Energean, Chariot partner to develop massive natural gas project offshore Morocco

December 07, 2023

(WO) – Energean plc has farmed into Chariot Limited’s acreage offshore Morocco, which includes the 18 Bcm (gross) Anchois natural gas development and significant exploration potential. 

Source: Chariot Energy Group

Energean has agreed to farm into a 45% working interest in the Lixus offshore license, which contains the Anchois natural gas development (Chariot 30%, ONHYM 25%), and a 37.5% working interest in the Rissana license (Chariot 37.5%, ONHYM 25%). Energean will assume operatorship for both licenses.

Terms. Energean has agreed to the following terms:

  • $10 million cash consideration on closing of the transaction.
  • Energean agrees to carry Chariot for its share of pre-FID costs (which are recoverable from Chariot’s future revenues, see terms below), up to a gross expenditure cap of $85 million, covering:
    • drilling of the appraisal well; and
    • all other pre-FID costs; and
    • up to $7 million of seismic expenditure on the Rissana licence.
  • $15 million in cash, which is contingent on FID being taken on the Anchois Development.

Following the drilling of the appraisal well, Energean has the option to increase its working interest in the Lixus offshore license (which includes the Anchois natural gas development) by 10%, to 55%. On exercise of this option, the amount payable would be:                                                                  

  • Chariot’s choice between either:
    • 5-year, $50 million of convertible loan notes with a GBP20 strike price and 0% coupon
    • 3 million Energean plc shares, issued immediately upon exercise of the option but subject to a lock-up period until the earlier of first gas and 3 years post FID
  • Energean will pay to Chariot a 7% royalty for every dollar achieved on gas prices (post transportation costs) in excess of a base hurdle
  • An agreement to carry Chariot’s 20% share of development costs for the Anchois development with the following terms:
  • A net expenditure cap of $170 million
  • The carry available for development costs is reduced by costs carried in the pre-FID phase
  • All carried amounts are recoverable from 50% of Chariot’s future revenues with interest charged at SOFR + 7%

If the option is not exercised, the partners agree to progress the Anchois development with an ownership structure of Energean 45%, Chariot 30%, ONHYM 25%. All amounts carried by Energean on behalf of Chariot would be recoverable from Chariot’s future revenues.

Lixus license and Anchois cevelopment. The Lixus offshore license covers an area of approximately 1,794 km2, with water depths ranging from the coastline to 850 m. The area has extensive data coverage, with legacy 3D seismic data covering approximately 1,425 km2. Five exploration wells have been drilled historically, including the Anchois-1 and Anchois-2 discovery wells. 

Chariot’s latest competent persons report covering the Anchois field has certified gross 2C contingent resources of 18 Bcm in the discovered gas sands and gross unrisked prospective resources of 21 Bcm in undrilled sands. Energean and Chariot plan to drill an appraisal well in 2024, with plans to undertake a drill stem test on the main gas-containing sands. The companies will also target an additional 5 Bcm of recoverable gas with a 61% geological chance of success through a sidetrack into the O sands in the Anchois Footwall prospect .

In addition, the companies plan to target an additional 6 Bcm of recoverable gas with a 49% geological chance of success through a deepening of the well into previously undrilled sands in the Anchois North Flank prospect.

Once drilled, the well is expected to be retained as a future producer for the Anchois development. It is anticipated that the license contains significant additional prospectivity that could allow for further balanced-risk, near-field exploration activity.

Lead image: Stena Don semi-submersible drilling rig (Source: Stena Drilling)

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