The following article is posted from proactive Investors.It...

The following article is posted from proactive Investors.
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“The drilling will mark the start of an exciting period of frontier exploration for the region and has obvious read across for both Tower Resources and Global Petroleum with nearby acreage"


Chariot Oil & Gas shares rise on rig deal
10:16 am by Jamie Ashcroft

Chariot Oil & Gas (LON:CHAR) shares advanced as much as 20 per cent in early deals as it sealed a rig contract for its first exploration well in the deep waters off the Namibian coast.
The Maersk Deliverer rig is due at the planned well location by the end of this month and drilling will begin shortly after that. The well will take two months to drill.
The deep water exploration well will test the Napir South prospect, which is estimated to contain around 600 million barrels of oil.
"We are extremely pleased to have concluded this drilling rig contract with Maersk and to provide an anticipated spud date for our first exploration well offshore Namibia,” said chief executive Paul Welch.
“Despite the tight rig market we have secured an excellent drilling rig for the Tapir South prospect with a highly reputable contractor.
The Napir South well has a one in four chance of success. The well is being drilled in a water depth of about 2,000 metres and it will be drilled to a depth of 5,100 metres.
Napir South is located in Chariot’s northern group of licences, which are still 100 per cent owned by the company. Today’s rig contract is for the first well in Chariot’s planned 4/5 well deepwater exploration drilling programme.
Chariot is aiming to conclude farm-out deals to support its expensive work programme, in addition to its existing partnerships with BP and Petrobras.
Analysts at Westhouse Securities reckon a deal may be done, in respect of Tapir South, prior to drilling given the costs associated with deep water drilling – estimated by the broker at over US$1 million a day.
Similarly, Daniel Stewart oil analyst Kate Fisher told clients that today’s announcement hinted that farm-out news could be on the way in the near future.
“(Today’s) contract takes Chariot that one step closer to spud of the well, and one step further towards the cardinal event, which we see as well results,” Fisher said in a note to clients.
“These events represent key milestones to the Chariot story, and important catalysts to Chariot`s share price.”
She adds: “There are plenty of key news events to come in 2012, which could make it a cornerstone year for the company.”
Meanwhile, Northland Capital’s Andrew McGeary highlighted that Chariot’s drill programme may have positive implications for other AIM-quoted firms in the area.
“The drilling will mark the start of an exciting period of frontier exploration for the region and has obvious read across for both Tower Resources and Global Petroleum with nearby acreage,” he said.
“Whilst the prospects are all looking at unique structures, Chariot’s programme could provide important information about the potential hydrocarbon system in the region.”
Rounding off the positive analyst coverage, Peel Hunt analyst Werner Riding upgraded his target price to 300p a share, from 250p.
He says the contract removes ‘drill-timing’ risk and he believes the stock will now close the stock’s discount to net asset value.
Napir South will be the first of Chariot’s identified targets to be drilled, and it is also one of the smaller ones.
Chariot’s second exploration well, named Kabeljou-1, will test the Nimrod prospect which is estimated to contain almost 5 billion barrels of oil.
Drilling Nimrod is pencilled in for the second half of this year.
Nimrod is located within the group’s Southern Licences, where it has already farmed-out to major partners in separate deals with BP and Petrobras.
Chariot retains a 25 per cent stake in the licence area, and its share of the drilling costs is being carried for the Nimrod well.
The company says it will make a decision on the remainder of the exploration programme after these two wells have been drilled and the recently acquired 3D seismic data has been interpreted.
At 9:50, Chariot shares were up 20.75p, or 12.5 per cent, trading at 186.75p each.