategic Positioning
A core component of the strategy is to secure large equity
positions in large licences with long licence terms when entering a
new region. This provides not only a strong negotiating position
during partnering but also the ability to retain a material stake
at the point of drilling. As each asset becomes more technically
mature, it is continuously measured against the fundamental goals
of the Company and its ability to deliver transformational results
within strict risk capital constraints. Furthermore, in obtaining
long terms on each licence, the Company is able to position itself
as a fast follower, rather than as a play opener, in these high
risk and relatively underexplored regions. This means that it can
take advantage of technical information from third party activity
prior to drilling, and at no cost.
An example of this strict adherence to portfolio management can
be seen within the Company's repositioning of its Namibian assets
during the period. Following the evaluation of significant amounts
of proprietary seismic and well data and the integration of
information from third party drilling, the team opted to relinquish
its Northern Blocks which, whilst prospective, were deemed too high
risk to fit with the Company's zero cost exploration
aspiration.
Similar analysis was also applied to the Central and Southern
Blocks in Namibia in which lower risk, high potential prospects and
leads have been identified. These targets also have significant
follow-on potential which further justifies continued exploration
and expenditure. Given the timing associated with the exploration
period on these licences, Chariot chose to relinquish and
simultaneously apply for them to be re-awarded, thus removing
potentially prohibitive commitments and also shifting the Company
to a fast follower position relative to competitors. This careful
management not only exemplifies Chariot's good standing in the
country but also means that it now has further time and optionality
in partnering discussions as well as the opportunity to learn from
third party drilling activities taking place prior to Chariot
having to commit to its own drilling programmes.
Continued Maturation of the Portfolio
Chariot regards its technical capabilities as fundamental to the
Company's ability to succeed in creating transformational growth.
This year, the team has continued to carry out substantial
technical work in order to progress the portfolio towards drilling
and, through the analysis of its own proprietary data as well as
that from third party activity, each asset has been matured to the
next stage of development.
As well as its giant, drill ready Prospect B in Namibia, the
team has identified four drill ready prospects, each in excess of
400mmbbls gross mean prospective resources (internal estimates),
offshore Mauritania, and is evaluating final PSDM data to determine
a drilling location in its JP-1 Prospect offshore Morocco. This
work is the result of extensive seismic acquisition and processing
programmes which the team has carefully interpreted and, in the
case of Mauritania, has also carried out substantial additional
inversion and spectral decomposition analysis.
Owing to the diversity of the portfolio, it contains a range of
maturity and further seismic programmes are due to be carried out
in 2015. In Q1 2015 2D data was acquired offshore Namibia to
identify optimal locations for 3D seismic and a 3D programme is
planned to identify the potential for drillable prospects offshore
Brazil.
Capital Discipline
Throughout this year Chariot has continued to guard its cash
reserves in order to be able to lead partnering negotiations from a
position of strength, fund its commitments and to capitalise on
opportunities that can provide additional value and flexibility to
the portfolio.
When the current executive was appointed at the end of 2012,
Chariot held approximately US$68 million on the balance sheet.
Since then, it has invested approximately US$65 million in the
business and ended 2014 with a cash balance of US$53.5 million.
This has been achieved through the team's continued focus on
capital discipline - despite doubling the number of subsurface
experts within its in-house team, G&A costs have not increased
- and the partnering proceeds, as well as a successful Placing of
US$15 million (gross) in August 2014, means that it is financially
robust during a challenging time in the equity markets and in the
broader E&P sector. Given its low commitments, long licence
terms and zero debt, Chariot is well positioned to use its
expertise and balance sheet to capitalise on opportunities that
become available as a result of the recent decline in the oil
price.
Governance
It has been a pleasure to chair the Chariot Board this year and
I believe we have a very good balance of corporate, financial and
technical expertise within our management skillset. In February
2014, we welcomed Bill Trojan and Dave Bodecott as Non-Executive
Directors, who both bring extensive knowledge of the industry and a
deep understanding of exploration plays within the Atlantic
margins. Their contributions to Board discussions have been
invaluable and we look forward to continuing to benefit from their
capabilities and insight in the future.
We were also pleased that, with these additional members, we
were able to add to the make-up of our Nomination, Audit and
Remuneration Committees. In addition, we were able to renew our
Corporate Governance Committee, with a majority membership of
Independent Non-Executive Directors which is chaired by Dave
Bodecott, who is now Senior Independent Non-Executive Director. We
are dedicated to ensuring that we maintain the highest corporate
governance standards as far as possible and the committee will look
to deliver this on an ongoing basis.
Regional Relationships
Chariot considers its relationships with its regional partners
as crucial to the overall success of the business. The positioning
of the portfolio that was secured during 2014 underlined the strong
relationships that Chariot has developed within each country of
operation and was indicative of the governments' endorsement of
Chariot's continued high quality technical work and commitment to
the development of these frontier regions. We maintain close
relations with our partners, including the national oil companies,
local empowerment partners and service companies, with regular
technical and operational meetings both to share knowledge and
facilitate communications. I would like to take this opportunity to
thank the Governments and Energy Ministries of Morocco, Mauritania,
Brazil and Namibia for their continued support and cooperation as
well as ONHYM, SMHPM and NAMCOR, with whom we are partnered, for
their ongoing technical insight and collaboration.
Conclusion
Despite the markets being difficult over the past few months,
reflected in both our share price and the wider AIM and FTSE oil
and gas sector, Chariot has maintained its focus on adding value to
the business.
As we enter 2015 in a financially robust position, with a large
portfolio of identified high volume opportunities, Chariot will
focus its attention on high quality new ventures to further develop
sustainable and de-risked business results whilst continuing to
mature its portfolio and looking to partner for drilling.
George Canjar
Chairman
19 March 2015
Chief Executive Officer's Review
Oil and gas exploration is a high risk business and Chariot's
goal - the exploration for and discovery of transformational
hydrocarbon accumulations in new and emerging basins - falls in the
higher part of this spectrum. Current market conditions are also
part of the cyclical risk inherent in the global oil and gas
business which have had a big impact sector wide. It is for these
reasons that Chariot focuses on managing its risk and positioning
the business for sustained success over the longer term.
This year we have continued to use our in-house skillset to
focus on portfolio diversity and management, the application of
technology, levered partnering and capital discipline, all of which
we have delivered. It is also important, however, to continuously
test these achievements within the business environment within
which we work. Whilst markets have been relatively risk-averse over
the past year, our high potential assets have continued to attract
both industry and financial partners. We believe that even in the
current climate, the potential material upside of our high margin
portfolio still stands as transformational. However, we also need
to respond to the effects that a decreased oil price has had on the
wider market and how this will impact our own strategy. There will
be new opportunities that will now become accessible to us but,
owing to a decrease in investment, there will also be challenges.
As a result, whilst the goal and strategy of the Company will not
change, we have had to consider carefully how the focus of the
Company's strategy needs to adapt in order to continue to pursue
and realise the value from our high impact portfolio.
Chariot's Strengths within the Changing Business Environment
High Margin, Giant Potential Assets with Excellent Commercial
Terms
The recent decline in the oil price has naturally resulted in a
reduction of revenue from production for the E&P industry,
which has materially affected the scale of investment. Whilst we
see this putting pressure on lower margin plays, production from
high volume deepwater assets, such as those targeted by Chariot,
has materially lower break-even economics, meaning that Chariot
retains its capacity for transformational value. This also provides
the possibility for a shift in capital investment, where some
resource plays become uneconomic or provide a modest return, whilst
the performance of high margin, conventional oil and gas becomes
more attractive.
Crucial to Chariot is that it has a deepwater, high margin focus
and that the regions in which it explores are emerging and
frontier, meaning that the commercial licence terms in which it
explores are designed to attract investment to balance the risk,
and early movers benefit from such terms. In Morocco, for example,
a ten year tax holiday means that a contractor can retain a 75%
share after taking account of the Moroccan State's share. In more
established basins, such as Angola or Nigeria, access is more
expensive, commitments are higher and the retained contractor share
is far lower.
Lower E&P Investments will Translate to Lower Service
Costs
A reduction in the investment within the sector has seen a
significant decline in the costs of oil and gas services, from
seismic through to drilling and completion. As Chariot has noted
previously, whilst less will be invested, these dollars will go
further. This has been demonstrated by the tendered costs of
Chariot's 3D seismic campaign in Brazil which have been halved in
the last eight months, with similar cost saving opportunities
becoming available in Namibia.
Well Funded, No Debt, Low Commitments, Long Licence Periods
Capital requirements and financial strength will be key issues
for companies with high level licence commitments or large debt
repayments. Chariot is fortunate to have a strong balance sheet and
carry no debt and as a consequence has all of its commitments fully
funded and cash on hand to deploy into potential new ventures,
further to the successful fundraising completed in August 2014.
Importantly, Chariot has long licence periods with low remaining
commitments which provides time to continue the maturation of the
portfolio and to continue the partnering programme.
Ability to Evaluate New Opportunities
Chariot's geotechnical team is fundamental to effective
evaluation of the range of opportunities that are becoming
available and identifying those that will add tangible value and
fit well within the risk profile. Chariot has a set of strict
screening criteria used to establish whether potential assets have
the required attributes that would make for a value-accretive
addition to the portfolio.
Adapting the Strategy to the Changing Business Environment
Challenges and Opportunities
Given the widely publicised cuts in sector capital expenditure
budgets, Chariot is likely to see fewer companies attending its
datarooms, which it will continue to host at each investment phase
across the portfolio as part of its risk management and capital
discipline. To date, the team's ability to attract supermajors,
majors and large independents as partners is testament to its
ability to access attractive acreage and de-risk with high quality
descriptions whilst maximising the high potential of its assets. In
this context, whilst partnering will be more challenging, we
believe our assets remain attractive.
It was also for this reason, however, that Chariot chose not to
pursue the new venture that it applied for in the summer of 2014.
The potential addition of a further underexplored, early phase
asset during a time of tightening farm-out markets meant that this
asset added additional risk to Chariot's zero cost exploration
aspiration. Thus, whilst the asset remained technically attractive,
it no longer fitted within the risk profile that the team was
looking to develop.
Chariot has built a diverse portfolio in terms of geography,
basins and plays and whilst the assets all offer giant potential,
they are all high risk within the exploration risk spectrum. Whilst
this provides the Company with prospects for transformational
growth, it is prudent to look to identify opportunities that offer
a chance to broaden its risk profile that will further balance the
portfolio and allow for the possibility of a self-sustaining
business. In the current climate, some companies are focusing on
core assets, falling into distress due to unfunded or debt
commitments, and as a result a new wave of opportunities is
becoming available. It is therefore the Company's aim to capitalise
on the changing deal flow and utilise the funds raised for new
ventures, with a focus on lower risk assets.
Upcoming Activity
Chariot will continue to mature its assets and focus on the
pursuit of partnered wells for its current, high impact portfolio.
This will be achieved through its ongoing work programmes,
technical evaluation and descriptions for potential partners. At
the same time, it will take an opportunistic approach to its
pursuit of business development in the current climate.
As well as its own work programmes, Chariot will look to benefit
from its portfolio-wide fast follower positioning, from which it
will be able to integrate third party play opening exploration
drilling into its own technical understanding. Whilst sector
exploration programmes have been reduced, there are several
important wells due to be drilled in Morocco, Mauritania and
Namibia over the coming 18 months and in the Barreirinhas Basin ten
wells are expected to be drilled in the next two to three years,
prior to Chariot entering its drilling phase.
The Chariot Team
Chariot retains the majority of its technical work in-house and
it is from this skillset that we have been able to identify our
asset base and build on the portfolio to date. As evidenced by
continued successful partnering, the team provides high quality
descriptions of its assets and has a growing reputation within the
industry.
The importance of this investment in intellectual capital is
also evidenced by the ability of the team to capitalise on their
deep regional knowledge of the portfolio. Whilst giant potential
has been identified in all of Chariot's countries of interest, the
team also looks to use its expertise to secure opportunities that
may provide significant follow-on potential in the case of drilling
success. This year, this was demonstrated in the acquisition of the
Mohammedia Reconnaissance licence in Morocco, where prospectivity
was seen to extend from the Company's Loukos and Rabat Deep
licences, which has resulted in the identification of the giant
Prospect JP-2. Chariot will continue to use this ability to
evaluate potential opportunities in the pursuit of new
ventures.
Our people are the key to identifying and creating value and I
would like to take this opportunity to thank the Chariot team for
another year of hard work and dedication.
Looking forward: Positioned to Take Advantage of Opportunity
With the high margin, giant potential assets held within our
portfolio, a focused strategy, the strength of our team and our
financial flexibility, we will look to continue to deliver on the
business plan. Diversifying, de-risking and a strict adherence to
capital discipline will continue to be the pillars that underpin
the Company going forward and we will continue to focus on
balancing our portfolio and maturing our prospects towards
drilling. We view the current climate as one that will work well
for those who are able to be opportunistic and we look forward to
continuing our progress over the coming year.
Larry Bottomley
Chief Executive Officer
19 March 2015
Chief Financial Officer's Review
Funding and Liquidity as at 31 December 2014
During 2014, the Group continued with the development of its
portfolio and business by investing c.US$27 million into its
exploration portfolio and administration activities (31 December
2013: c.US$38 million). Despite this significant investment, the
Group's cash balances only reduced by US$3.2 million to US$53.5
million as at 31 December 2014 (31 December 2013: US$56.7 million)
due to the receipt of US$10.3 million from Woodside, being the
majority of the proceeds from the farm-out of 25% of the Rabat Deep
licence, Morocco, and c.US$14 million net of fees from the
Company's share Placing in the second half of 2014. Similar to what
was achieved in 2013 with Cairn and Mauritania, this recovery from
Woodside of previous amounts invested into the Rabat Deep licence
is another example of the Group achieving zero cost exploration in
its portfolio. The Group remains debt free as at 31 December 2014
and, applying strict capital discipline, it will continue to invest
in its portfolio and business activities during 2015 and beyond. As
at 31 December 2014, US$13.4 million (31 December 2013: US$16.0
million) of the Group's US$53.5 million (31 December 2013: US$56.7
million) cash balances were held as security against licence work
commitments.
Financial Performance - Year ended 31 December 2014
The Group's loss after tax for the year to 31 December 2014 was
US$41.8 million, which is US$31.3 million higher than the US$10.5
million loss incurred for the year ended 31 December 2013. This
US$31.3 million increase in the annual loss is mainly due to the
US$33.6 million impairment recognised against previously
capitalised costs in the Namibian Northern Blocks due to the
licence's relinquishment in 2014. The share based payments charge
of US$1.7 million for the year ended 31 December 2014 was US$0.5
million lower than the US$2.2 million in the previous year due to
the vesting of historic employee deferred share awards.
Other administrative expenses of US$6.1 million for the year
ended 31 December 2014 is broadly unchanged from the previous year
(31 December 2013: US$6.0 million).
Finance income of US$1.5 million for the year ended 31 December
2014 is US$0.7 million higher than the US$0.8 million received
during the previous year mainly because the cash secured against
the Brazil licence work commitment has been invested in a high
interest deposit account for the full year during 2014 compared to
only six months during 2013.
Finance expense of US$1.6 million for the year ended 31 December
2014 is higher than the US$1.2 million incurred in 2013 due to the
continued weakening of the Brazilian Real and its impact on the
Group's local currency cash security held against licence work
commitments in Brazil.
The tax expense of US$0.3 million in the year to 31 December
2014 relates to local taxation levied on the Group's interest
income in Brazil, whereas the US$1.8 million tax charge in the year
to 31 December 2013 was primarily as a result of the US$1.7 million
of Capital Gains Tax payable on the 2013 Mauritania farm-out to
Cairn.
Exploration and Appraisal Assets as at 31 December 2014
During the year to 31 December 2014, the Group's exploration and
appraisal assets reduced by US$27.0 million to US$101.3 million
from US$128.3 million as at 31 December 2013. This US$27.0 million
reduction was due to the US$33.6 million Northern Blocks, Namibia,
impairment charge and the US$10.7 million from the farm-out of 25%
of Rabat Deep, offshore Morocco to Woodside more than offsetting
the US$17.3 million of portfolio investment undertaken in 2014. The
US$17.3 million portfolio investment is broadly split as follows:
in Morocco, US$12.3 million was invested completing the acquisition
of, and the partial processing of, the 1,700km(2) 3D survey
undertaken across the Group's Rabat Deep, Mohammedia and Loukos
blocks; in Namibia, US$2.7 million was incurred across all the
Group's licences, with the majority relating to the completion of
the 2,128km 2D seismic survey in the 2714B Southern Block; in
Brazil, US$1.2 million was incurred mainly on EIA and G&G work
in advance of the 3D seismic survey planned for 2015; and in
Mauritania, US$1.1 million was incurred completing the processing
and interpretation of the 3,500km(2) 3D survey acquired during 2013
and in paying ongoing licence maintenance costs.
Other Assets and Liabilities as at 31 December 2014
The Group's inventory balance of US$7.4 million as at 31
December 2014 is US$0.2 million higher than the US$7.2 million
balance as at 31 December 2013. This increase is mainly due to a
long lead ordered wellhead previously held within other receivables
being transferred to inventory on delivery.
As at 31 December 2014, 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$0.5 million compared to US$4.4
million of net current liabilities as at 31 December 2013. This
year on year reduction in net current liabilities is primarily due
to two large non-reoccurring liabilities at 31 December 2013 being
a US$1.7 million capital gains tax liability on the Mauritanian
farm-out to Cairn and a trade payable of US$1.8 million in relation
to part of the 2D seismic acquisition programme that was ongoing in
Southern Block 2714B in Namibia at the end of 2013.
Outlook
As highlighted above, with US$53.5 million of cash balances as
at 31 December 2014, the Group is well funded to continue investing
into its business and portfolio throughout 2015 and beyond. In
Brazil, the Group plans to carry out a 3D survey satisfying its
commitment to acquire 768km(2) of 3D seismic across its four
licences in the Barreirinhas Basin. This survey aims to identify
locations for potential drilling with a partner in 2017/18. In
February/March this year, the Group carried out a 1,700km 2D
seismic survey in its 2312 and 2412A Central Blocks, Namibia, with
a view to highlighting potential areas of prospectivity for a
follow-on 3D survey with a partner in 2016 and in the Southern
Blocks, Namibia, it has fulfilled all of its commitments. Finally,
in Morocco and Mauritania, the Group will complete final G&G
studies in advance of planning to drill with partners in
2016/17.
Mark Reid
Chief Financial Officer
19 March 2015
Technical Director's Review of Operations
During this year we have continued to deepen our technical
understanding of our assets and further developed the potential
within our portfolio for transformational growth. We have
undertaken specialised processing and iterative interpretation
across 3,500km(2) of 3D seismic offshore Mauritania; acquired,
processed and are currently interpreting 1,700km(2) of 3D seismic
offshore Morocco; carried out significant 2D seismic acquisition in
Namibia, which we are integrating into our existing data; and
evaluated 1,000km of legacy 2D data across our Brazilian
acreage.
As well as this, significant developments have been made through
third party drilling in close proximity, enabling the team to
integrate this detail into its understanding in order to de-risk
its own prospects. This is particularly notable in Namibia where
information provided in 2014 has located excellent oil-prone mature
source rocks and proven that Namibia is oil generating. The
significant industry interest in the regions in which we work
provides for an exciting year ahead, where play opening wells could
provide the opportunity for significantly de-risking our giant
prospects further, improving the possibility for success at the
point of drilling.
Having a diversified portfolio with a range of basins and
technical maturity provides the potential for a number of drilling
campaigns in the future. It also provides the optionality for the
team to focus on the prospects that are lower risk and to manage
the portfolio in accordance with its capital discipline and zero
cost focus. This is further enhanced by the technical evaluation
provided by the peer group review carried out in the farm-out
process at each investment phase.
In addition to the substantial progress that Chariot has made
within the portfolio, it has also used its regional expertise and
technical insight to identify further opportunities that will
provide for value-accretive additions to the portfolio. We are
excited by the various opportunities that we are evaluating and
look forward to exploring this further over the coming year.
Morocco and Mauritania - Increased Activity in Emerging and
Established Basins
Over the last few years these regions have seen increasing
interest from the industry, in part due to successes on the
conjugate margin of Nova Scotia and in part due to the multiple
play potential within these areas. Whilst the Moroccan and
Mauritanian Atlantic margins remain relatively underexplored, they
are emerging and established basins with proven working petroleum
systems and sufficient data from past industry exploration
campaigns has provided the basis for new ideas and play concepts to
be developed.
Over the last 18 months a new phase of drilling has confirmed
multiple working charge systems and demonstrated the importance of
robust structural trapping geometries for success on the shelf and
the importance of reservoir understanding to both shelf and
deepwater plays. While no commercial discovery has been made, the
technical results from this third-party drilling are encouraging
and will assist Chariot in prospect portfolio ranking to identify
optimum drilling targets.
Morocco
Chariot operates three licences (Rabat Deep (50% Chariot
(Operator), 25% Woodside, 25% ONHYM (carried interest)), Loukos and
Mohammedia (75% Chariot (Operator), 25% ONHYM (carried interest))
in the northern region offshore Morocco. Within this acreage the
team has identified all three of the proven and new plays that have
been the source of industry activity within the margin over recent
years.
In July 2014 Chariot announced the successful farm-out of Rabat
Deep to Australia's largest independent E&P company, Woodside,
who took up a 25% working interest in the licence in return for
paying all back costs and some additional future technical work.
These back costs included the 3D seismic that was acquired in April
2014 which was carried out principally to capture the prospectivity
associated with the JP-1 Prospect - a four-way faulted structure
with estimated gross mean prospective resources of 618mmbbls (based
on 2D data). Following the final interpretation of this 3D
acquisition, due in H1 of 2015, Woodside will have the option to
take on operatorship and 50% of the licence in return for carrying
Chariot through the costs of drilling an exploration well (to an
agreed financial cap).
To date, Chariot's evaluation of the 3D data shows that the JP-1
structure contains a probable Jurassic shelf edge section with
pronounced build up geometries believed to be reefs, with the
inversion data supporting the potential for reservoir development.
The Jurassic play is proven in Morocco with the Cap Juby heavy oil
discovery, legacy onshore light oil production adjacent to
Chariot's acreage and a recent well drilled in this play offshore
encountered 26deg API oil. Within Rabat Deep, a further six leads
have been identified in the Jurassic play and, in addition, the 3D
seismic has highlighted another giant prospect within the
Mohammedia Reconnaissance licence, JP-2. Overall the presence of a
robust structural closure with good reservoir indications in a
proven charge fairway meets the success criteria we think has been
lacking in most of the wells targeting this play in offshore
Morocco.
In the Loukos licence, the team has identified a significant
Mio-Pliocene lead that also extends into the Mohammedia
Reconnaissance licence area. This is a large, attribute-supported
shallow water gas lead that could provide, in the success case,
near term production. Datarooms describing the prospectivity
identified in this, and the Jurassic play, will be opened for
partnering in Q2 2015.
In addition to the proven Jurassic and Mio-Pliocene plays, the
team has also identified the potential for Cretaceous clastics
throughout its Moroccan portfolio. Whilst this play is yet to be
proven, widespread Cretaceous age sands have been recognised during
fieldwork in onshore areas adjacent to the licence and the Jurassic
charge system is expected to be capable of charging the Cretaceous
section. Chariot will carry out further studies to de-risk this
play before committing any significant additional funds to its
exploration.
Forward Plan:
Completion of 1,700km(2) 3D seismic data evaluation and carry
out an independent audit of prospective resources.
Rabat Deep: Complete well partnering for the JP-1 Prospect.
Chariot's large equity holding in the licence gives additional
optionality in the event that a further partnering process is
required should Woodside not take up their option.
Loukos and Mohammedia: A dataroom is due to open in Q2 2015 in
order to secure partners for the forward exploration programme.
Third Party Activity:
Two to three wells are anticipated offshore Morocco testing both
the Jurassic and Cretaceous plays.
Remaining Commitments:
Chariot has no remaining commitments offshore Morocco.
Mauritania
Chariot holds 55% and operatorship in the C-19 licence offshore
Mauritania, having attracted a seismic partner in Cairn (35%) with
SMHPM holding a 10% carried interest. This licence is on trend with
nearby oil and gas condensate discoveries as well as two on-block
legacy wells with extensive and pervasive oil shows.
During 2014 the team spent a significant amount of time
evaluating the 3D seismic data that was shot in 2013. Due to the
presence of steep seabed canyons, detailed depth migration of the
seismic was required and additional steps, including data
inversion, were carried out to optimise data quality and trap
definition, especially of stratigraphic prospects. The resulting
seismic volumes have enabled the interpretation of a large prospect
and lead portfolio including four giant prospects, each in excess
of 400mmbbls gross mean prospective resources (internal estimates).
Of note, the KT-1 Prospect, identified as the priority drilling
target, is a stacked prospect and, of the individual target layers,
the largest has gross mean prospective resources of 532mmbbls
(internal estimate). A number of targets in this prospect are
supported by well-defined seismic attributes showing structural
conformance, a significant low risk indicator for the presence of
hydrocarbons.
In addition to Chariot's own work, 2013/2014 saw further
de-risking of the petroleum system in this region through the
drilling of the Cretaceous by third parties, with a new oil play
reported in late Cretaceous turbidites in Mauritania, as well as
new discoveries where the basin extends into Senegal, with oil
found in upper slope fan sands as well as in Albian sands draped
over eroded Aptian carbonates on the shelf. Post period a discovery
of gas and liquids has been reported to the north of C-19, an
important demonstration that the working hydrocarbon system extends
through our licence area.
Forward Plan:
Chariot has opened a dataroom and is currently seeking a
potential additional partner to participate in drilling its
priority KT-1 stacked prospect.
Third Party Activity:
Three wells are planned in the region.
Remaining Commitments:
Chariot has no remaining commitments offshore Mauritania.
Brazil and Namibia - New Understanding in Frontier Regions
The underexplored regions of offshore Namibia and the
Barreirinhas Basin of Brazil have also attracted significant
industry interest in recent years. Whilst these areas sit outside
of the traditional exploration focus on the Aptian Salt Basin, new
exploration technology and well penetrations have demonstrated that
world class source rocks and excellent Cretaceous-aged deepwater
turbidite reservoir rocks are present. Offshore Namibia, this has
been identified through Chariot's own data and information released
from wells drilled off-shelf during 2012/2013 in which all of the
elements needed for the successful accumulation of hydrocarbons
have now been proven.
Offshore Brazil, the Barreirinhas Basin is conjugate to the Salt
Pond Basin of Ghana and many of the play elements of that province
have been demonstrated adjacent to Chariot's blocks. The Company is
accompanied in these regions by supermajors, majors and large
independents in neighbouring acreage, indicative of the anticipated
prospectivity and potential of these frontier regions.
Brazil
In 2013, Chariot participated in the highly competitive Bidding
Round 11 in the Barreirinhas Basin, offshore Brazil, and was
awarded licences BAR-M-292, 293, 313 and 314 with a 100% interest.
Chariot was successful in securing this acreage on a seismic option
and low signature bonus whilst many of the supermajors and majors
in the region took on significant drilling commitments with large
signature bonuses. This third party commitment means that Chariot
is able to learn from up to ten wells expected to be drilled in the
basin, one of which will be directly adjacent to its acreage, prior
to the Company electing to enter the next phase of the
licences.
In July 2014, the team farmed out 25% of the licences to AziLat
in which they agreed to pay an increased proportion equal to 50% of
the costs of the 3D seismic acquisition commitment across the
acreage. Whilst this agreement remains subject to the approval of
the Brazilian authorities and other conditions, the decline in
seismic costs over the past months means that Chariot will look to
accelerate this programme using the funds raised for this purpose
in 2014.
The high industry interest in this part of the transform margin
is due to the Barreirinhas Basin being conjugate to the Atlantic
offshore basins in Côte d'Ivoire and Ghana which have seen
significant oil and gas discoveries. Whilst the few wells that have
been drilled in the region have not yet yielded discoveries, they
have proven high quality reservoirs and encountered good source
rocks in the Cenomanian-Turonian. From the team's interpretation of
legacy 2D seismic across its acreage, a series of leads with
evidence for sands and trapping geometries have been identified.
Lead A shows a combination trap pinch-out onto an inversion
structure with best estimate prospective resources standing at
725mmbbls (internal estimate) and the possibility to test this and
a second feature (Lead B) with a single well. Lead B is a four-way
dip closure with the potential for stacked targets on an inversion
structure with a Palaeocene top seal and has a best estimate of
346mmbbls gross mean prospective resources (internal estimate). The
team anticipates that the acquisition of 3D seismic will provide a
better insight and reveal more information to identify specific
targets for drilling.
Forward Plan:
To acquire the commitment seismic and seek an additional
partner.
Third Party Activity:
Ten wells due to be drilled within the next two to three
years
Remaining Commitments:
768km(2) of 3D seismic
Namibia
Chariot has a large acreage position that sits within the
Luderitz and Orange Basins and industry activity in recent years
has provided new and encouraging information on the prospectivity
within these regions, with the most recent drilling activity
proving two new petroleum systems in the Aptian and the
Cenomanian-Turonian. The implications of these results are
significant, as Namibia is now de-risked for oil charge, and it is
now a matter of determining where the reservoir, trap and source
combine to deliver giant accumulations of hydrocarbons.
During 2013/2014 Chariot repositioned its Namibian acreage to
become that of a fast follower. This not only enabled Chariot to
have a stronger positioning in its licences, providing the
optionality to seek seismic or well partners, but also meant that
recent entrants into the region would be required to drill
potential play opening wells prior to Chariot deciding on entering
its own drilling periods. As a result, Chariot operates the Central
Blocks 2312 & 2412A (65%) with AziNam (20%), NAMCOR (10%
carried) and Ignitus (5% carried) as partners. In the Southern
Blocks 2714A&B, it operates the licences with an 85% interest,
with NAMCOR (10% carried) and Quiver (5% carried).
Central Blocks
Especially important is the information released in late 2014
from wells adjacent to the Company's Central Blocks where well
penetrations of the Aptian section occurred. The source associated
with this interval has been shown to be excellent, oil prone and
mature, and this source rock can be directly correlated into the
Central Blocks where this source is buried to the same depths and
should have experienced the same hydrocarbon maturation
history.
Chariot has acquired a 3,500km(2) 3D seismic survey on the north
eastern flank of the licence. From this, Chariot has identified a
number of Upper Cretaceous turbidite clastic reservoirs in a
variety of stratigraphic and structural traps with the potential
for oil charge from locally mature Aptian and Cenomanian-Turonian
marine source rocks. Four prospects have been identified and
Prospect B, which has gross mean prospective resources of
469mmbbls, is the lowest risk and the priority target. The
identification of the Aptian source rock has extended the
prospective area within the Central Blocks and, with the new
licence positioning in this region, Chariot sees the opportunity
for further de-risking on the north western flank through the
acquisition of additional seismic data. In order to identify the
optimum area to carry out a 3D seismic survey, and to delineate
areas of key interest for prospective partners, the team contracted
SeaBird Exploration to carry out a 2D seismic acquisition programme
in this area in February/March 2015. As such, Chariot has been able
to generate a valuable option while managing the associated risks
and the Company will continue its talks with potential drilling and
seismic partners to accelerate its work programme.
Southern Blocks
In the Southern Blocks, Chariot has fulfilled all of its
commitments through the acquisition of 2D seismic data. The Company
is currently analysing these in order to locate the optimum
positioning for a 3D seismic survey, which should allow the team to
gain a more accurate understanding of the geological setting, and
mature prospects for drilling within this acreage. The aim will be
to carry out this survey with seismic partners, which is planned
for 2016
Forward Plan:
Central Blocks: evaluate 2D seismic data to optimise location
for a 3D seismic acquisition on the outboard high in the north
eastern part of the blocks; continue the partnering process.
Southern Blocks: evaluate 2D seismic data to optimise location
for a 3D seismic acquisition; carry out partnering process to
accelerate 3D seismic programme.
Third Party Activity:
Three wells reported for 2015 from recent entrants in the
region.
Remaining Commitments:
1,500km(2) 3D in Central Blocks.
Matthew Taylor
Technical Director
19 March 2015
Chariot Oil & Gas Limited
Consolidated Statement of Comprehensive Income for the Year
Ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
Notes US$000 US$000
Share based payments 20 (1,746) (2,219)
Impairment of exploration
asset 11 (33,629) -
Other administrative
expenses (6,053) (6,008)
--------------------------------- ------ -------------- --------------
Total operating expenses (41,428) (8,227)
--------------------------------- ------ -------------- --------------
Loss from operations 4 (41,428) (8,227)
Finance income 7 1,546 758
Finance expense 7 (1,580) (1,177)
--------------------------------- ------ -------------- --------------
Loss for the year before
taxation (41,462) (8,646)
Tax expense 9 (311) (1,809)
--------------------------------- ------ -------------- --------------
Loss for the year and
total comprehensive
loss for the year attributable
to equity owners of
the parent (41,773) (10,455)
--------------------------------- ------ -------------- --------------
Loss per Ordinary share 10 US$(0.19) US$(0.05)
attributable to the
equity holders of the
parent - basic and diluted
--------------------------------- ------ -------------- --------------
All amounts relate to continuing activities.
The notes form part of these financial statements.
Chariot Oil & Gas Limited
Consolidated Statement of Changes in Equity for the Year Ended
31 December 2014
Share based Total
payment Foreign attributable
Share Share Contributed reserve exchange Retained to equity
capital premium equity reserve deficit holders of
the parent
US$000 US$000 US$000 US$000 US$000 US$000 US$000
--------------- ------------- ------------- ------------- ------------ ------------ ------------- -------------
As at 1
January 2013 3,758 323,668 796 4,841 (1,241) (135,176) 196,646
Loss and total
comprehensive
loss for the
year - - - - - (10,455) (10,455)
Share based
payments - - - 2,219 - - 2,219
Transfer of
reserves due
to issue of
LTIPS 18 909 - (927) - - -
Transfer of
reserves due
to cancelled
/ lapsed
share options - - - (2,259) - 2,259 -
As at 31
December 2013 3,776 324,577 796 3,874 (1,241) (143,372) 188,410
--------------- ------------- ------------- ------------- ------------ ------------ ------------- -------------
Loss and total comprehensive loss for the year - - - - - (41,773) (41,773)
Issue of capital 972 13,605 - - - - 14,577
Issue costs - (909) - - - - (909)
Share based payments - - - 1,746 - - 1,746
Transfer of reserves due to issue of LTIPS 31 1,075 - (1,106) - - -
As at 31 December 2014 4,779 338,348 796 4,514 (1,241) (185,145) 162,051
------------------------------------------------ ------ -------- ---- -------- -------- ---------- ---------
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.
The notes form part of these financial statements.
Chariot Oil & Gas Limited
Consolidated Statement of Financial Position as at 31 December
2014
31 December 31 December
2014 2013
Notes US$000 US$000
Non-current assets
Exploration and appraisal
costs 11 101,251 128,284
Property, plant and equipment 12 342 613
----------------------------------- ------ ------------ ------------
Total non-current assets 101,593 128,897
----------------------------------- ------ ------------ ------------
Current assets
Trade and other receivables 13 1,681 1,614
Inventory 14 7,427 7,234
Cash and cash equivalents 15 53,482 56,684
----------------------------------- ------ ------------ ------------
Total current assets 62,590 65,532
----------------------------------- ------ ------------ ------------
Total assets 164,183 194,429
----------------------------------- ------ ------------ ------------
Current liabilities
Trade and other payables 16 2,132 6,019
Total current liabilities 2,132 6,019
----------------------------------- ------ ------------ ------------
Total liabilities 2,132 6,019
----------------------------------- ------ ------------ ------------
Net assets 162,051 188,410
----------------------------------- ------ ------------ ------------
Capital and reserves attributable
to equity holders of the
parent
Share capital 17 4,779 3,776
Share premium 338,348 324,577
Contributed equity 796 796
Share based payment reserve 4,514 3,874
Foreign exchange reserve (1,241) (1,241)
Retained deficit (185,145) (143,372)
----------------------------------- ------ ------------ ------------
Total equity 162,051 188,410
----------------------------------- ------ ------------ ------------
The notes form part of these financial statements.
The financial statements were approved by the Board of Directors
and authorised for issue on 19 March 2015.
George Canjar
Chairman
Chariot Oil & Gas Limited
Consolidated Cash Flow Statement for the Year Ended 31 December
2014
Year ended Year ended
31 December 31 December
2014 2013
US$000 US$000
Operating activities
Loss for the year before
taxation (41,462) (8,646)
Adjustments for:
Finance income (1,546) (758)
Finance expense 1,580 1,177
Depreciation 334 349
Share based payments 1,746 2,219
Impairment of exploration 33,629 -
asset
----------------------------------- -------------- --------------
Net cash outflow from operating
activities before changes
in working capital (5,719) (5,659)
(Increase) / decrease in
trade and other receivables (197) 1,360
Increase / (decrease) in
trade and other payables 162 (1,520)
Increase in inventories (92) (81)
------------------------------------ -------------- --------------
Cash outflow from operating
activities (5,846) (5,900)
Tax payment (2,078) -
Net cash outflow from operating
activities (7,924) (5,900)
------------------------------------ -------------- --------------
Investing activities
Finance income 1,578 758
Payments in respect of property,
plant and equipment (63) (80)
Farm-in proceeds 10,265 26,400
Payments in respect of intangible
assets (19,146) (31,574)
Net cash outflow used in
investing activities (7,366) (4,496)
------------------------------------ -------------- --------------
Financing activities
Issue of Ordinary share 14,577 -
capital
Issue costs (909) -
----------------------------------- -------------- --------------
Net cash inflow from financing 13,668 -
activities
----------------------------------- -------------- --------------
Net decrease in cash and
cash equivalents in the
year (1,622) (10,396)
Cash and cash equivalents
at start of the year 56,684 68,257
Effect of foreign exchange
rate changes on cash and
cash equivalent (1,580) (1,177)
Cash and cash equivalents
at end of the year 53,482 56,684
------------------------------------ -------------- --------------
The notes form part of these financial statements.
Chariot Oil & Gas Limited
Notes forming part of the financial statements for the year
ended 31 December 2014
1 General information
Chariot Oil & Gas Limited is a company incorporated in
Guernsey with registration number 47532. The address of the
registered office is Regency Court, Glategny Esplanade, St Peter
Port, Guernsey, GY1 3RH. The nature of the Company's operations and
its principal activities are set out in the Director's Report and
in the Technical Director's Review of Operations.
2 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRIC
interpretations, as issued by the International Accounting
Standards Board (IASB), as adopted by the European Union.
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
The Directors are of the opinion that the Group has adequate
financial resources to enable it to undertake its planned programme
of exploration and appraisal activities for a period of at least 12
months.
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 2014. 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
----------------------------------------- -----------------
IFRS 10 - Consolidated Financial 1 January
Statements 2014
----------------------------------------- -----------------
IFRS 11 - Joint Arrangements 1 January
2014
----------------------------------------- -----------------
IFRS 12 - Disclosure of Interests 1 January
in Other Entities 2014
----------------------------------------- -----------------
IAS 27 - Amendment - Separate 1 January
Financial Statements 2014
----------------------------------------- -----------------
IAS 28 - Amendment - Investments 1 January
in Associates and Joint Ventures 2014
----------------------------------------- -----------------
IAS 32 - Offsetting Financial 1 January
Assets and Financial Liabilities 2014
----------------------------------------- -----------------
IAS 36 - Recoverable Amounts Disclosures 1 January
for Non-Financial Assets 2014
----------------------------------------- -----------------
IAS 39 - Novation of Derivatives 1 January
and Continuation of Hedge Accounting 2014
----------------------------------------- -----------------
IFRIC 21 - Levies 1 January
2014
----------------------------------------- -----------------
Certain new standards and amendments to standards have been
published that are mandatory for the Group's accounting periods
beginning after 1 January 2015 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
------------------------------------------ -----------------
IAS 1 - Presentation of Financial 1 January
Statements (Amendments) 2016*
------------------------------------------ -----------------
IAS 19 - Defined Benefit Plans 1 February
(Amendments) 2015
------------------------------------------ -----------------
IAS 16 and IAS 38 - Acceptable 1 January
Methods of Depreciation and Amortisation 2016*
(Amendments)
------------------------------------------ -----------------
IAS 27 - Separate Financial Statements 1 January
2016*
------------------------------------------ -----------------
IFRS 9 - Financial Instruments 1 January
2018*
------------------------------------------ -----------------
IFRS 10 and IAS 28 - Investments 1 January
in Associates and Joint Ventures 2016*
(Amendments)
------------------------------------------ -----------------
IFRS 10, 12 and IAS 28 - Investment 1 January
Entities (Amendments) 2016
------------------------------------------ -----------------
IFRS 11 - Joint Arrangements (Amendments) 1 January
2016*
------------------------------------------ -----------------
IFRS 15 - Revenue from Contract 1 January
with Customers 2017*
------------------------------------------ -----------------
Annual Improvements to IFRSs - 1 February
(2010-2012 Cycle) 2015
------------------------------------------ -----------------
Annual Improvements to IFRSs - 1 January
(2011-2013 Cycle) 2015
------------------------------------------ -----------------
Annual Improvements to IFRSs - 1 January
(2012-2014 Cycle) 2016*
------------------------------------------ -----------------
* Not yet endorsed by the EU.
Exploration and appraisal costs
All expenditure relating to the acquisition, exploration,
appraisal and development of oil and gas interests, including an
appropriate share of directly attributable overheads, is
capitalised within cost pools.
The Board regularly reviews the carrying values of each cost
pool and writes down capitalised expenditure to levels it considers
to be recoverable. Cost pools are determined on the basis of
geographic principles. The Group currently has six cost pools being
Northern, Central and Southern Blocks in Namibia, Mauritania,
Morocco and Brazil. In addition 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 cost pools 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 cost pools is treated as a credit to the
Consolidated Statement of Comprehensive Income.
Any Capital Gains Tax payable in respect of a farm-in
transaction is recognised in the Consolidated Statement of
Comprehensive Income.
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 2.5 -
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.
Operating leases
Rent paid on operating leases is charged to the Consolidated
Statement of Comprehensive Income on a straight line basis over the
term of the lease.
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.
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. Trade and other receivables are stated initially at
fair value and subsequently at amortised cost.
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:
i. Recoverability of intangible assets
Expenditure is capitalised as an intangible asset by reference
to appropriate cost pools and is assessed for impairment when
circumstances suggest that the carrying amount may exceed its
recoverable value. This assessment involves judgement as to: (i)
the likely future commerciality of the asset and when such
commerciality should be determined; (ii) future revenues and costs
pertaining to any asset based on proved plus probable, prospective
and contingent resources; and (iii) the discount rate to be applied
to such revenues and costs for the purpose of deriving a
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
Appraisal Costs. 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. Share based payments
In order to calculate the charge for share based compensation as
required by IFRS 2, the Group makes estimates principally relating
to the assumptions used in its pricing model as set out in note
20.
3 Segmental analysis
The Group has two reportable segments being exploration for oil
and gas and head office 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 2014
Exploration Head Office Total
for
Oil and
Gas
--------------------------- ------------ ------------ ---------
US$000 US$000 US$000
--------------------------- ------------ ------------ ---------
Share based payment - (1,746) (1,746)
--------------------------- ------------ ------------ ---------
Administrative expenses (758) (5,295) (6,053)
--------------------------- ------------ ------------ ---------
Impairment of exploration
asset (33,629) - (33,629)
--------------------------- ------------ ------------ ---------
Finance income - 1,546 1,546
--------------------------- ------------ ------------ ---------
Finance expense - (1,580) (1,580)
--------------------------- ------------ ------------ ---------
Tax expense - (311) (311)
--------------------------- ------------ ------------ ---------
Loss after taxation (34,387) (7,386) (41,773)
--------------------------- ------------ ------------ ---------
Additions to non-current
assets 17,287 63 17,350
--------------------------- ------------ ------------ ---------
Total assets 109,164 55,019 164,183
--------------------------- ------------ ------------ ---------
Total liabilities (870) (1,262) (2,132)
--------------------------- ------------ ------------ ---------
Net assets 108,294 53,757 162,051
--------------------------- ------------ ------------ ---------
31 December 2013
Exploration Head Office Total
for
Oil and
Gas
--------------------------- ------------ ------------ ---------
US$000 US$000 US$000
--------------------------- ------------ ------------ ---------
Share based payment - (2,219) (2,219)
--------------------------- ------------ ------------ ---------
Administrative expenses (956) (5,052) (6,008)
--------------------------- ------------ ------------ ---------
Impairment of exploration - - -
asset
--------------------------- ------------ ------------ ---------
Finance income - 758 758
--------------------------- ------------ ------------ ---------
Finance expense - (1,177) (1,177)
--------------------------- ------------ ------------ ---------
Tax expense (1,702) (107) (1,809)
--------------------------- ------------ ------------ ---------
Loss after taxation (2,658) (7,797) (10,455)
--------------------------- ------------ ------------ ---------
Additions to non-current
assets 18,045 80 18,125
--------------------------- ------------ ------------ ---------
Total assets 136,103 58,326 194,429
--------------------------- ------------ ------------ ---------
Total liabilities (3,152) (2,867) (6,019)
--------------------------- ------------ ------------ ---------
Net assets 132,951 55,459 188,410
--------------------------- ------------ ------------ ---------
4 Loss from operations
31 December 31 December
2014 2013
------------------------------------- ------------ ------------
US$000 US$000
------------------------------------- ------------ ------------
Loss from operations is stated
after charging:
------------------------------------- ------------ ------------
Impairment of exploration asset 33,629 -
------------------------------------- ------------ ------------
Operating lease - office rental 606 329
------------------------------------- ------------ ------------
Depreciation 334 349
------------------------------------- ------------ ------------
Share based payments - Share
Option Scheme 258 303
------------------------------------- ------------ ------------
Share based payments - Long
Term Incentive Scheme 1,378 1,891
------------------------------------- ------------ ------------
Share based payments - Restricted
Share Unit Scheme 110 25
------------------------------------- ------------ ------------
Auditors' remuneration:
------------------------------------- ------------ ------------
Fees payable to the Company's
Auditors for the audit of the
Company's annual accounts 72 72
------------------------------------- ------------ ------------
Audit of the Company's subsidiaries
pursuant to legislation 18 17
------------------------------------- ------------ ------------
Fees payable to the Company's
Auditors for the review of
the Company's interim accounts 12 12
------------------------------------- ------------ ------------
Total payable 102 101
------------------------------------- ------------ ------------
5 Leases commitments
31 December 31 December
2014 2013
----------------------------- ------------ ------------
US$000 US$000
----------------------------- ------------ ------------
Not later than one year 508 557
----------------------------- ------------ ------------
Later than one year and not
later than five years 749 1,230
----------------------------- ------------ ------------
Total 1,257 1,787
----------------------------- ------------ ------------
The leases are operating leases in relation to the offices in
the UK, Namibia, Mauritania and Brazil.
6 Employment costs
Employees 31 December 31 December
2014 2013
----------------------------- ------------ ------------
US$000 US$000
----------------------------- ------------ ------------
Wages and salaries 3,287 2,941
----------------------------- ------------ ------------
Payment in lieu of notice / 274 -
compromise payment
----------------------------- ------------ ------------
Pension costs 167 169
----------------------------- ------------ ------------
Share based payments 1,022 1,387
----------------------------- ------------ ------------
Sub-total 4,750 4,497
----------------------------- ------------ ------------
Capitalised to exploration
costs (2,174) (1,669)
----------------------------- ------------ ------------
Total 2,576 2,828
----------------------------- ------------ ------------
Key management personnel 31 December 31 December
2014 2013
---------------------------- ------------ ------------
US$000 US$000
---------------------------- ------------ ------------
Wages and salaries 2,347 1,657
---------------------------- ------------ ------------
Pension costs 31 29
---------------------------- ------------ ------------
Share based payments 724 832
---------------------------- ------------ ------------
Sub-total 3,102 2,518
---------------------------- ------------ ------------
Capitalised to exploration
costs (854) (452)
---------------------------- ------------ ------------
Total 2,248 2,066
---------------------------- ------------ ------------
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.
7 Finance income and expense
Finance income 31 December 31 December
2014 2013
-------------------------- ------------ ------------
US$000 US$000
-------------------------- ------------ ------------
Bank interest receivable 1,546 758
-------------------------- ------------ ------------
Total 1,546 758
-------------------------- ------------ ------------
Finance expense 31 December 31 December
2014 2013
----------------------- ------------ ------------
US$000 US$000
----------------------- ------------ ------------
Foreign exchange loss 1,580 1,177
----------------------- ------------ ------------
Total 1,580 1,177
----------------------- ------------ ------------
8 Investments
The Company's wholly owned subsidiary undertakings at 31
December 2014 and 31 December 2013, excluding dormant entities,
were:
Subsidiary undertaking Principal Country of
activity incorporation
------------------------------ ---------------- ---------------
Chariot Oil & Gas Investments Holding company Guernsey
(Namibia) Limited
------------------------------ ---------------- ---------------
Chariot Oil & Gas Investments Oil and gas Guernsey
(Mauritania) Limited exploration
------------------------------ ---------------- ---------------
Chariot Oil & Gas Investments Oil and gas Guernsey
(Morocco) Limited exploration
------------------------------ ---------------- ---------------
Chariot Oil & Gas Statistics Service company UK
Limited
------------------------------ ---------------- ---------------
Enigma Oil & Gas Exploration Oil and gas Namibia
(Proprietary) Limited(1) exploration
------------------------------ ---------------- ---------------
Chariot Oil & Gas Investments Holding company Guernsey
(Brazil) Limited
------------------------------ ---------------- ---------------
Chariot Brasil Petroleo Oil and gas Brazil
e Gas Ltda exploration
------------------------------ ---------------- ---------------
Chariot Oil & Gas Finance Service company Guernsey
(Brazil) Limited(1)
------------------------------ ---------------- ---------------
(1) Indirect shareholding of the Company.
9 Taxation
Prior to 30 January 2014, the Company was tax resident in
Guernsey, where corporate profits are taxed at zero per cent. From
30 January 2014, the Company was tax resident in the UK, however no
tax charge arises due to taxable losses for the period 30 January
2014 to 31 December 2014.
No taxation charge arises in Namibia, Morocco or the UK
subsidiaries as they have recorded taxable losses for the year (31
December 2013: US$Nil).
In 2013, in Mauritania there was a Capital Gains Tax payable of
US$1,702,000 due to the farm-out of 35% of licence C-19 offshore
Mauritania to Capricorn Mauritania Limited, a wholly owned
subsidiary of Cairn Energy Plc, which completed on 11 October 2013.
In 2014, no taxation charge arises in Mauritania due to taxable
losses for the year.
In Brazil, there were taxable profits due to interest received
on cash balances resulting in a tax charge payable of US$311,000
(31 December 2013: US$107,000). 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 31 December
2014 2013
-------------------------------------- ------------ ------------
US$000 US$000
-------------------------------------- ------------ ------------
Tax reconciliation
-------------------------------------- ------------ ------------
Loss on ordinary activities
for the year before tax (41,462) (8,646)
-------------------------------------- ------------ ------------
Loss on ordinary activities (8,914) -
at the standard rate of corporation
tax in the UK of 21.5% (31
December 2013: Guernsey 0%)
-------------------------------------- ------------ ------------
Non-deductible expenses 7,677 -
-------------------------------------- ------------ ------------
Difference in tax rates in
other jurisdictions 134 (192)
-------------------------------------- ------------ ------------
Deferred tax effect not recognised 1,414 299
-------------------------------------- ------------ ------------
Mauritanian Capital Gains
Tax of 10% (31 December 2013:10%) - 1,702
-------------------------------------- ------------ ------------
Total taxation charge 311 1,809
-------------------------------------- ------------ ------------
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$3.7 million (31 December 2013:
US$2.3 million). Deferred tax assets were not recognised as there
is uncertainty regarding the timing of future profits against which
these assets could be utilised.
10 Loss per share
The calculation of basic loss per Ordinary share is based on a
loss of US$41,773,000 (31 December 2013: loss of US$10,455,000) and
on 222,449,858 Ordinary shares (31 December 2013: 200,913,999)
being the weighted average number of Ordinary shares in issue
during the year. Potentially dilutive share awards are detailed in
note 20, 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.
11 Exploration and appraisal costs
31 December 2014 31 December 2013
-------------------------------- ----------------- -----------------
US$000 US$000
-------------------------------- ----------------- -----------------
Net book value brought forward 128,284 136,639
-------------------------------- ----------------- -----------------
Additions 17,287 18,045
-------------------------------- ----------------- -----------------
Farm-in proceeds (10,691) (26,400)
-------------------------------- ----------------- -----------------
Impairment (33,629) -
-------------------------------- ----------------- -----------------
Net book value carried forward 101,251 128,284
-------------------------------- ----------------- -----------------
As at 31 December 2014 the net book values of the six cost pools
are Northern Blocks offshore Namibia US$Nil (31 December 2013:
US$33.6 million), Central Blocks offshore Namibia US$43.0 million
(31 December 2013: US$42.4 million), Southern Blocks offshore
Namibia US$47.3 million (31 December 2013: US$45.2 million),
Mauritania US$3.9 million (31 December 2013: US$2.8 million),
Morocco US$3.2 million (31 December 2013: US$1.6 million) and
Brazil US$3.9 million (31 December 2013: US$2.7 million).
Farm-in proceeds in 2014 are in relation to the farm-out of 25%
of the Rabat Deep Offshore permits I-IV, Morocco, to a wholly owned
subsidiary of Woodside Petroleum Limited, which completed on 23
December 2014. Farm-out proceeds in 2013 are in relation to the
farm-out of 35% of licence C-19 offshore Mauritania to Capricorn
Mauritania Limited, a wholly owned subsidiary of Cairn Energy Plc,
which completed on 11 October 2013.
Continued portfolio review leading to no application for a
licence renewal of 1811A&B resulting in the licence lapsing on
26 October 2014 causing a provision of US$33.6 million against the
carrying value of Northern Blocks, Namibia.
12 Property, plant and equipment
Fixtures, fittings Fixtures, fittings
and equipment and equipment
------------------------ ------------------- -------------------
31 December 31 December
2014 2013
------------------------ ------------------- -------------------
US$000 US$000
------------------------ ------------------- -------------------
Cost
------------------------ ------------------- -------------------
Brought forward 1,665 1,585
------------------------ ------------------- -------------------
Additions 63 80
------------------------ ------------------- -------------------
Disposals (79) -
------------------------ ------------------- -------------------
Carried forward 1,649 1,665
------------------------ ------------------- -------------------
Depreciation
------------------------ ------------------- -------------------
Brought forward 1,052 703
------------------------ ------------------- -------------------
Charge 334 349
------------------------ ------------------- -------------------
Disposals (79) -
------------------------ ------------------- -------------------
Carried forward 1,307 1,052
------------------------ ------------------- -------------------
Net book value brought
forward 613 882
------------------------ ------------------- -------------------
Net book value carried
forward 342 613
------------------------ ------------------- -------------------
13 Trade and other receivables
31 December 31 December
2014 2013
----------------------- ------------ ------------
US$000 US$000
----------------------- ------------ ------------
Other receivables and
prepayments 1,681 1,614
----------------------- ------------ ------------
The fair value of trade and other receivables is equal to their
book value.
14 Inventory
31 December 31 December
2014 2013
---------------------- ------------ ------------
US$000 US$000
---------------------- ------------ ------------
Wellheads and casing 7,427 7,234
---------------------- ------------ ------------
15 Cash and cash equivalents
31 December 31 December
2014 2013
---------------------- ------------ ------------
Analysis by currency US$000 US$000
---------------------- ------------ ------------
US Dollar 41,627 43,389
---------------------- ------------ ------------
Brazilian Real 11,566 12,606
---------------------- ------------ ------------
Sterling 267 633
---------------------- ------------ ------------
Namibian Dollar 11 51
---------------------- ------------ ------------
Mauritanian Ouguiya 11 5
---------------------- ------------ ------------
53,482 56,684
---------------------- ------------ ------------
The cash balance of US$53.5 million (31 December 2013: US$56.7
million) does not include US$1.4 million (31 December 2013: US$Nil)
held in a Brazilian Real denominated escrow bank account. At 31
December 2014 the Group did not control or benefit from this escrow
cash. This escrow cash and the related 25% farm-out of the
Brazilian blocks to a wholly owned subsidiary of AziLat Limited
will be recognised post year end on completion of the farm-out
agreement.
As at 31 December 2014, the cash balance of US$53.5 million (31
December 2013: US$56.7 million) contains the following cash
deposits that are secured against bank guarantees given in respect
of exploration work to be carried out:
31 December 31 December
2014 2013
------------------------ ------------ ------------
US$000 US$000
------------------------ ------------ ------------
Brazilian licences 10,745 12,160
------------------------ ------------ ------------
Mauritanian licence 500 2,500
------------------------ ------------ ------------
Moroccan licences 1,900 1,000
------------------------ ------------ ------------
Namibian 2714B licence 300 300
------------------------ ------------ ------------
13,445 15,960
------------------------ ------------ ------------
The funds are freely transferrable but alternative collateral
would need to be put in place to replace the cash security.
16 Trade and other payables
31 December 31 December
2014 2013
---------------- ------------ ------------
US$000 US$000
---------------- ------------ ------------
Trade payables 714 1,976
---------------- ------------ ------------
Accruals 1,376 2,234
---------------- ------------ ------------
Tax Payable 42 1,809
---------------- ------------ ------------
2,132 6,019
---------------- ------------ ------------
The fair value of trade and other payables is equal to their
book value.
17 Share capital
Authorised
-------------- ------------------------------------------------------
31 December 31 December 31 December 31 December
2014 2014 2013 2013
-------------- ------------ ------------ ------------ ------------
Number US$000 Number US$000
-------------- ------------ ------------ ------------ ------------
Ordinary
shares
of 1p each* 400,000,000 7,980 400,000,000 7,980
-------------- ------------ ------------ ------------ ------------
Allotted, called up and fully paid
------------ ------------------------------------------------------
31 December 31 December 31 December 31 December
2014 2014 2013 2013
------------ ------------ ------------ ------------ ------------
Number US$000 Number US$000
------------ ------------ ------------ ------------ ------------
Ordinary
shares of
1p each* 262,294,113 4,779 201,789,805 3,776
------------ ------------ ------------ ------------ ------------
* The authorised and initially allotted and issued share capital
on admission (19 May 2008) has been translated at the historic rate
of US$:GBP of 1.995. The shares issued since admission have been
translated at the date of issue, or, in the case of the LTIP, the
date of grant and not subsequently retranslated.
Details of the Ordinary shares issued are in the table
below:
Date Description Price No of shares
US$
------------- ------------------------ ------ -------------
1 January
2013 Opening Balance 200,641,135
------------- ------------------------ ------ -------------
10 April Issue of shares
2013 as part of LTIP 3.61 30,000
------------- ------------------------ ------ -------------
10 April Issue of shares
2013 as part of LTIP 1.74 9,366
------------- ------------------------ ------ -------------
23 April Issue of shares
2013 as part of LTIP 4.38 10,500
------------- ------------------------ ------ -------------
23 April Issue of shares
2013 as part of LTIP 1.74 3,097
------------- ------------------------ ------ -------------
23 April Issue of shares
2013 as part of LTIP 1.95 10,000
------------- ------------------------ ------ -------------
2 October Issue of shares
2013 as part of LTIP 2.95 12,768
------------- ------------------------ ------ -------------
2 October Issue of shares
2013 as part of LTIP 0.50 75,881
------------- ------------------------ ------ -------------
2 October Issue of shares
2013 as part of LTIP 1.74 27,676
------------- ------------------------ ------ -------------
8 October Issue of shares
2013 as part of LTIP 1.95 10,000
------------- ------------------------ ------ -------------
8 October Issue of shares
2013 as part of LTIP 0.50 173,443
------------- ------------------------ ------ -------------
8 October Issue of shares
2013 as part of LTIP 1.74 4,055
------------- ------------------------ ------ -------------
8 October Issue of shares
2013 as part of LTIP 0.32 71,304
------------- ------------------------ ------ -------------
8 October Issue of shares
2013 as part of LTIP 1.70 55,000
------------- ------------------------ ------ -------------
8 October Issue of shares
2013 as part of LTIP 4.38 4,000
------------- ------------------------ ------ -------------
21 October Issue of shares
2013 as part of LTIP 0.45 150,000
------------- ------------------------ ------ -------------
21 October Issue of shares
2013 as part of LTIP 4.38 14,000
------------- ------------------------ ------ -------------
21 October Issue of shares
2013 as part of LTIP 0.50 162,602
------------- ------------------------ ------ -------------
21 October Issue of shares
2013 as part of LTIP 0.32 114,978
------------- ------------------------ ------ -------------
22 October Issue of shares
2013 as part of LTIP 0.50 120,000
------------- ------------------------ ------ -------------
22 October Issue of shares
2013 as part of LTIP 1.36 40,000
------------- ------------------------ ------ -------------
22 October Issue of shares
2013 as part of LTIP 0.50 50,000
------------- ------------------------ ------ -------------
31 December
2013 201,789,805
--------------------------------------- ------ -------------
26 February Issue of shares
2014 as part of LTIP 4.38 14,000
------------- ------------------------ ------ -------------
26 February Issue of shares
2014 as part of LTIP 0.57 150,000
------------- ------------------------ ------ -------------
26 February Issue of shares
2014 as part of LTIP 0.50 73,171
------------- ------------------------ ------ -------------
26 February Issue of shares
2014 as part of LTIP 0.35 83,494
------------- ------------------------ ------ -------------
12 March Issue of shares
2014 as part of LTIP 0.50 26,498
------------- ------------------------ ------ -------------
12 March Issue of shares
2014 as part of LTIP 0.44 5,696
------------- ------------------------ ------ -------------
21 March Issue of shares
2014 as part of LTIP 4.38 7,000
------------- ------------------------ ------ -------------
24 April Issue of shares
2014 as part of LTIP 0.50 25,000
------------- ------------------------ ------ -------------
29 August Issue of shares
2014 at GBP0.15 in Placing 0.25 58,596,038
------------- ------------------------ ------ -------------
2 September Issue of shares
2014 as part of LTIP 0.30 129,601
------------- ------------------------ ------ -------------
2 September Issue of shares
2014 as part of LTIP 0.27 226,350
------------- ------------------------ ------ -------------
2 September Issue of shares
2014 as part of LTIP 2.92 25,000
------------- ------------------------ ------ -------------
2 September Issue of shares
2014 as part of LTIP 4.38 14,000
------------- ------------------------ ------ -------------
2 September Issue of shares
2014 as part of LTIP 0.50 439,024
------------- ------------------------ ------ -------------
2 September Issue of shares
2014 as part of LTIP 0.33 50,000
------------- ------------------------ ------ -------------
10 October Issue of shares
2014 as part of LTIP 4.38 7,500
------------- ------------------------ ------ -------------
10 October Issue of shares
2014 as part of LTIP 0.50 327,867
------------- ------------------------ ------ -------------
10 October Issue of shares
2014 as part of LTIP 2.95 12,768
------------- ------------------------ ------ -------------
10 October Issue of shares
2014 as part of LTIP 1.25 26,666
------------- ------------------------ ------ -------------
10 October Issue of shares
2014 as part of LTIP 1.36 40,000
------------- ------------------------ ------ -------------
10 October Issue of shares
2014 as part of LTIP 0.19 224,635
------------- ------------------------ ------ -------------
31 December
2014 262,294,113
--------------------------------------- ------ -------------
18 Related party transactions
- Key management personnel comprises the Directors and details
of their remuneration are set out in note 6 and the Directors'
Remuneration Report.
- Westward Investments Limited ("Westward") is a company where
Robert Sinclair is a Director and which is owned by a discretionary
trust of which Adonis Pouroulis is one of a number of
beneficiaries. During the year ended 31 December 2014, Westward
received administrative services from an employee of Chariot for
which Westward incurred fees payable to Chariot of US$24,490 (31
December 2013: US$14,845). The amount outstanding as at 31 December
2014 was US$27,101 (31 December 2013: US$2,611) which was received
post year end.
- Benzu Resources Limited ("Benzu") is a company where Adonis
Pouroulis is a Director. During the year ended 31 December 2014,
Benzu received administrative services from an employee of Chariot
for which Benzu incurred fees payable to Chariot of US$14,157 (31
December 2013: US$14,845). The amount outstanding as at 31 December
2014 is US$24,603 (31 December 2013: US$10,446) which was received
post year end.
- Pella Resources Limited ("Pella") is a company where Robert
Sinclair and Adonis Pouroulis are Directors. During the year ended
31 December 2014, Pella received administrative services from an
employee of Chariot for which it incurred fees payable to Chariot
of US$39,590 (31 December 2013: US$75,699). The amount outstanding
as at 31 December 2014 was US$44,170 (31 December 2013: US$4,580)
which was received post year end.
19 Financial instruments
The Board of Directors determine, as required, the degree to
which it is appropriate to use financial instruments or other
hedging contracts or techniques to mitigate risk. Throughout the
year ending 31 December 2014, no trading in financial instruments
was undertaken (31 December 2013: US$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
banks Barclays and BNP Paribas, on fixed short term deposits. 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.
Currency risk
The Group has limited currency risk in respect of items
denominated in foreign currencies. Currency risk comprises of
transactional exposure in respect of operating costs and capital
expenditure incurred in currencies other than the functional
currency of operations.
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 Brazilian Real, Sterling, Namibian Dollars and
Mauritanian Ouguiya to meet other non-US Dollar industry costs and
on-going corporate and overhead commitments.
At the year end, the Group had cash balances of US$53.5 million
(31 December 2013: US$56.7 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$1,186,000 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 2013: US$1,330,000).
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 on-going 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 Company will put
in place measures that it has assessed as prudent to mitigate the
risk of default by the other party. This would consist of
instruments such as bank guarantees and letters of credit or
charges over assets.
The Group currently acts as Operator in three non-carried Joint
Venture relationships on three of the Group's licences and
therefore from time to time is owed money from its Joint Venture
partners. The Joint Venture partner which has a 20% interest in the
Central Blocks in Namibia is an entity which is 48% owned by one of
the world's largest seismic and geoscience companies. The Joint
Venture partner which has a 35% interest in the Mauritanian licence
is an entity which is wholly owned by a FTSE 250 company. The Joint
Venture partner which has a 25% interest in the Rabat Deep Offshore
permits I-IV, Morocco, is an entity which is wholly owned by
Australia's largest oil company.
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.
20 Share based payments
Share Option Scheme
During the year, the Company operated the Chariot Oil & Gas
Share Option Scheme ("Share Option Scheme"). The Company recognised
total expenses (all of which related to equity settled share based
payment transactions) under the plan of:
31 December 31 December
2014 2013
--------------------- ------------ ------------
US$000 US$000
--------------------- ------------ ------------
Share Option Scheme 258 303
--------------------- ------------ ------------
The options expire if they remain unexercised after the exercise
period has lapsed. For options valued using the Black-Scholes
model, there are no market performance conditions or other vesting
conditions attributed to the options.
The following table sets out details of all outstanding options
granted under the Share Option Scheme:
31 December 31 December
2014 2013
-------------------------- ------------ ------------
Number of Number of
Options Options
-------------------------- ------------ ------------
Outstanding at beginning
of the year 4,000,000 5,400,000
-------------------------- ------------ ------------
Granted during the year - 2,750,000
-------------------------- ------------ ------------
Lapsed during the year - (3,450,000)
-------------------------- ------------ ------------
Cancelled during the
year - (700,000)
-------------------------- ------------ ------------
Outstanding at the end
of the year 4,000,000 4,000,000
-------------------------- ------------ ------------
Exercisable at the end
of the year 4,000,000 1,250,000
-------------------------- ------------ ------------
The range of the exercise price of share options exercisable at
the year-end falls between US$0.39 (25p) - US$1.94 (125p) (31
December 2013: US$0.41 (25p) - US$2.06 (125p)).
The estimated fair values of options which fall under IFRS 2 and
the inputs used in the Black-Scholes model to calculate those fair
values are as follows:
Date of Estimated Share Exercise Expected Expected Risk Expected
grant fair value price price volatility life free dividend
rate
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
27 March
2008 GBP0.62 GBP1.21 GBP1.30 32% 10 years 4.94% 0%
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
13 November
2009 GBP0.17 GBP0.26 GBP0.26 80% 5 years 4.3% 0%
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
15 January
2010 GBP0.19 GBP0.28 GBP0.25 80% 5 years 4.3% 0%
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
1 June
2010 GBP0.89 GBP1.29 GBP1.15 80% 5 years 4.3% 0%
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
17 August
2010 GBP0.71 GBP1.09 GBP1.19 80% 5 years 4.3% 0%
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
1 September
2011 GBP0.87 GBP1.29 GBP1.25 80% 5 years 4.3% 0%
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
22 April
2013 GBP0.11 GBP0.186 GBP0.273 80% 5 years 1.5% 0%
------------- ------------- ---------- ---------- ------------ --------- ------ ----------
Expected volatility was determined by calculating the annualised
standard deviation of the daily changes in the share price.
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 will vest three
years from the end of the year that the award relates.
The Group recognised a charge under the plan for the year to 31
December 2014 of US$1,378,000 (31 December 2013: US$1,891,000).
The following table sets out details of all outstanding share
awards under the LTIP:
31 December 31 December
2014 2013
------------------------------------ ------------ ------------
Number of Number of
awards awards
------------------------------------ ------------ ------------
Outstanding at beginning
of the year 6,886,638 6,265,174
------------------------------------ ------------ ------------
Granted during the year 3,256,581 2,251,638
------------------------------------ ------------ ------------
Shares issued for no consideration
during the year (1,908,270) (1,148,670)
------------------------------------ ------------ ------------
Lapsed during the year (281,335) (481,504)
------------------------------------ ------------ ------------
Outstanding at the end
of the year 7,953,614 6,886,638
------------------------------------ ------------ ------------
Exercisable at the end
of the year 2,605,862 1,176,877
------------------------------------ ------------ ------------
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 prior to 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 2014 of US$110,000 (31 December 2013: US$25,000).
The following table sets out details of all outstanding share
awards under the RSU:
31 December 31 December
2014 2013
-------------------------- ------------ ------------
Number of Number of
awards awards
-------------------------- ------------ ------------
Outstanding at beginning 505,663 -
of the year
-------------------------- ------------ ------------
Granted during the year 753,528 505,663
-------------------------- ------------ ------------
Outstanding at the end
of the year 1,259,191 505,663
-------------------------- ------------ ------------
Exercisable at the end 168,555 -
of the year
-------------------------- ------------ ------------
21 Contingent liabilities
From 30 December 2011 the Namibian tax authorities introduced a
withholding tax of 25% on all services provided by non-Namibian
entities which are received and paid for by Namibian residents. As
at 31 December 2014, based upon independent legal and tax opinions,
the Group has no withholding tax liability (31 December 2013:
US$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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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