REG - Chariot Limited - 2023 Final Results
11/06/2024 07:00
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RNS Number : 8652R Chariot Limited 11 June 2024
11 June 2024
Chariot Limited
("Chariot" or the "Company")
2023 Final Results
Chariot (AIM: CHAR), the Africa focused transitional energy company, today
announces its audited final results for the year ended 31 December 2023.
Adonis Pouroulis, CEO commented:
"Since our last set of results we have progressed all of the assets that sit
within our natural gas, renewables and green hydrogen pillars and,
importantly, we have further de-risked each division of the business. In
Morocco, we secured a highly experienced partner for our offshore Anchois gas
project, secured new acreage and successfully drilled in the contiguous Loukos
Onshore licence. We have materially increased our exposure to renewable energy
generation and electricity trading in South Africa, furthered our financing
and development plans for our power business and advanced our green hydrogen
projects in both Mauritania and Morocco.
We are excited about the ongoing activities and catalysts ahead of us with our
forward plans for Loukos, drilling at Anchois in August and moving into the
next phases of evolution for Power and Hydrogen. Going forward, we are focused
on generating near-term cashflows from our gas business with our overriding
ambition to return capital to shareholders from these revenues. While we will
continue to pursue new opportunities, we see great scale and value across our
current asset base and are fully focused on delivery throughout 2024 and
beyond."
Key Highlights throughout 2023 and post period:
Transitional Gas
Offshore Morocco:
· Completion of Front End Engineering and Design ("FEED") for the
Anchois gas development project ("Anchois") in the Lixus licence offshore
Morocco
· Partnership agreed with Vivo Energy to develop a gas to industry
market in Morocco
· Environmental Impact Assessment approval received for Anchois
development
· Partnership agreements signed and completed with Energean plc
("Energean") on the Lixus and Rissana licences offshore Morocco
o Focused on expansion and delivery of Anchois
o Formal approvals duly received from the Moroccan authorities
o Rig contract signed with Stena Drilling for Stena Forth drill ship
o Appraisal and development well to be drilled in Q3 2024 with option for an
additional well
Onshore Morocco:
· Award of new licence Loukos Onshore ("Loukos") in July 2023
· Environmental Impact Assessment approval received for drilling on
Loukos and construction activities and permitting conducted within 10 months
of licence award
· Initial drilling campaign commenced and successfully completed in
May 2024 safely, efficiently, on time and on budget
o The RZK-1 well drilled on the Gaufrette prospect confirmed good quality
reservoir and multiple gas shows, though was sub economic
o Gas discovery confirmed from drilling the OBA-1 well at the Dartois
prospect - gross interval approximately 70m of primary interest identified
o OBA-1 well has been cased and cemented with a Christmas tree installed for
rigless flow testing and potential use as a future producer
Transitional Power
· Strategic Review underway to secure financing and enable ongoing
growth and development of the portfolio
Power to Mining projects:
· Operational Essakane 15MW solar project at IAMGOLD's gold mine in
which Chariot has a 10% share in Burkina Faso, continues to perform well
· Progressing development of three key renewable projects in
Africa:
o Tharisa - 40MW solar project in South Africa
o Karo - 30MW solar project in Zimbabwe
o First Quantum Minerals - 430MW solar and wind projects in Zambia
Electricity Trading:
· Increased stake in South African Electricity Trading joint
venture Etana Energy (Pty) Limited to 49%
o Enables Chariot's participation in large renewable generation projects -
400MW of gross wind generation capacity identified
o Focused on securing multiple electricity offtake agreements with a range
of consumers - supply deals signed up with Growthpoint Properties and Autocast
with others under negotiation
o Renewable energy wheeled for the first time through Cape Town's grid
Water:
· Successfully commissioned the proof of concept water project in
Djibouti in June 2023
· Evaluating other opportunities within Africa
Green Hydrogen
· Feasibility study completed on Project Nour in Mauritania
alongside partner TEH2 (80% owned by TotalEnergies and 20% owned by the EREN
Group)
o Confirms world class scale, outlines first phase pathway for domestic and
export development
· Partnership agreements extended with UM6P and Oort Energy on
proof of concept projects in Morocco
· Other green hydrogen projects under evaluation and development
Corporate
· Placing and oversubscribed open offer successfully raised US$19.1
million in June 2023
· Cash position as at 31 December 2023 $6.0 million
· US$10 million received on completion of Energean deal in April
2024
· No debt and minimal work commitments
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, as retained in the UK pursuant to S3 of the European
Union (Withdrawal) Act 2018.
Enquiries
Chariot Limited +44 (0)20 7318 0450
Adonis Pouroulis, CEO
Julian Maurice-Williams, CFO
Cavendish Capital Markets Limited (Nomad and Joint Broker) +44 (0)131 220 9778
Derrick Lee, Adam Rae
Stifel Nicolaus Europe Limited (Joint Broker) +44 (0) 20 7710 7760
Callum Stewart, Ashton Clanfield
Celicourt Communications (Financial PR) +44 (0)20 7770 6424
Mark Antelme, Jimmy Lea
NOTES FOR EDITORS:
About Chariot
Chariot is an Africa focused transitional energy group with three business
streams, Transitional Gas, Transitional Power and Green Hydrogen.
Chariot Transitional Gas is focused on high value, low risk gas development
projects in Morocco, a fast-growing emerging economy, with a clear route to
early monetisation, delivery of free cash flow and material exploration
upside.
Chariot Transitional Power is focused on providing competitive, sustainable
and reliable energy and water solutions across the continent through building,
generating and trading renewable power.
Chariot Green Hydrogen is partnering with TEH2 (80% owned by TotalEnergies,
20% by the EREN Group) and the Government of Mauritania on the potential
development of a 10GW green hydrogen project, Project Nour in Mauritania, and
are progressing pilot projects in Morocco.
The ordinary shares of Chariot Limited are admitted to trading on the AIM
under the symbol 'CHAR'.
CHAIRMAN'S STATEMENT
Ongoing volatility over the past year has continued to highlight the
interconnected global focus on energy security, as well as the necessity to
strike a balance between the need for steady supply, economic advancement and
progress across the energy transition.
Nowhere is this better illustrated than in Africa. The current contrast
between resource abundance and energy poverty on the continent is striking
and, when combined with significant levels of population growth, projected to
reach over 2.5 billion by 2050, it becomes truly profound. This situation
drives our focus to unlock all types of lower carbon energy resource to serve
and uplift the African population and support economic growth across
industrial and urban communities.
Our Purpose:
At Chariot, we look to deliver a rational and efficient contribution to the
energy transition from all our businesses. Hydrocarbons will remain a
significant proportion of the global energy mix for decades to come but
renewables will supplement and support the energy demand and it is critical to
advance every opportunity to reduce emissions. Natural gas will play an
essential part in improving access to electricity whilst facilitating growth
and development, but displacement of coal power generation, as we are looking
to do in Morocco over the longer term, will also be a crucial factor. Wind and
solar replacing heavy fuel in decentralised locations also decreases carbon
emissions while grid scale renewable power augmenting existing electricity
networks demonstrates scale and immediate impact. Concurrently, green hydrogen
developments and integration within hard-to-abate industries arguably
foreshadows future solutions with near zero emission. Our assets play directly
into the themes of energy security, sustainability and supply but our projects
also have the potential to have wide ranging positive impacts across skills
training, job creation and expansion of local infrastructure within the
countries in which we work.
Our Portfolio
While the businesses in our portfolio are diverse, they have consistent
characteristics. They all address important energy requirements, each is
foundational, and we have adopted a first mover approach in all three. Each
also possesses significant growth opportunities both in-country and across
Africa and we are partnering with world class companies to deliver these
scalable assets.
Moroccan Gas province: It is rare to discover a new gas province of
significant scale. With the combined Loukos, Lixus and Rissana licences,
Chariot has an enviable footprint in a Moroccan onshore, shallow water and
deep water gas province where we see material upside potential. Although we
are currently focused on specific prospects and areas within each licence, we
also see numerous additional tieback targets, very large, contiguous basin
floor fan prospects as well as an entire shallow water trend within this
acreage.
Pan African renewable power: In addition to our decentralised renewable power
projects focused primarily on the mining sector, our business model has
evolved to scale. This next chapter takes advantage of multi megawatt wind and
solar developments that can directly access the established grid network and
the trade of low carbon power supply to a variety of clients across South
Africa. Our renewable expertise and industry partnerships combined with our
Etana trading company makes this possible and will result in cleaner energy
solutions and improved access to much needed electricity.
Green Hydrogen in Mauritania and beyond: Chariot has rapidly established
itself as an important part of Mauritania's aim to be a leader in the global
green hydrogen market with the development of the giga-scale Project Nour, and
we have initiated other smaller scale but important proof of concept projects
in Morocco and Mauritania. These projects are taking advantage of the world
class wind and solar power that are found in key parts of the continent and
our teams are looking to develop domestic production capabilities and export
optionality. With advancements in associated technology, these developments
are leading the way towards delivering green hydrogen projects at competitive
international pricing within the next decade.
Our Path Forward
With the challenges to energy security as a backdrop, Chariot is committed to
support responsible growth and energy independence in our host countries'
economies, as well as looking to develop access into wider international
markets.
We recognise that our company has projects across multiple areas, and we will
look for ways to advance the progress and finance of each one in the most
efficient way. In 2024, we continue to progress our Moroccan gas portfolio,
South African renewable generation and power trading business and green
hydrogen assets as well as considering new venture opportunities. We feel
there is a lot to play for. I offer sincere thanks to our shareholders, host
governments, local communities, staff, contractors, and consultants. I greatly
appreciate the work that has been undertaken to get us to this point and look
forward to a successful year ahead.
George Canjar
Chairman
10 June 2024
Q & A WITH THE CEO
What are the key attributes that underpin Chariot as an investment
opportunity?
The quality of our asset base across the three pillar portfolio, the global
need to meet energy requirements, our team and our focus on Africa are the
foundations of our business model and strategy. We are very much focused on
our Transitional Gas division of the business where we are looking to get to
first gas and generate cashflows as quickly as possible with the overriding
objective to return cash to our shareholders.
The global need for energy is increasing dramatically, and in Africa alone
electricity demand is expected to rise six fold by 2050. It is well documented
that there is a critical need to rebalance the energy mix whilst generating
reliable, affordable and accessible supply with a focus on closing the energy
gap. Viable solutions need to be implemented to ensure stable growth and
address the power poverty situation that is hindering the continents
development. Chariot is playing a meaningful role in this goal.
Our portfolio of projects will play an important part in diversifying energy
sources, supporting industrial and downstream development and reducing
reliance on imports. This also has the very important knock-on effect of
stimulating the creation of further industry for the communities and countries
we operate in. Our focus is on Africa due to its vast resource wealth but we
also have a depth of knowledge across the continent and can leverage our
expertise to play a tangible role in developing its energy networks.
Importantly, we are looking to deliver into undersupplied markets that have
immediate demand. Across our assets we are focused on developing competitive
supply that can help meet domestic and export needs utilising our in-house
expertise and working closely with our partners and host Governments. These
are the underlying tenets of the unique investment opportunity that Chariot
offers and how we will create future value.
Can you give us your view on the importance of developing gas assets within
the Transitional Energy space?
Today, hydrocarbons still make up between 80-85% of the world's energy
consumption so the transition to a new energy mix will take time but we need
to have practical, workable solutions. It is impossible to implement an
immediate shift away from fossil fuels and it is important to note that this
would also exacerbate energy poverty in developing countries.
Whilst gas is a hydrocarbon, it has a lower carbon footprint than most and
is widely viewed as a transitional fuel. African countries are increasingly
embracing energy solutions that integrate hydrocarbons and renewable sources
but having access to dependable baseload power underpins all developments.
With hydrocarbons as a baseload - and gas in our case in Morocco - you can be
more relentless in advancing new projects and technologies so it can play a
key role in accelerating the adoption of a range of new
energy sources whilst supporting longer term substitution.
What were your headline achievements in the Transitional Gas business this
year?
Our main highlights have been securing Energean as a partner on our offshore
Moroccan acreage; being awarded the Loukos Onshore licence which widened our
footprint in Morocco; and successfully delivering our first drilling campaign,
with a gas discovery in the OBA-1 well and completing all operations safely
and efficiently. Our primary focus for this business year is to now execute
our drilling plans offshore where we are looking to increase the resource base
to over 1Tcf, move towards a Final Investment Decision at Anchois and progress
with our forward plans at Loukos.
Can you tell us more about securing Energean as a partner?
During the first half of 2023, we completed the FEED phase at our Anchois gas
project which defined our initial development plan and confirmed the
commercial viability of this significant discovery. As we progressed our FEED
project, we also undertook a partnering process in order to be able to look to
upscale and deliver the potential that we saw this project offers. This
process generated significant industry interest where we had multiple offers
and we were delighted to sign agreements with Energean, the FTSE-250 company,
as a partner across our Lixus and Rissana licences. Energean acquired
operatorship and 45% in Lixus and 37.5% in Rissana, with Chariot retaining 30%
and 37.5% respectively and ONHYM maintaining its 25% stake in each licence. We
received US$10 million on completion of this deal, we have a US$85 million
gross carry on Lixus pre-FID costs which includes the Anchois-East well and
flow test and a further US$15 million is payable on FID. They then have an
option to acquire a further 10% for a gross development carry of US$850
million to first gas, a US$50m convertible loan note or 3 million Energean
shares, and 7% royalty payments on their production revenues.
Energean is a highly experienced operator in delivering projects of this
nature and they share our vision on future development plans. We are looking
forward to drilling the Anchois-East well in August this year which will
appraise, develop and potentially be a future producer, but is fundamentally
being undertaken to look to upscale the development from day one. Anchois is
currently the primary focus but the partnership will undertake further
exploration across Lixus and Rissana in due course as we see material running
room in this acreage.
Anchois is larger and longer term, so is Loukos an earlier production
opportunity?
Yes, it is, and we applied for the Loukos Onshore licence as we saw
significant, overlooked potential, it was a natural fit for our portfolio and
we could expedite drilling plans. We have in-depth knowledge of this area
through proprietary data from our Lixus licence which is immediately adjacent
and possesses clear geological similarities.
We were delighted to report a gas discovery from the OBA-1 well at the Dartois
prospect recently. The planned next steps will be to design and conduct a flow
test and our team are working across and integrating all the data we have
acquired in the drilling campaign to understand the impacts on the exploration
potential of the entire licence area and optimise the future work programme.
We are focused on early commercialisation opportunities, as gas produced here
can be delivered directly to local industry and we can look to build this out
over time. Morocco is an excellent country to work in, with existing
infrastructure that we can also utilise and it is an ongoing pleasure to work
with our partner ONHYM on these assets.
Can you give us an overview of the ongoing evolution of the Transitional Power
business?
When we acquired AEMP in 2021, our focus was on building a portfolio of
renewable projects for mining and industrial clients to provide onsite, lower
carbon energy solutions and we have four projects with a total of 515MW under
development with our partners. This is a business approach that will continue
to grow as heavy industry looks to reach emission targets and also because the
set up and generation of renewable energy now makes long term economic sense.
The electricity trading platform, Etana Energy (Pty) Limited has become a
prominent element of this business as we increased our holding to 49% in
January 2024, alongside partner H1 Holdings. Through this platform we are
tapping into a wide and essential network and we believe that this could be
one of the most influential businesses in facilitating, installing, and
delivering greener, competitive and sustainable energy across South Africa's
national grid over the next decade. This business connects efficient supply to
end users through the trading platform but it also enables the development of
new, renewable energy generation, in which this Power business can
participate. We are very pleased to have signed up some large offtake
customers already with more under negotiation. Our water business is also an
important part of this portfolio, addressing another essential need, and there
are many ongoing growth opportunities here too. It is important to note that
in producing treated water, we will use renewable energy which Chariot intends
to supply.
Can you provide an update on the Strategic Review of Transitional Power?
As we have noted before, we have been looking at financing options at the
subsidiary level for Transitional Power. With the majority of these assets
based in South Africa, and the positive implications that these developments
could have for the country, we have found that South Africa focused banks and
investors have a strong interest to fund this. As announced in March, and in
order to enable the onward growth and progression of this business we are
undertaking a Strategic Review which could result in a full or partial sale or
demerger with the aim of maximising value for shareholders. We will likely
phase this review as we focus on securing financing for the projects and will
provide further updates as this process moves forward.
What is the latest with your Green Hydrogen pillar?
The green hydrogen story continues to evolve. Over the past year, we completed
our Feasibility Study at the 10GW Project Nour in Mauritania alongside our
partners TEH2, with whom we have an excellent working relationship. This
further confirmed its world class potential and we have also been working on
proof of concept, nearer term projects through our partnerships with UM6P and
Oort Energy in Morocco. We continue to evaluate and progress other
opportunities and pilot projects across the African continent as we look at
value accretive assets that fit within our investment criteria. Offtake is a
key focus for us and we also continue to progress our financing options at the
subsidiary level. This is an early stage but vast industry so there are
challenges to overcome as it develops, but green hydrogen will be a critical
part of the net zero solution.
How are your host countries facilitating its ongoing evolution?
We have had only good experiences working in Mauritania and the investment
climate continues to improve. This has been recognised in a speech by Ursula
von der Leyen, head of the European Commission in February who stated "we want
to build a green hydrogen ecosystem…. here in Mauritania." Green hydrogen
will play an important part in their European Green Deal strategy, which is to
be climate neutral by 2050, and they are looking to Mauritania as a key export
market for this. They also strongly underlined the importance of developing
domestic industry and building out the green steel market in country and we
are in step with this through our work there too. Morocco is also very keen to
further develop and expand this industry to support their energy transition
strategy.
Looking forward - what are the upcoming catalysts for the Company?
Our primary focus is reaching first gas and generating revenues from our
Transitional Gas assets. We look forward to our ongoing work and progress with
our activities onshore and to drilling offshore in the near future with
Energean and ONHYM. We will finalise our financing of the Transitional Power
division which will in tandem progress our Strategic Review and our Hydrogen
projects will continue on their trajectories.
We believe that the key to success is to continue to adapt, collaborate,
innovate and partner, as we have done consistently to date. We are proud of
our entrepreneurial approach, which has enabled us to pursue new or previously
overlooked assets and we will continue to look to pioneer and grow. We will
always look for new opportunities that enhance the Chariot investment case. We
believe we have a compelling and relevant story, we believe in our projects
and will remain fully focused on realising their potential as we move forward.
Thank you
I would like to thank our shareholders for their ongoing support as we
successfully raised circa US$19m in June 2023. Both existing and new
institutions participated, as did our retail investors via an oversubscribed
open offer. As a Board and Management team, we have continued to buy shares in
the market, so remain very much aligned with our investor base and the long
term success of our Company.
I'd also like to thank all our partners, Ministries and teams that we work
with in Morocco, Mauritania, South Africa, Zambia, Zimbabwe, Burkina Faso and
Djibouti. Collectively we are making a real difference both now and for the
future and I look forward to more to come. We need to also appreciate and give
thanks to all the communities in which we operate for without their support we
could not achieve anything. Thank you as always to the Chariot Board and our
colleagues across each part of the business with whom it is an ongoing
pleasure to work with.
Adonis Pouroulis
Chief Executive Officer
10 June 2024
Chief Financial Officer's Review
Funding and Liquidity as at 31 December 2023
The Group remains debt free and had a cash balance of US$6.0 million as at 31
December 2023 (31 December 2022: US$12.1 million).
During 2023, the Group invested c.US$23 million (31 December 2022: c.US$39
million) into the business through its exploration campaigns Offshore and
Onshore Morocco, business development within the Transitional Power and Green
Hydrogen businesses, and administration activities.
The net proceeds of the US$19.1 million raised from the equity fundraising
completed in August 2023 allowed the Group to plan its exploration campaign
Onshore Morocco, continue to progress its Anchois development Offshore
Morocco, as well as progress opportunities within the Transitional Power and
Green Hydrogen businesses across the African continent.
As at 31 December 2023, US$1.05 million of the Group's cash balances were held
as security against Moroccan licence work commitments. The increase from
US$0.75 million as at 31 December 2022 was due to new bank guarantees relating
to the new Onshore licence in Morocco.
Financial Performance - Year Ended 31 December 2023
The Group's loss after tax for the year to 31 December 2023 was US$15.6
million, an increase of US$0.7 million on the US$14.9 million loss incurred
for the year ended 31 December 2022. This equates to a loss per share of
US$(0.02) compared to a loss per share of US$(0.02) in 2022.
The share-based payments charge of US$5.7 million for the year ended 31
December 2023 was US$1.5 million higher than the US$4.2 million in the
previous year mostly due to the granting of employee and Directors' deferred
share awards in the current year, and the full year impact of awards granted
to employees in 2022.
To provide further detail of total operating expenses, Green Hydrogen and
other business development costs have been split out from other administrative
expenses within the consolidated statement of comprehensive income.
Green hydrogen and other business development costs of $1.3 million (31
December 2022: $1.7 million) comprise non-administrative expenses incurred in
the group's green hydrogen business development activities, the majority of
which relate to Project Nour feasibility studies and related costs.
Other administrative expenses of US$8.7 million for the year ended 31 December
2023 are higher than the previous year's US$8.5 million due to employment
costs from scaling up the team to progress the Anchois gas and Loukos
developments, as well within the Transitional Power and Green Hydrogen teams.
Finance income of US$0.2 million (31 December 2022: US$0.1 million) relates to
higher bank interest received on the cash balance over the period, as well as
foreign exchange gains on non-Sterling currencies.
Total finance expenses of US$0.2 million (31 December 2022: US$0.6 million)
include foreign exchange losses of US$0.2 million (31 December 2022: US$0.4
million). Foreign exchange expenses are lower than the prior period reflecting
the stabilising of foreign exchange rates on the holding of cash balances in
Sterling. A US$0.1 million expense (31 December 2022: US$0.1 million expense)
on the unwinding of the discount on the lease liability under IFRS 16 is also
included in finance expenses.
Exploration and Evaluation Assets as at 31 December 2023
Following the signing of the Loukos Onshore licence in Morocco during the
year, the carrying value of the Group's exploration and evaluation assets
comprise US$61.8 million (31 December 2022: US$51.8 million) in relation to
the existing Offshore Moroccan geographic area, and US$1.2 million in relation
to the new Onshore licence.
Across the Offshore geographic area a further US$10.0 million (31 December
2022: US$20.3 million) was invested in the asset comprising completion of the
FEED phase of the Anchois gas development project, progression of the Anchois
development ESIA, and geophysical and geotechnical site surveys onshore and
offshore, to further define pipeline routing and landfall approach to bring
the Anchois development towards FID.
Onshore investment to 31 December 2023 reflects the permitting and planning
activity for the first drilling campaign of two wells.
Other Assets and Liabilities as at 31 December 2023
The carrying value of goodwill of US$0.4 million at 31 December 2023 (31
December 2022: US$0.4 million) reflects the intellectual property, management
team and customer relationships acquired through the business combination of
AEMP in 2021. In 2022 three Memoranda of Understandings were announced for
projects in the mining portfolio totalling over 500 MW of power. These
projects are large scale, early stage and are being progressed in partnership
with Total Eren and a black economic empowerment ('BEE') partner on the
Tharisa project, with minimal commitments in the near-term. No impairment of
the goodwill was identified in the period from acquisition to 31 December
2023.
The fair value of the Group's investment in power projects relates to the 10%
project equity holding in the Essakane solar project in Burkina Faso as
acquired with AEMP and is valued at US$0.3 million (31 December 2022: US$0.4
million). The project, a joint investment with Total Eren, continues to
generate power under a power purchase agreement with IAMGOLD's Essakane mine.
During 2023 the Group completed its construction of a desalination plant, with
US$0.6 million capitalised in property, plant and equipment, for the
proof-of-concept water project in Djibouti, with commercial operations
commencing and revenue generated from July 2023.
In 2023, wellheads and casing valued at a total of US$1.8 million (31 December
2022: US$1.4 million) were held in inventory relating to both the Anchois and
Loukos drilling campaigns in Morocco.
As at 31 December 2023, 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$3.2 million (31 December 2022: US$5.4 million). The change is
primarily due to significant activity on the Anchois front end engineering
design in December 2022 for which outstanding payables were due as at 31
December 2022. Note 2 details the Group's future funding plans.
Following the extension of the UK office lease term by a further three years
in 2023, both the associated right-of-use asset and lease liability have been
modified. Under IFRS 16 the Group has recognised a depreciating right of use
asset of US$1.3 million (31 December 2022: US$0.3 million) and a corresponding
lease liability based on discounted cashflows of US$1.3 million (31 December
2022: US$0.4 million).
Outlook
We look forward to a safe and successful drilling campaign at Anchois East in
Q3 2024 which the partnership hopes will upscale the development and lead to
FID shortly thereafter, unlocking the further material cashflows from the
Energean partnering transaction. As detailed in Note 2, our current liquidity
highlights the need for funding across the business at an asset, subsidiary or
Group level to ensure the Group is well capitalised to carry out its
objectives.
We have continued to evolve as a business over the past year and I am proud of
all the achievements as reported. As we moved forward, we will continue to
progress all areas of the Company but our primary objective as we focus on the
gas business is to develop these material assets, generate cash flow and
return cash to shareholders.
Julian Maurice-Williams
Chief Financial Officer
10 June 2024
TRANSITIONAL GAS
Our Moroccan Footprint
In recent years, Chariot has focused on value-driven gas projects, involving
exploration and appraisal operations, combined with development planning and
commercialisation activities.
Chariot owns a 30% and 37.5% non-operated working interest in the Lixus
Offshore and Rissana Offshore licences respectively alongside our new partners
Energean, who operate both blocks with a 45% and 37.5% working interest.
Chariot also owns and operates a 75% interest in the Loukos Onshore block.
The Moroccan state owned Office National des Hydrocarbures et des Mines
("ONHYM") holds the remaining 25% working interest in all licences.
Offshore
Since the award of the Lixus Offshore licence in 2019, Chariot has delivered a
material increase in the resource potential of the Anchois gas field and
defined a material prospect portfolio in the same play across the wider
licence area. This growth has been delivered in previously overlooked acreage,
utilising latest technology and interpretation methods to identify additional
gas resources, combined with the ability to evaluate the prospectivity with a
critical and open mindset.
The Anchois-2 appraisal and exploration well drilled by Chariot in 2022,
increased the P50 (2C) discovered resources of the field by a factor of 5
versus the previous operator, largely through the discovery of 5 new gas
bearing sands in a stacked accumulation. We have now matured the development
plan for the Anchois field, which is expandable to capture material running
room, a factor which helped Chariot to attract a new partner in Energean, an
operator with a proven track record of executing similar offshore
developments. The team are advancing together towards development sanction,
the final details and confirmation of which will be determined by the
Anchois-East well. This will be carried by Energean and is on track to start
drilling in August 2024.This next campaign, which could include an optional
second well, will mark an important step in the development plan in terms of
the completion design, number of producer wells and production capacity of the
field, with drilling success bringing the possibility of significantly higher
rates than previously envisaged by Chariot.
The joint venture partnership will also be conducting additional exploration
across the Rissana licence through a planned seismic acquisition campaign.
Onshore
Building on our successes offshore, Chariot identified significant
prospectivity in the same overlooked play, this time in the onshore part of
the same sedimentary basin. The Loukos Onshore licence offers an extensive
exploration portfolio, optimally located to existing gas markets, and presents
the opportunity to unlock a low-capex, high-value, rapid gas to industrial
market solution.
The Loukos Onshore block was awarded in July 2023, complete with a rich,
legacy dataset comprising 154km(2) of 3D seismic, acquired in 2011, and
previous wells proving several gas discoveries and indications of gas bearing
intervals from which the exploration potential could be rapidly assessed.
There was also an extensive dataset of >900km of 2D line kms, which also
reveals further prospectivity beyond the limits of the 3D seismic. Following
early geological evaluation, our team identified a set of attractive drilling
targets on the existing 3D seismic dataset and, post licence award, set to
work to fast-track a drilling campaign. Through the combined diligent efforts
of the entire team, Chariot was ultimately able to deliver drilling operations
within 10 months of licence award.
We were delighted to announce the completion of the successful drilling
campaign and a gas discovery from the drilling at the Dartois prospect at the
end of May 2024. We now have a comprehensive dataset from the drilling of both
wells and our team will integrate this with our recently reprocessed 3D
seismic data to further define the resource potential of the Dartois area,
confirm the future work programme and also analyse the impact on the wider
prospectivity across the Loukos licence area.
We believe we are just scratching the surface with our exploration efforts to
date. The coming year has key catalysts for growth through our ongoing
analysis and testing planned on both the onshore licence and our offshore
drilling campaign. We will also continue to leverage our long-established
relationships in-country. In looking to develop important supplies of domestic
gas, we hope to strengthen our future as a Moroccan gas producer and
contribute to the Kingdom's ambitious energy strategy.
Developing Morocco's Largest Discovery
The Lixus and Rissana Offshore licences are covered by an extensive dataset
including multiple 3D seismic survey datasets and 6 previous wells, including
the Anchois-1 and Anchois-2 discovery wells and a legacy well located in the
south of the Rissana which provides evidence for an extensive, deep
thermogenic petroleum system, in addition to the post-nappe play of Anchois
field area.
In December 2023, following an extensive farmout process, Chariot announced a
partnership with Energean, who also recognised the potential in our offshore
portfolio. The transaction completed in April 2024, and with a rig contract
with Stena Drilling for the Stena Forth drillship signed, the partnership will
drill the Anchois-East well, with a subsequent well test planned in the main
gas bearing sands.
In this well, we will drill two wellbores in one operation; a pilot hole will
be drilled first, into the undrilled 'Footwall' fault block to the east of the
main field area, and then the well will be side-tracked and the main borehole
will be drilled to penetrate the 'Main' fault block in a location to the east
of the previously drilled Anchois wells. The pilot hole targets exploration
objectives in the M and O Sands of the footwall structure, potentially
providing an additional 170 Bcf of recoverable gas to the current volumes from
the O Sands alone. The main borehole will then appraise the discovered sands
of the field, currently estimated at 637 Bcf (gross 2C resource), and also
explore the deeper O Sand North Flank target, potentially providing a further
213 Bcf of 2U recoverable gas below the proven gas-down-to in the field. We
aim to retain the well as a potential future producer location in the Anchois
Development. An optional second well is also under consideration.
The subsea-to-shore development plan currently includes 3 initial producer
wells, comprising the existing Anchois-2 well, the upcoming Anchois-East well
and potentially the optional second well. This approach sees individual
producer wells containing multi-zone completions to cost-effectively access
the stacked gas sands at Anchois. Together with the utilisation of existing
wells as producers, this reduces uncertainty and post-FID capex. Production
testing of the Anchois-East well, in the Q3 2024 campaign, will also allow for
further optimisation of the producer wells and completions as we gather
important data on reservoir productivity.
With the potential to materially increase the gas resources through this
drilling activity, the joint venture partnership sees the possibility for an
expanded development plan, above the current 105 mmscfd CPF capacity. 2023 saw
important progress in the planning for the Anchois development, including a
key step forward through the approval of the development ESIA; this was
announced in October 2023, following a 15 month process, and this approval
included both local regulatory approvals and additional scopes of work to
align with the likely requirements of lending institutions.
The Chariot and Energean joint venture technical teams are working closely
together on delivering the Anchois project, including field development FEED
updates and progressing gas commercialisation agreements. With long-term local
gas contracts under negotiation, including anchor contract negotiations with
ONEE, and associated fixed, long-term anticipated cashflows, we are refining
the extensive work undertaken so far to look to reach Final Investment
Decision as soon as possible.
Offshore Project Progress
The wider Lixus and surrounding Rissana licences, contain significant
additional prospectivity which provides opportunities for further near-field
exploration activity around Anchois.
Following the upcoming drilling and testing campaign, we will be able to
further refine our understanding of the distribution of gas-bearing reservoirs
and provide further calibration of our geophysical models which are important
to reduce the risk of exploration targets away from the main field. Our
geological model currently shows extensive reservoir system associated with
the A, B, C, M and O Sand intervals. The identified, low-risk targets in this
system around Anchois are called the Anchois Satellite prospects, and these
are within a 5-10km radius around the central field location; meaning that in
the case of successful exploration these can be all tied back to, and be
produced through, the Anchois infrastructure.
Expanding the focus beyond Anchois, future targets are abundant. Rissana's
vast expanse captures a variety of plays, with multi-Tcf potential locked up
in deeper exploration targets, such as the Mesozoic sub-nappe and fore-nappe
plays, and the recently identified shallow Miocene Basin Floor Fan Play, which
is anticipated to be a focus of future seismic acquisition.
As the work progresses on the regional onshore geology, we are also now
integrating this to understand the impact on the linked offshore plays; as we
know that the same sand systems moving through this onshore part of the basin
feed the reservoirs offshore. We are continuously updating and refining our
understanding, using modern methods of seismic analysis to best represent
reservoirs and new petrographic studies on key intervals which have
demonstrated significant sand fairways throughout the Late Miocene. Onshore
well data and studies are consistently helping to illuminate the
under-explored areas of the offshore, which will be further resolved by the
planned seismic acquisition campaign.
Partner Profile - Energean
Securing an experienced, pro-active and committed partner, such as Energean,
was seen as a key step in moving the Anchois Development forward in a way
which could accelerate delivery of the value and inherent upsides in the
project. Energean has taken Operatorship of the offshore projects and the
partnership is working together, benefiting from synergies of our combined
expertise, to ensure a safe, timely and cost-efficient drilling campaign.
Energean is the perfect match for our offshore operations as they are aligned
with our ambitions to focus on scalable growth projects. We can leverage their
development experience and expertise at Anchois, whilst also maximising
upsides within the wider Lixus and Rissana licences through the unique
exploration insights and understandings of the Chariot subsurface team.
Together, we are aligned on the fundamental importance of domestic market
supply to underpin new gas field development and how we can be part of
ensuring security of supply, development of local industry and the
decarbonization of the energy mix. We also both recognize the potential of
export markets to offer a rapid commercial outlet for surplus gas volumes
which can offer significant value upside.
Loukos Onshore Licence
Exploring Onshore
Through our extensive analysis and interpretation of the available dataset,
and leveraging our knowledge from the offshore projects, the exploration team
investigated and defined the first two drilling targets. The primary target of
the first well, RZK-1, was a prospect called Gaufrette, located up dip of the
LNB-1 well which had discovered gas pay in the same interval downdip, and was
supported by seismic anomalies. Approximately 8km north-east of RZK-1, the
OBA-1 well location was also selected for the campaign, to target the Dartois
prospect located along trend from a historic gas discovery in RJB-3, which
tested gas from the same reservoir system.
Concurrent to this exploration activity, the drilling and logistics teams
worked across the wide scope of preparation and planning required for the
campaign. This planning effort involved securing of all necessary land
permits, approval of the Environmental Impact Assessment (EIA), long lead
items and drilling rig and services contracts. In anticipation of further
drilling activity, the EIA approval we received in January 2024, from the
Unified Regional Investment Committee, covers a total of 20 well operations
across the block. This certificate is valid for a period of 5 years and gives
us flexibility in any future campaigns.
Successful Campaign and Gas Discovery
As announced in May 2024, we successfully completed the two well campaign
safely and efficiently, on time and on budget. The RZK-1 well was drilled to a
depth of 961m through the Gaufrette Main target, which was found on prognosis
and confirmed thick intervals of good quality reservoir, which exceeded
pre-drill expectations. Multiple gas shows of various intensity were
identified, however, the reservoirs of the main target were interpreted to be
largely water bearing with evidence of residual gas. Whilst some thin gas pays
were identified, the well was deemed sub-economic and was duly plugged and
abandoned, however, we will take all of the learnings from this prospect and
conduct a full post-well evaluation in order to apply our knowledge to more
informed exploration of the block's wider prospectivity. We recognise that the
well was supported by the presence of a very promising reservoir system and
evidence for strong gas migration into the structure, which supports our
exploration thesis for the block, however the well was likely unsuccessful due
to a prospect-specific trap failure.
Following RZK-1, the rig moved immediately to the Dartois prospect to target a
different reservoir system and trapping style, to drill the OBA-1 well. Here,
we were very pleased to announce the gas discovery after successfully drilling
to a depth of 901m, through target reservoirs using a slim-hole well
construction. This was designed by the drilling team based on knowledge of
drilling performance across the basin to look to drill this well with greatest
efficiency. Further to comprehensive evaluation of the well data which
included wireline logs, cuttings and gas data, preliminary interpretation
confirmed the presence of reservoirs over an interval of approximately 200m
with a gross interval of approximately 70m of primary interest. This interval
of primary interest contains elevated resistivities coincident with elevated
mud gas readings, indicating potential gas pays, with no water-bearing
reservoirs identified. Further analysis will now be carried out on the
subsurface dataset in preparation for well flow testing to together determine
the well productivity and the gas resource potential of the discovery. The
well was cased and cemented and suspended with a Christmas tree installed to
allow for future rigless testing operations and potential use as a producer
well.
Onshore Exploration Outlook
The pre-drill high-graded portfolio was estimated to hold approximately 100
Bcf P50 recoverable in the 3D area alone. Based on early drilling results, we
can have demonstrated the presence of the regionally expansive, good quality,
Mid-Messinian reservoir sand system targeted by much of this portfolio. We
will now carry out detailed petrophysical and geophysical data analysis to
understand the impact of the wells on this portfolio, and also the potential
for other prospects to be identified on newly reprocessed seismic data which
has recently been delivered to the company and is ready for interpretation.
Work will focus on understanding prospect-specific trapping integrity and
calibration of the seismic attributes. Both the recent well results and legacy
wells provide strong evidence for gas migration across this basin which
remains a low risk component of the petroleum system. This understanding is
integral for the follow-on exploration of other high-graded targets, for
example, Éclair. This prospect shares the same reservoir system, seismic
attribute support and similar burial depths to the initial drilling targets
and is one of the high-graded candidates for a future follow-up drilling
campaign with associated estimated resources of 32 Bcf across the Éclair and
adjacent Éclair West closures.
The team will continue to analyse the extensive, reprocessed 2D and 3D seismic
datasets alongside new well data and, although still in progress, we are
seeing a significant uplift in imaging quality across the portfolio in the
early products.
As we progress with analysis of the drilling results to fully understand the
implications for the surrounding on-block prospectivity, we continue to look
to unlock and develop this overlooked gas province in the heart of the
Moroccan Kingdom.
The Moroccan Gas Market and Commercialisation Opportunities
Morocco hosts a scalable domestic market with growing industrial hubs in need
a steady supply of lower carbon, competitive energy and these market
fundamentals are underpinned by excellent fiscal terms in country. There is
currently a heavy reliance on imports and coal power generation and Chariot is
dedicated to being part of the national transitional energy goals that will
see Morocco be less reliant and eventually move away from these imported
carbon intensive fuel sources.
Chariot is in a unique position to meet Moroccan domestic gas needs across
many sectors including power and industry. We have established key agreements
in efforts to support this, including key Gas Sales Principles with the state
national utility ONEE, pipeline tie-in agreements with infrastructure owners
and project partners, ONHYM, and a gas to industry partnership with Vivo
Energy.
Natural gas from Chariot's acreage would be delivered via a variety of
potential solutions, a key advantage of the existing infrastructure. Offshore
for example, the more substantial volumes of Anchois gas are planned to be
commercialised primarily through a fixed connection to the existing GME
pipeline which directly connects to domestic power generation hubs as well as
industrial hubs via future pipeline infrastructure and European markets. This
interconnection with Europe via Spain means that future export sales of
surplus volumes could be explored once the domestic needs have been satisfied.
Multiple offtakers in Europe are interested in receiving the gas where both
demand and a desire to diversify supply source has increased due to macro
events of recent years.
In terms of onshore, the Loukos licence is perfectly located to supply to the
Kenitra industrial zone, a large manufacturing area within excess of 10mmscfd
of existing possible natural gas demand that is currently under supplied. This
is only c.90km from Loukos and has a direct route to market either through the
existing pipeline network in the southern part of the Gharb basin or a virtual
pipeline solution. A virtual pipeline is the direct distribution of compressed
natural gas (CNG) to customers by truck and this solution offers the most
immediate, modular and low-cost option to commercialise early production. This
is the first likely route that Chariot will initiate to get the gas to
industry and it will also serve as an important catalyst for future pipeline
development and further growth.
Alongside our partner ONHYM we see a great opportunity to develop onshore gas
in a lower cost, simple operating environment which would complement a future
subsea-to-shore development. Commercialisation options are infinitely scalable
over the longer term to meet Morocco's growing gas needs as a priority, with
the potential to rapidly commercialise surplus gas in the European markets.
TRANSITIONAL POWER
Developing large renewable energy projects in Africa
Chariot Transitional Power is focused on providing competitive, sustainable
and reliable energy and water solutions across the African continent through
developing, financing, building and operating power generation and water
assets.
Over the past year, we continued to progress our renewable projects that we
are developing for Tharisa, First Quantum Minerals and Karo Mining, as well as
continuing the solar operations at IAMGOLD's Essakane Mine in Burkina Faso. We
have also broadened our exposure to the electricity market in South Africa
through increasing our stake in Etana Energy and are securing long term
offtake agreements with a diversified portfolio of customers.
As announced in March 2024, having received a range of interest from South
Africa focused investors, Chariot is undertaking a Strategic Review of the
Transitional Power business to look to explore the funding options available.
This review may involve a full or partial sale or demerger with the aim of
enabling ongoing growth and development of the portfolio and maximising value
for all stakeholders.
Solar and Wind Solutions for Mining Projects
Through the renewable energy projects that we are developing in conjunction
with our clients and partner TotalEnergies, we are establishing a secure and
direct energy supply to their mining operations, reducing reliance on heavy
fuel, and in turn lowering their carbon footprints.
ESSAKANE: BURKINA FASO: Solar Power Production
Chariot's first renewable power project, supplying the Essakane Gold Mine in
Burkina Faso with 15MW of solar energy is now in its fifth year of operation.
On commissioning in 2018, the project was the largest hybrid photovoltaic (PV)
- heavy fuel oil (HFO) power plant in the world and one of the largest solar
facilities in sub-Saharan Africa with 130,000 solar panels. Chariot holds 10%
equity in this award-winning project, with TotalEnergies holding the remaining
90%.
Year on year the mine has reduced its fuel consumption by an estimated 6
million litres, representing 18,500 tonnes CO(2)e annually. 100% of permanent
Essakane project staff are nationals, while 1% of project revenues are
dedicated to community investment. Carbon credits are also registered with the
UN to raise funds for community developments.
THARISA: SOUTH AFRICA: Solar Power Project
In partnership with Tharisa and TotalEnergies, Chariot is developing the 40MW
solar PV Buffelspoort project which will supply electricity to Tharisa's
chrome and platinum group metals mine in the North West province of South
Africa. Project development and permitting continues to move forward with
Financial Close now expected in Q4 2024.
The plant, to be built on Tharisa's property and connected behind the meter,
will contribute to the company's goals to become carbon neutral in 2050 as it
will reduce the project's dependence on coal fired power from 100% to 69% as
well as creating around 200 local jobs during the construction period.
FIRST QUANTUM MINERALS: ZAMBIA: Wind and Solar Power Project
Alongside TotalEnergies, Chariot is progressing the development of 430MW of
combined wind and solar power to look to expand Zambia's existing renewable
energy capacity and provide First Quantum Minerals with competitive and
sustainable power for its Zambian mining operations.
Once completed, the combined project will be one of the largest renewable
energy projects in Zambia and a flagship project in the Southern Africa
region.
The split of power will be 230 MW solar PV + 200 MW wind, and the requisite
permitting and planning is underway. Further updates will follow as this
progresses towards Final Investment Decision.
KARO PLATINUM: ZIMBABWE: Solar Power Project
In Zimbabwe, Chariot is working on the development of a 30MW solar plant, to
supply competitive electricity on site at Karo's platinum mine in Zimbabwe.
Construction of the mine has commenced but the timeline for delivery has
slowed down further due to a review of the PGM price environment. This has
delayed the implementation of the solar plant but permitting of the project
continues to progress and further updates will follow as this moves towards
Final Investment Decision.
With Tharisa as a 75% shareholder in Karo, this project is also linked to
their carbon emission reduction targets.
Electricity Trading Licence
As announced in December 2023 and completed in January 2024, Chariot now owns
49% in the South African electricity trading platform, Etana Energy (Pty)
Limited ("Etana") alongside partner H1 Holdings (Pty) Limited which holds 51%.
H1 is a black-owned and managed company based in South Africa, which has a
proven track record in developing and investing in large renewable projects.
Etana is one of five companies to hold an electricity trading licence granted
by the National Energy Regulator of South Africa. Its objective is to provide
competitive and sustainable end to end electricity solutions through
connecting new and existing energy generation projects to commercial and
industrial users. Major deregulation changes currently taking place in South
Africa's electricity market provides licence holders the opportunity to trade
to a range of high-volume off-takers as well as the opportunity to participate
in new renewable energy generation projects.
Market Opportunity
South Africa is the largest electricity market in sub-Saharan Africa. It is
predominantly supplied by coal fired power generation and as a result, around
80% of greenhouse gas emissions come from the energy sector. There is a major
lack of supply however as insufficient electricity is generated, and power
outages have significant macroeconomic impacts. Investec estimates that there
was a cost of around ZAR300 billion to the South African economy due to
downtime in 2022 and this issue has compounded further over the past twelve
months, with just 50% of power availability recorded in December 2023.
These two fundamental issues underpin the rationale for the rapid market
deregulation that is now taking place, enabling private sector renewable power
generation and opening up trade through the national grid. The SA National
Energy plan has forecast the needs for an additional 30GW of renewable energy
to be procured by 2030, with the first 4GW to be added into the grid by the
end of 2024. Etana's trading license, coupled with Chariot's business network
and development track record means it is extremely well positioned to play a
material role within this high growth, high demand sector.
The Etana Business Model:
There is significant market demand for green and competitively priced
electricity and multiple commercial and industrial offtakers have already been
secured across mining, industry, municipal and retail sectors. Etana's model
is already working, as evidenced by the first wheeling of renewable energy
through Cape Town's grid announced in September 2023. Wheeling is a process
where electricity is bought and sold between private parties, using the
existing grid to transport power from the point of generation to end-users.
On the generation side, 400MW of gross wind generation capacity has been
identified and is in negotiation with Etana. The trading platform enables
Chariot's participation in these large renewable projects, and there is a
strong focus on securing a future pipeline of large generation projects.
Long Term Agreements signed with Growthpoint Properties, AutoCast and Petra
Diamonds
· As announced in February 2024, Etana will supply Growthpoint, the
largest South African Real Estate Investment Trust company with 195GWh of
renewable energy per year - 32% of their current annual consumption across
their commercial properties located around South Africa
· This will be a mix of wind, solar and hydroelectric power and is
the first multi-jurisdiction, multi-building, multi-source renewable energy
wheeling arrangement
· This agreement has also enabled Growthpoint to secure the rights
to purchase 30GWh per annum of 24/7 baseload hydropower
· Autocast, a leading supplier of cast and machined components to
the automotive, mining and engineering industries selected Etana as its
renewable energy supplier in April 2024
· Autocast is part of a cluster of the high energy users in the
Nelson Mandela Bay area together (about 30 members) which has selected Etana
to find a common solution to procure clean power
· The agreement signed with Petra Diamonds will wheel renewable
energy to their Cullinan and Finsch diamond mines, supplying between 36-72% of
the expected power requirements from FY2026 onwards
Renewable Water Production Business:
Our water business is focused on delivering clean water solutions on the
African continent using renewable energy. The process utilises a modular,
scalable, reverse osmosis technology that can be powered 100% by solar energy
to produce desalinated water. Our objective is to originate, invest in and own
decentralised water supply projects that can provide affordable water access
for private offtakers and municipalities through long term agreements.
Our first test project, the Ghoubet water project which is affiliated to the
largest wind farm in Djibouti was commissioned in June 2023 and is running
well. This project is providing 50 m(3) potable water per day to local
communities, around 1,000 people, over the next 20 years and the team is
looking at further opportunities across the continent.
This business complements both our Transitional Power and Green Hydrogen
pillars and has a natural overlap with our current network and portfolio. The
business model strategically sits within the Power business as it follows the
renewable project model with long term offtake but access to desalinated water
is a key part of green hydrogen production cycle.
GREEN HYDROGEN
Near-Term Production, Long Term Scalability
Our objective with our green hydrogen pillar is to build a world class
portfolio of projects that have a mix of near- term production opportunities
balanced with long term scope and scale.
Our Strategy and Focus
Project Nour, our giga-scale project based in Mauritania remains the
cornerstone asset in our portfolio, but our strategy has evolved over the past
year as we have adopted a deliberate phasing approach to look to establish
earlier production on a commercial basis. Our overarching aim is to become a
significant green hydrogen producer and Nour has the potential to be one of
the largest, lowest cost assets in Africa but there are key elements that we
are focused on as we look to reduce risk and deliver projects:
Partnering and Offtake. Working alongside experts and world-class partners is
fundamental, as through this we co-invest, secure offtake, collaborate and
ultimately deliver bankable projects. Our strategic partnership with TEH2 (a
dedicated green hydrogen developer, owned 80% by TotalEnergies and 20% by Eren
Group) has been excellent in the development of Project Nour to date and it is
a pleasure to work with UM6P and Oort Energy, the Governments in Mauritania
and Morocco and other key industrial players in the sector.
Portfolio. We aim to build out our asset base to diversify risk over various
projects and countries but also benefit from the economies of scale and shared
learning in working with different partners in different industries. We have
strict criteria that we work within around project selection, with a focus on
resource availability and long-term offtake opportunities, as well as a host
country's approach to development in the sector and its legal and regulatory
framework.
Near-Term production. We are looking to deliver a series of technical
proof-of-concept projects to progress early commercial phases and generate
early revenues with domestic offtake as initial priority. These projects will
allow us to showcase delivery and importantly lay the basis to scale up,
increase production and develop export options over the longer term.
Access to Technology. Having access to technologies critical to the green
hydrogen production cycle is also important in future proofing development
plans. Having early-stage partnerships in place helps secure access to
important elements of the supply chain, builds expertise within teams and
importantly helps leverage participation in new ventures.
We maintain our conviction that green hydrogen will be one of the most
important components of the future energy mix and look forward to developing
our role in this. We also continue to pursue various sources of financing for
this pillar of the business at the subsidiary level.
Market Demand
Green hydrogen, created by splitting water into hydrogen and oxygen using
renewable energy, has a material role to play in reaching net zero climate
targets. Currently around 95% of hydrogen is produced using fossil fuels so
there will be a significant transition across this sector and demand will
continue to grow as the energy mix changes. IRENA states that to achieve the
2050 target, the supply of hydrogen overall will need to expand more than
five-fold, to more than 500 MT/y, if it is to serve a broader range of uses
and decarbonize carbon-intensive sectors. There are a range of hard-to-abate
sectors which currently utilise a substantial proportion of grey hydrogen but
an emphasis is being placed on three key industries - steel making, fertiliser
production and transportation fuel (including aviation); all of which Chariot
is looking to address within the projects we are working on.
Key demand centres will be looking to import competitive green hydrogen and
the EU will likely need to import about half of the estimated 60 million
tonnes of decarbonised hydrogen and derivatives required by 2050. Hydrogen is
a key building block in Europe's climate targets and these factors were both
underlined by the visit by the European Commission to Mauritania in early
February 2024. They publicly reaffirmed their commitment to the sector, its
importance within Europe and have selected Mauritania as a key partner in the
EU's Global Gateway initiative with regard to future hydrogen export and green
steel production.
Project Nour:
Project Nour spans two onshore areas, totalling approximately 5,000 km(2)
across northern Mauritania. With up to 10 GW of electrolysis to be installed,
it could become, once implemented at scale, one of the most significant green
hydrogen projects in Africa, producing 1.2 Mtpa of green hydrogen.
We recently completed the Feasibility Study, conducted in compliance with
Equator Principles and IFC Performance Standards, which further confirmed the
scale and viability of the project and outlined a phased pathway for domestic
offtake and export development. Nour will be developed in multiple phases with
the initial phase seeking to install 1.6 GW of electrolysis and initial
development designs are focused on domestic use for green steel production and
export of green ammonia.
Sustainable economic development is embedded within the project planning with
local content aimed at maximizing employment and business opportunities in
Mauritania. In parallel discussions are ongoing with the local iron ore mining
sector to establish a green steel industry in the country. Next steps include
completion of the investment framework, engineering conceptual study and
offtake negotiations.
We have been working alongside TEH2 and TotalEnergies' in-house Power-2-X
engineering unit 'OneTech' on the technical side of the project. The OneTech
team consists of highly experienced engineers and their specialist teams
(solar, wind, hybrid and green Hydrogen) are widely recognised by peers and
partners. They have been instrumental in delivering the feasibility study for
Nour, and their expertise shared from other large-scale projects that they are
working on in other parts of the world is invaluable.
Case Study: Decarbonising the SNIM iron ore train in Mauritania
At COP28 in December 2023 Chariot signed an agreement, along with partners
TEH2 and Société Nationale Industrielle et Minière ("SNIM"), Mauritania's
national iron ore mining company, to undertake a scoping study to look at the
country's first green hydrogen pilot aimed at decarbonising the SNIM iron ore
train using green hydrogen technology.
· SNIM is Africa's second largest iron ore producer and the study
will focus on SNIM's train transport operations from the Zouerat iron ore mine
to Nouadhibou port which run on imported diesel fuel
· The concept is to produce green hydrogen as a substitute power
source via fuel cells mounted on carriages of each train - which can be up to
3 km long
· The scoping study will look to utilise existing wind resources to
generate green hydrogen and adapt this into a power source for the
locomotives.
· Overall objective is to materially reduce the carbon emissions in
local iron ore mining industry and showcase the value of green hydrogen in
production and application, helping to put Mauritania on the map
Proof-of-concept projects
In September 2023, we extended our collaboration with UM6P and Oort Energy in
conducting electrolyser pilot projects in Morocco. The partnership is
developing a technical Proof of Concept project at OCP's Jorf Lasfar
industrial complex which will use a 1 MW polymer electrolyte membrane ("PEM")
electrolyser system, patented by Oort. This will both test the capacity of the
electrolyser in an industrial setting, develop education and skills whilst
also evaluate the feasibility of larger scale green hydrogen and ammonia
production in-country.
Ongoing Collaboration, Commitment and Cost Reduction
There are still challenges in development timeframes and scale of investment
needed but Chariot welcomes ongoing implementation of initiatives that are
driving co-operation and alignment. The improvements in legal and regulatory
frameworks, as well as national and EU commitments focused on encouraging
investment and development, all point to future success.
The Government of Mauritania in particular has made great strides in creating
a favourable environment for developers. It has drafted a comprehensive
hydrogen code - very similar to a mining code - that would grant 35-year
operating licences and includes a wide range of incentives and tax breaks to
boost investment in the hydrogen sector. The draft legislation is expected to
be promulgated by the end of 2024 and further highlights the government's
commitment to becoming a major green hydrogen producer.
The Africa Green Hydrogen Alliance - in which both Mauritania and Morocco are
partners - is amongst those paving the way in this regard, fostering
collaboration across governments, the private sector, financing institutions
and society to look to establish long term stability. Importantly, the cost of
production is expected to decline significantly towards 2030 driven mainly by
technology advancements, cheaper renewables and manufacturing economies of
scale.
ESG - OUR COMMITMENT TO SUSTAINABLE OPERATIONS
Robust management of environmental, social and governance (ESG) concerns are
at the core of what we do and how we work. Chariot seeks to embed a
responsible approach to ESG management throughout the business.
In line with industry best practice Chariot uses the IFC Performance
Standards, Equator Principles, and the United Nations' Sustainable Development
Goals as benchmarks and guiding principles. We also comply with applicable
environmental laws, regulations and standards of the countries in which we are
present.
We acknowledge the potential ESG impacts that our activities may have as we
develop our projects. Our team is committed to proactively identifying and
assessing issues that are important to our business and to our stakeholders.
We manage these and their associated risks and seek to minimise the impacts of
our activities as far as possible by putting robust frameworks and policies in
place.
Anchois ESIA and Loukos EIA approvals
In October 2023, Chariot received approval of the Anchois gas development
project's Environmental and Social Impact Assessment from the Moroccan
Ministry of Energy Transition and Sustainable Development. This process was
conducted over a 12-month period and included detailed onshore and offshore
environmental baseline studies, a social baseline survey and a wide-ranging
stakeholder engagement process. The resulting Management plan sets out
mitigation and monitoring measures which will be implemented during
construction and production. In line with the most recent iteration of the
Equator Principles, Chariot also commissioned a Climate Change Risk Assessment
and Human Rights considerations were embedded in the main ESIA.
The Environmental Impact Assessment approval was also received for drilling
activity on Loukos Onshore in January 2024. This covers a total of 20 wells,
is valid for 5 years and will also inform Chariot's activities here going
forward.
Environmental Authorisation, Buffelspoort, Tharisa
Equally good progress was made by the Transitional Power team on permitting
the Tharisa solar project in Buffelspoort, South Africa. In May 2023, the
Environmental Authorisation was issued, along with the required water license,
National Forest license and alien species (NEMBA) license.
Local Content Program for Project Nour
As part of Project Nour's feasibility study, a comprehensive local content
program was developed in 2023. This includes proposals to expand Mauritania
higher education and technical training capabilities, to localise as many jobs
as possible. The team also led consultations with 50 local entrepreneurs
regarding the work packages which they may be able to execute, especially
during construction. Seventeen key areas were identified in this context, from
precast concrete panel manufacturing to insulation, from scaffolding to valve
inspections and repairs, along with the requirements of each in terms of
additional investment, training, and certification. The study has been shared
with the Mauritanian authorities and its technical and financial partners with
a view to securing support for its implementation.
Materiality Assessment
Our Materiality Assessment is compiled in line with the Global Reporting
Initiative ("GRI") framework and linked to the Sustainable Development Goals
which will guide project development and implementation in the future.
Focus on Reducing Emissions
Considering the transitional nature of Chariot's energy projects, each is
expected to deliver carbon emissions reductions in their host countries:
· Morocco's energy needs are heavily dependent on coal (which
currently makes up circa 70% of the country's requirements) and gas imports.
The domestic gas from Chariot's Anchois project has the potential to directly
supply into the national grid and become an important contributor in
rebalancing the country's energy mix and reducing emissions going forward.
· Chariot's renewable power projects are bespoke solutions for
mining companies, often sited in locations well away from power grids.
Accessing wind and solar power for use directly on the mine sites removes the
dependence on and need for transportation of carbon heavy fuel and provides a
renewable, long term energy supply. Wheeling renewable power through the South
African national grid through Etana will also notably reduce the reliance on
coal fired power stations opening up a wider customer base including
municipalities, industrial and retail sectors.
· Green hydrogen also has the potential to supplement and replace
traditional fossil fuels in both power generation and hard-to-abate industrial
processes, leading to a significant reduction in associated emissions of
greenhouse gases. It also has the potential to stimulate the development of
greener primary industry (such as green ammonia and green steel production)
and could lead to significant, positive long term impacts for Mauritania as
well as the entire global energy transition.
Two of the UN SDGs are particularly relevant to across our each of our
business pillars and underpin our strategy and our values:
Goal 7:
Ensure access to affordable, reliable, sustainable modern energy for all -
specifically around increasing the share of renewable energy in the global
energy mix, improving energy efficiency and advanced and cleaner fossil-fuel
technology…expansion of infrastructure and upgrade technology for supplying
modern and sustainable energy services for developing countries
Goal 9:
Build resilient infrastructure, promote inclusive and sustainable
industrialisation and foster innovation - … raise industry's share of
employment and gross domestic product, in line with national
circumstances…upgrade infrastructure and retrofit industries to make them
sustainable with increased resource-use efficiency and greater adoption of
clean and environmentally sound technologies and industry.
Alignment to the SDG's
Based on the updated Materiality Assessment and key goals, Chariot's alignment
to the UN SDG's have been reviewed accordingly, with key targets for each one
selected. This will also guide the reporting framework going forward.
Chariot Limited
Consolidated Statement of Comprehensive Income for the Year Ended 31 December
2023
Year ended 31 December 2023 Year ended 31 December 2022
Notes US$000 US$000
Revenue 3 80 -
Share based payments 27 (5,652) (4,168)
Hydrogen and other business development costs (1,285) (1,704)
Other administrative expenses (8,680) (8,478)
Total operating expenses (15,617) (14,350)
Loss from operations 5 (15,537) (14,350)
Finance income 7 202 74
Finance expense 7 (236) (608)
Loss for the year before taxation (15,571) (14,884)
Tax expense 9 - -
Loss for the year (15,571) (14,884)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (14) (3)
Other comprehensive income for the year, net of tax (14) (3)
Total comprehensive loss for the year (15,585) (14,887)
(Loss)/ profit for the year attributable to:
Owners of the parent (15,578) (14,882)
Non-controlling interest 7 (2)
(15,571) (14,884)
Total comprehensive (loss)/ profit attributable to:
Owners of the parent (15,592) (14,885)
Non-controlling interest 7 (2)
(15,585) (14,887)
Loss per Ordinary share attributable to the equity holders of the parent - 10 US$(0.02) US$(0.02)
basic and diluted
All amounts relate to continuing activities.
The notes form part of these final results.
Chariot Limited
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2023
For the year ended 31 December 2022
Share based payment reserve Other components of equity
Share capital Share premium Retained deficit Total attributable to equity holders of the parent Non-controlling interest
Total equity
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
As at 1 January 2022 11,696 383,318 2,207 938 (359,199) 38,960 - 38,960
Loss for the year - - - - (14,882) (14,882) (2) (14,884)
Other comprehensive loss - - - (3) - (3) - (3)
Loss and total comprehensive loss for the year - - - (3) (14,882) (14,885) (2) (14,887)
Issue of capital 2,567 32,143 (276) - - 34,434 - 34,434
Issue costs - (1,618) - - - (1,618) - (1,618)
Share based payments - - 4,168 - - 4,168 - 4,168
As at 31 December 2022 14,263 413,843 6,099 935 (374,081) 61,059 (2) 61,057
Chariot Limited
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2023 (continued)
For the year ended 31 December 2023
Share based payment reserve Other components of equity
Share capital Share premium Retained deficit Total attributable to equity holders of the parent Non-controlling interest
Total equity
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
As at 1 January 2023 14,263 413,843 6,099 935 (374,081) 61,059 (2) 61,057
(Loss)/ profit for the year - - - - (15,578) (15,578) 7 (15,571)
Other comprehensive loss - - - (14) - (14) - (14)
Loss and total comprehensive loss for the year - - - (14) (15,578) (15,592) 7 (15,585)
Issue of capital 1,451 18,733 (1,146) - - 19,038 - 19,038
Issue costs - (1,284) - - - (1,284) - (1,284)
Movements on shares to be issued reserve - - - (142) 142 - - -
Share based payments - - 5,652 - - 5,652 - 5,652
As at 31 December 2023 15,714 431,292 10,605 779 (389,517) 68,873 5 68,878
The notes form part of these final results.
Chariot Limited
Consolidated Statement of Financial Position as at 31 December 2023
31 December 2023 31 December 2022
Notes US$000 US$000
Non-current assets
Exploration and evaluation assets 11 62,956 51,795
Goodwill 12 380 380
Investment in power projects 13 334 448
Property, plant and equipment 16 646 428
Right of use asset 20 1,242 332
Total non-current assets 65,558 53,383
Current assets
Trade and other receivables 15,17 1,263 755
Inventory 18 1,808 1,424
Cash and cash equivalents 19 6,016 12,052
Total current assets 9,087 14,231
Total assets 74,645 67,614
Current liabilities
Trade and other payables 21 4,429 6,198
Lease liability: office lease 20 430 359
Total current liabilities 4,859 6,557
Non-current liabilities
Lease liability: office lease 20 908 -
Total non-current liabilities 908 -
Total liabilities 5,767 6,557
Net assets 68,878 61,057
Capital and reserves attributable to equity holders of the parent
Share capital 22 15,714 14,263
Share premium 431,292 413,843
Share based payment reserve 10,605 6,099
Other components of equity 23 779 935
Retained deficit (389,517) (374,081)
Capital and reserves attributable to equity holders of the parent 68,873 61,059
Non-controlling interest 14 5 (2)
Total equity 68,878 61,057
The notes form part of these final results.
The financial statements were approved by the Board of Directors and
authorised for issue on 10 June 2024.
George Canjar
Chairman
Chariot Limited
Consolidated Cash Flow Statement for the Year Ended 31 December 2023
Year ended 31 December 2023 Year ended 31 December 2022
US$000 US$000
Operating activities
Loss for the year before taxation (15,571) (14,884)
Adjustments for:
Finance income (202) (74)
Finance expense 236 608
Change in value of investment in power project 114 -
Depreciation 485 472
Share based payments 5,652 4,168
Net cash outflow from operating activities before changes in working capital (9,286) (9,710)
(Increase)/ Decrease in trade and other receivables (535) 210
Increase / (Decrease) in trade and other payables 1,251 (132)
Cash outflow from operating activities (8,570) (9,632)
Net cash outflow from operating activities (8,570) (9,632)
Investing activities
Finance income 93 62
Payments in respect of property, plant and equipment (400) (256)
Payments in respect of exploration assets (14,246) (29,243)
Net cash outflow used in investing activities (14,553) (29,437)
Financing activities
Issue of ordinary share capital net of fees 17,754 32,816
Payments of lease liabilities (432) (501)
Finance expense on lease (43) (27)
Net cash from financing activities 17,279 32,288
Net decrease in cash and cash equivalents in the year (5,844) (6,781)
Cash and cash equivalents at start of the year 12,052 19,406
Effect of foreign exchange rate changes on cash and cash equivalents (192) (573)
Cash and cash equivalents at end of the year 6,016 12,052
The notes form part of these final results.
Chariot Limited
Notes forming part of the financial statements for the year ended 31 December
2023
1 General information
Chariot Limited is a company incorporated in Guernsey with registration number
47532. The address of the registered office is Oak House, Hirzel Street, St
Peter Port, Guernsey, GY1 2NP. The nature of the Company's operations and its
principal activities are set out in the Report of the Directors and in the
Technical Director's Review of Operations.
2 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with UK
International Accounting Standards.
In accordance with the provisions of section 244 of the Companies (Guernsey)
Law, 2008, the Group has chosen to only report the Group's consolidated
position, hence separate Company only financial statements are not presented.
The financial statements are prepared under the historical cost accounting
convention on a going concern basis.
Going concern
As at 31 December 2023, the Group had cash of $6.0 million, no debt, trade and
other receivables of $1.3 million, inventory of $1.8 million and trade and
other payables of $4.4 million.
The Group operates as a transitional energy group focused on developing
large-scale gas, renewable power, and hydrogen projects in Africa. To date, it
has not earned any revenues and so is reliant on various options, including
asset partnering, project finance debt, and equity placements to finance the
Group's overheads and progress its projects to first revenues.
The group financial statements have been prepared on a going concern basis
with the directors of the opinion that the Group will be able to meet its
obligations as and when they fall due.
As at 30 April 2024, the Group had cash of $7.9 million, no debt, trade and
other receivables of approximately $1.3 million, inventory of approximately
$2.2 million and trade and other payables of approximately $3.2 million. The
Board has prepared a cash flow forecast for the period 1 May 2024 to 31
December 2025. This has included the following assumptions:
Anchois Gas Development:
On the Group's Anchois gas development, the partnering process with Energean
plc ("Energean") completed in April 2024 and provided:
- An upfront gross cash consideration payment of $10 million received
in April 2024.
- Subject to a successful FID, expected in the months following the
Anchois East drilling and testing campaign, the Group will receive US$15
million payable in cash and following completion of the Anchois well,
Energean will have the right to acquire a further 10% of Chariot's equity in
the Lixus licence for a US$850 million gross development carry to first gas
(including the US$85 million gross carry). At Chariot's option the Group
will also receive either a US$50 million 5-year zero coupon convertible loan
note with a strike price of £20 adjusted down for dividends, or issuance of
three million Energean shares. The Energean shares currently attract a
quarterly dividend and if this option were taken would provide Chariot with
regular quarterly near-term cashflows.
- An US$85 million gross carry including all Lixus costs up to FID,
including the additional Anchois well with a gas flow test, and planned
Rissana seismic acquisition costs separately capped at US$7 million.
Energean's carry of Chariot's costs is non-recourse, and has a coupon of 7%
over the one year Secured Overnight Financing Rate (SOFR), with the carry
including interest repayable from 50% of Chariot's future net sales revenues
from the Lixus licence.
Further interim period cost amounts have also been received by the Group from
Energean in relation to costs paid by Chariot on the gas development between
the December 2023 agreement signature and completion in April 2024. Following
completion, Chariot staff have been seconded under a services agreement to the
Anchois East drilling project, which provides a monthly recovery of their
cost.
Management is confident that progress on the Anchois project will lead to
first revenues generating income to fund ongoing overheads. The Risk
Management Statement outlines the principle risks and uncertainties of natural
gas exploration and the mitigations the Group has in place. Strategic
discussions continue with potential investors to provide further funding as
required at the asset, subsidiary or group level.
Over the forecast period the Group estimates a gross $6.5 million outflow in
respect of the transitional gas overhead and other related costs before any
recovery of development costs from joint venture partners.
Loukos Gas Development:
The onshore drilling campaign has successfully been completed. At the date of
these financial statements the RZK-1 well was found to be sub-economic but a
gas discovery was announced from the drilling of the OBA-1 well. The remaining
cost of drilling these two wells over the forecast period is estimated at $6.7
million. The Group has minimal licence commitments over the going concern
period in its position as operator on the licence. The Group is in early
commercialisation discussions with bankable offtakers which, subject to the
discovery of gas, will provide near-term gas sales with minimal capital
commitments.
Transitional Power Business:
The renewable projects are focussed on the South African energy market and are
at an earlier stage of development. The Group is evaluating project finance
and investment at subsidiary levels to enable the business to fulfil its
potential and has received over 10 non-binding expressions of interest
from South Africa focused banks, institutions and major energy groups to
fund the Transitional Power business providing near-term cashflows.
The directors have forecast an uncommitted $3.6 million outflow to fund
related overheads and development of the Transitional Power business over the
forecast period.
Green Hydrogen:
The Group continues to progress financing options at the subsidiary level
ahead of making any significant capital commitments. The directors have
forecast an uncommitted $1.4 million outflow to fund related overheads and
development of the green hydrogen business over the forecast period.
Corporate:
The directors have forecast a $7.2 million outflow for ongoing general and
administrative costs of the Group over the forecast period.
Conclusion
The forecast indicates that there will be a cash deficit from July 2024. To
manage this the directors mitigating actions include cutting discretionary
expenditure and deferring creditor payments until funding across the business
at an asset, subsidiary or Group level are successful, however, it also
acknowledges that this short term funding is not, at the present time, in
place.
Longer term, subject to successful drilling results at Anchois East, Chariot,
in partnership with Energean and ONHYM, are focused on reaching FID shortly
after the drilling and testing campaign has completed which could result in
$15 million cash inflow within the going concern forecast period.
Further, based on the strong interest from South Africa focused investors,
management is confident that financing options are available to fund ongoing
Transitional Power project work and overheads. In the event that a funding
package for the Transitional Power business is not concluded in the near-term
the Group will be required to seek other funding options for this business
pillar to fund its share of future capital expenditure on projects and related
overheads.
Based on feedback from ongoing financing discussions, the Directors have made
a judgement that the necessary funds to adequately finance the Group's
obligations will be secured and that the Group will continue to realise its
assets and discharge its liabilities in the normal course of business.
Accordingly, the Directors have adopted the going concern basis in preparing
the consolidated financial statements, however, the need for additional
financing in the short term, which has not yet been secured, indicates the
existence of a material uncertainty, which may cast significant doubt about
the Group's ability to continue as a going concern, and its ability to realise
its assets and discharge its liabilities in the normal course of business.
These financial statements do not include adjustments that would be required
if the Group was unable to continue as a going concern.
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 2023. 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 17 Insurance Contracts 1 January 2023
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 1 January 2023
(Amendment - Disclosure of Accounting Policies)
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors 1 January 2023
(Amendment - Definition of Accounting Estimates)
IAS 12 Income Taxes (Amendment - Deferred Tax related to Assets and 1 January 2023
Liabilities arising from a Single Transaction)
Certain new standards and amendments to standards have been published that are
mandatory for the Group's accounting periods beginning after 1 January 2024 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
IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback) 1 January 2024
IAS 1 Presentation of Financial Statements (Amendment - Classification of 1 January 2024
Liabilities as Current or Non-Current)
IAS 1 Presentation of Financial Statements (Amendment - Non-current 1 January 2024
Liabilities with Covenants)
IFRS 16 - Leases
Under IFRS 16 lease liabilities are initially measured at the present value of
the remaining lease payments and discounted using an incremental borrowing
rate at the date of recognition. Associated right-of-use assets are measured
at an amount equal to the lease liability adjusted for any prepaid or accrued
lease payments.
Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to profit or loss over the lease period to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
The Group has elected not to recognise right-of-use assets and liabilities for
leases where the total lease term is less than or equal to 12 months, or for
leases of low-value assets. Low-value assets comprise IT equipment and small
items of office furniture. Payments associated with short-term leases and
leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss.
Further details on the lease liability can be found in note 20.
Exploration and evaluation assets
The Group accounts for exploration and evaluation costs in accordance with the
requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources.
Any costs incurred prior to obtaining the legal rights to explore an area are
expensed immediately to the Income Statement. All expenditures relating to the
acquisition, exploration and appraisal of oil and gas interests, including an
appropriate share of directly attributable overheads, are recognised as
exploration and evaluation assets and initially capitalised by reference to
appropriate geographic areas. Costs recognised as exploration and evaluation
assets are transferred to property, plant and equipment and classified as oil
and gas assets when technical feasibility and commercial viability of
extracting hydrocarbons is demonstrable.
Costs recognised as exploration and evaluation assets are tested for
impairment whenever facts and circumstances suggest that they may be impaired.
Where exploration wells have been drilled, consideration of the drilling
results is made for the purposes of impairment of the specific well costs. If
the results sufficiently enhance the understanding of the reservoir and its
characteristics it may be carried forward when there is an intention to
continue exploration and drill further wells on that target.
Where farm-in transactions occur which include elements of cash consideration
for, amongst other things, the reimbursement of past costs, this cash
consideration is credited to the relevant accounts within the geographic area
where the farm-in assets were located. Any amounts of farm-in cash
consideration in excess of the value of the historic costs in the geographic
area are treated as a credit to the Consolidated Statement of Comprehensive
Income.
Investment in power projects
The Group, through its subsidiary Chariot Transitional Power France , holds a
10% investment in the Essakane solar project, Burkina Faso. This investment is
recognised at fair value through profit and loss with any movement in fair
value subsequently recognised in the Consolidated Statement of Comprehensive
Income.
The investment is not held under a 'hold to collect' or 'hold to collect and
sell' business model and is therefore categorised as fair value through profit
and loss.
Further details on the investment in power projects can be found in note 13.
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.
Inventory valuation is continually reviewed against expected use in
anticipated future drilling campaigns. Obsolete or damaged inventory is
expensed to the income statement as identified.
Revenue
The group's revenue is derived from one fixed price contract to provide
desalinated water and therefore the amount of revenue to be earned from the
contract is determined by reference to those fixed prices. Revenue on this
contract is recognised at the point that the desalinated water for each
monthly period has been provided to the customer.
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 currency of the Company and its subsidiaries is the US dollar,
except for Chariot Transitional Power France, Chariot Transitional Power
Africa and Chariot Transitional Power South Africa Pty Limited which have the
European Euro as their functional currency.
Translation gains or losses resulting from the translation of the financial
statements from the functional currency to the presentation currency are
recorded as a foreign currency translation reserve in the Statement of Changes
in Equity.
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost or fair value on acquisition
less depreciation and impairment. As well as the purchase price, cost includes
directly attributable costs and the estimated present value of any future
unavoidable costs of dismantling, decommissioning and removing items. The
corresponding liability is recognised within provisions. 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.
Assets in the course of construction are carried at cost, less any recognised
impairment loss. Depreciation of these assets, on the same basis as other
assets, commences when the assets are complete and ready for their intended
use.
Fixtures, fittings and office equipment are depreciated using the straight
line method over their estimated useful lives over a range of 3 - 5 years.
Energy plant and equipment is depreciated using the straight line method over
their estimated useful lives over a range of 5 - 20 years.
The carrying value of property, plant and equipment is assessed annually and
any impairment charge is charged to the Consolidated Statement of
Comprehensive Income.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
Group's interest in the fair value of identifiable assets, liabilities and
contingent liabilities acquired.
Goodwill is initially recognised as an asset at cost and is subsequently
measured at cost less accumulated impairment losses.
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
Share based payments
Where equity settled share awards are awarded to employees or Directors, the
fair value of the awards at the date of grant is charged to the Consolidated
Statement of Comprehensive Income over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity
instruments expected to vest at each balance sheet date so that, ultimately,
the cumulative amount recognised over the vesting period is based on the
number of awards that eventually vest. Current equity settled share awards
issued have no market vesting conditions attached.
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.
For share-based payment transactions with parties other than employees, the
fair value of an equity-settled share-based payment is based on the fair
value of the goods or services provided.
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.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's equity. Non-controlling interests
consist of the non-controlling shareholder's share of changes in equity. The
non-controlling interests' share of losses, where applicable, are attributed
to the non-controlling interests irrespective of whether the non-controlling
shareholders have a binding obligation and are able to make an additional
investment to cover the loss.
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
Trade and other receivables
Trade and other receivables are stated initially at fair value and
subsequently at amortised cost.
Financial instruments
The Group's financial assets consist of a bank current account or short-term
deposits at variable interest rates and other receivables. Any interest earned
is accrued and classified as finance income.
The Group's financial liabilities consist of trade and other payables. The
trade and other payables are stated initially at fair value and subsequently
at amortised cost.
Joint arrangements
The group is a party to a joint arrangement when there is a contractual
arrangement that confers joint control over the relevant activities of the
arrangement to the group and at least one other party. Joint control is
assessed under the same principles as control over subsidiaries.
The group classifies its interests in joint arrangements as either:
- Joint ventures: where the group has rights to only the net assets of the
joint arrangement;
- Joint operations: where the group has both the rights to assets and
obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group
considers:
- The structure of the joint arrangement
- The legal form of joint arrangements structured through a separate vehicle
- The contractual terms of the joint arrangement agreement
- Any other facts and circumstances (including any other contractual
arrangements).
Joint ventures are initially recognised in the consolidated statement of
financial position at cost, including long term shareholder loans as
investments in joint ventures. Subsequently, joint ventures are accounted for
using the equity method, where the Group's share of post-acquisition profits
and losses and other comprehensive income is recognised in the consolidated
statement of profit and loss and other comprehensive income (except for losses
in excess of the Group's investment in the joint venture unless there is an
obligation to make good those losses). Where there is objective evidence that
the investment in a joint venture has been impaired the carrying amount of the
investment is tested for impairment in the same way as other non-financial
assets. The Group conducts some of its transitional power and green hydrogen
activities jointly with other companies in this way.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experiences and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
deviate from these estimates and assumptions. If these estimates and
assumptions are significantly over or under stated, this could cause a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year. The areas where this could impact the Group are:
a) Areas of judgement
i. Recoverability of exploration and evaluation assets
Expenditure is capitalised as an intangible asset by reference to appropriate
geographic area and is assessed for impairment against the criteria set out in
IFRS 6 when management assesses that circumstances suggest that the carrying
amount may exceed its recoverable value.
The making of this assessment involves judgement concerning the Group's future
plans and current technical and legal assessments. In considering whether
exploration and evaluation assets are impaired, the Group considers various
impairment indicators and whether any of these indicates existence of an
impairment. If those indicators are met, a full impairment test is performed.
At 31 December 2023 the Group considers that no formal indicators of
impairment exist under the framework of IFRS 6 in respect of exploration and
evaluation assets.
ii. Accounting for business combinations
Judgment is required in determining whether a transaction meets the criteria
of a business combination under IFRS 3, and whether the associated assets
acquired are identifiable and should be recorded separately from goodwill.
An acquisition qualifies as a business combination when the assets and
liabilities acquired include an input and a substantive process that together
significantly contribute to the ability to create outputs.
b) Estimates and assumptions
i. Impairment of goodwill
The assessment the carrying value of goodwill includes a number of judgements
and estimates exercised by management including assessment of future
discounted cashflows or fair value less costs to sell.
When value in use calculations are undertaken, the Group estimates the
expected future cashflows from the asset and chooses a suitable discount rate
to calculate the present value of those cashflows. In undertaking these value
in use calculations, the Group is required to make use of estimates and
assumptions concerning the Group's future plans.
When fair value less costs to sell calculations are undertaken, the Group uses
earnings multiples derived from observable market data from recent
transactions within the relevant sector.
At 31 December 2023 the Group has not identified an impairment of goodwill.
ii. Fair value of investments in power projects
The assessment of the fair value of the investment in the Essakane power
project includes a number of estimates exercised by management including the
assessment of future discounted shareholder distribution cashflows that will
be made by the Essakane power project from cash resources not retained for use
locally.
The Group estimates the expected future cashflows from the asset and chooses a
suitable discount rate to calculate the present value of those cashflows. In
undertaking this value in use calculation, the Group is required to make use
of estimates and assumptions concerning the Essakane power project's future
production and cashflow.
3 Revenue
31 December 2023 31 December 2022
US$000 US$000
Supply of desalinated water 80 -
The group's revenue is derived from one fixed price contract held by its
Mauritian subsidiary Oasis Water Limited to provide desalinated water in
Djibouti.
4 Segmental analysis
Following the full year adoption of the three pillars strategy, the Group has
four reportable segments being Transitional Gas, Transitional Power, Green
Hydrogen and Corporate costs (2022: three being Transitional Gas, Transitional
Power and Corporate). 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 2023 Transitional Gas Transitional Power Green Hydrogen Corporate Total
US$000 US$000 US$000 US$000 US$000
Revenue - 80 - - 80
Share based payments - (515) - (5,137) (5,652)
Hydrogen and other - - (1,285) - (1,285)
business development costs
Administrative expenses (703) (2,456) (324) (5,197) (8,680)
Finance income 73 24 - 105 202
Finance expense (27) - - (209) (236)
Loss after taxation (657) (2,867) (1,609) (10,438) (15,571)
Additions to non-current assets 11,176 253 - 1,345 12,774
Total assets 66,077 1,866 - 6,702 74,645
Total liabilities (1,324) (387) - (4,056) (5,767)
Net assets 64,753 1,479 - 2,646 68,878
31 December 2022 Transitional Gas Transitional Power Corporate Total
US$000 US$000 US$000 US$000
Share based payments - (15) (4,153) (4,168)
Hydrogen and other - - (1,704) (1,704)
business development costs
Administrative expenses (516) (2,521) (5,441) (8,478)
Finance income 12 - 62 74
Finance expense - (70) (538) (608)
Loss after taxation (504) (2,606) (11,774) (14,884)
Additions to non-current assets 20,290 366 21 20,677
Total assets 54,158 1,474 11,982 67,614
Total liabilities (5,227) (203) (1,127) (6,557)
Net assets 48,931 1,271 10,855 61,057
5 Loss from operations
31 December 2023 31 December 2022
US$000 US$000
Loss from operations is stated after charging:
Depreciation of property, plant and equipment 50 45
Depreciation of Right of Use asset 435 427
Share based payments - Long Term Incentive Scheme 4,652 3,661
Share based payments - Restricted Share Unit Scheme 485 492
Share based payments - deferred consideration 15 15
Share based payments - other arrangements 500 -
Share of post-tax losses of joint venture 17 14
Auditors' remuneration:
Fees payable to the Company's Auditors for the audit of the Company's annual 119 108
accounts
Audit of the Company's subsidiaries pursuant to legislation 24 17
Total payable 143 125
6 Employment costs
Employees 31 December 2023 31 December 2022
US$000 US$000
Wages and salaries 4,613 3,863
Pension costs 459 413
Employee share based payments arrangements 2,887 2,141
Sub-total 7,959 6,417
Capitalised to exploration costs (2,275) (2,189)
Total 5,684 4,228
Key management personnel 31 December 2023 31 December 2022
US$000 US$000
Wages, salaries and fees 2,248 2,481
Social security costs 261 304
Pension costs 60 52
Benefits 12 9
Employee share based payments arrangements 2,264 2,027
Sub-total 4,845 4,873
Capitalised to exploration costs (739) (827)
Total 4,106 4,046
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 2023 31 December 2022
US$000 US$000
Foreign exchange gain 103 9
Bank interest receivable 99 65
Total 202 74
Finance expense 31 December 2023 31 December 2022
US$000 US$000
Foreign exchange loss 193 581
Finance expense on lease 43 27
Total 236 608
8 Investments
The Company's principal subsidiary undertakings at 31 December 2023 and 31
December 2022, excluding dormant entities, were:
Subsidiary undertaking Principal activity Country of incorporation Proportion of ownership at 31 December Non-controlling interest ownership at 31 December
2023 2022 2023 2022
Chariot Oil & Gas Investments (Namibia) Limited Holding company Guernsey 100% 100% - -
Chariot Oil & Gas Investments (Morocco) Limited Oil and gas exploration Guernsey 100% 100% - -
Chariot Oil and Gas Statistics Limited Service company UK 100% 100% - -
Enigma Oil & Gas Exploration (Proprietary) Limited(1) Oil and gas exploration Namibia 100% 100% - -
Chariot Oil & Gas Investments (Brazil) Limited Holding company Guernsey 100% 100% - -
Chariot Brasil Petroleo e Gas Ltda Oil and gas exploration Brazil 100% 100% - -
Chariot Oil & Gas Finance (Brazil) Limited(1) Service company Guernsey 100% 100% - -
Chariot Oil & Gas Holdings (Morocco) Limited Oil and gas exploration UK 100% 100% - -
Chariot Rissana Limited Oil and gas exploration UK 100% 100% - -
Chariot Transitional Power Limited Holding company and renewable energy solutions UK 100% 100% - -
Chariot Transitional Power Holdings Limited (1) Holding company UK 100% 100% - -
Chariot Transitional Power France(1) Holding company France 100% 100% - -
Chariot Transitional Power Africa(1) Renewable energy solutions Mauritius 100% 100% - -
Chariot Transitional Power South Africa (Pty) Ltd (1) Renewable energy solutions South Africa 100% 100% - -
Oasis Water Limited (1, 2) Renewable energy solutions Mauritius 74% 70% 26% 30%
Quantum Solar Limited (1) Holding company UK 100% 100% - -
Chariot Green Hydrogen Limited Green hydrogen solutions UK 100% - - -
( )
( 1)Indirect shareholding of the Company.
(2) An immaterial increase in ownership arising from the acquisition of ENEO
Water PTE Limited's business and assets including its minority holding in
Oasis Water Limited.
( )
9 Taxation
The Company is tax resident in the UK, however no tax charge arises due to
taxable losses for the year (31 December 2022: US$Nil).
No taxation charge arises in Morocco or the group subsidiaries as they have
recorded taxable losses for the year.
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 2023 31 December 2022
US$000 US$000
Tax reconciliation
Loss on ordinary activities for the year before tax (15,571) (14,884)
Loss on ordinary activities at the small profits rate of corporation tax in (2,958) (2,828)
the UK of 19% (31 December 2022: 19%)
Non-deductible expenses 1,153 881
Deferred tax effect not recognised 1,805 1,947
Total taxation charge - -
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$12.4 million (31 December 2022: US$10.6 million). Deferred tax assets
were not recognised as there is uncertainty regarding the timing of future
profits against which these assets could be utilised.
10 Loss per share
The calculation of basic loss per Ordinary share attributable to the equity
holders of the parent is based on a loss of US$15,578,000 (31 December 2022:
loss of US$14,882,000) and on 1,007,791,040 Ordinary shares (31 December 2022:
891,215,431) being the weighted average number of Ordinary shares in issue
during the year. Potentially dilutive share awards are detailed in note 27,
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 evaluation assets
31 December 2023 31 December 2022
US$000 US$000
Net book value brought forward 51,795 31,750
Additions 11,161 20,286
Transferred to inventory - (241)
Net book value carried forward 62,956 51,795
The Group has two cost pools being the Offshore Moroccan geographical area and
the Onshore Moroccan geographical area. As at 31 December 2023 the net book
value of the Offshore Moroccan geographical area US$61.8 million (31 December
2022: US$51.8 million), and the Onshore Moroccan geographical area US$ 1.2
million (31 December 2022: US$NIL).
On 7 December 2023 the Group announced a Sale and Purchase Agreement to sell a
portion of its interest in, and transfer operatorship of the Lixus Offshore
Licence, where the Anchois gas development project is located, and the Rissana
Offshore licence in Morocco, to Energean plc group ("Energean"). As further
detailed in note 29, completion of the agreement was announced on 10 April
2024.
12 Goodwill
Goodwill
US$000
Gross carrying amount at 31 Dec 2021 380
Balance at 31 Dec 2022 and 31 Dec 2023 380
The goodwill balance US$380,000 relates to the acquisition of Africa Energy
Management Platform in 2021 and reflects the intellectual property, management
team and customer relationships acquired through the business combination now
contained in the Transitional Power segment.
The Group tests cash-generating units with goodwill annually for impairment,
or more frequently if there is an indication that a cash-generating unit to
which goodwill has been allocated may be impaired. The recoverable amount of a
cash generating unit is the higher of the cash-generating unit's fair value
less cost of disposal and its value-in-use.
Fair value less cost of disposal has been used to assess the recoverable
amount of the Group's goodwill. Fair value less cost of disposal is determined
using earnings multiples derived from observable market data from recent
transactions within the solar and wind sector. The fair value measurement is
categorised as a level 2 fair value based on the inputs in the valuation
techniques used.
13 Investment in power projects
31 December 2023 31 December 2022
US$000 US$000
Essakane power project 334 448
The Group's investment in power projects represents its 10% project equity
holding in the Essakane power project. The investment is fair valued at each
reporting date and has been classified within level 3 of the hierarchy (as
defined in IFRS 13) as the investment is not traded and contains unobservable
inputs. Due to the nature of the investment, it is always expected to be
classified as level 3. There have been no transfers between levels during the
year ended 31 December 2023.
Valuations are derived using a discounted cash flow methodology and reflect
the annual forecast shareholder distributions resulting from net available
cash of the Essakane power project over its lifetime, and a risk adjusted
discount rate.
Significant unobservable input Sensitivity of the fair value measurement to input
Discount rate An increase in the discount rate would decrease the fair value and a decrease
in the discount rate would increase the fair value of the asset.
Shareholder distributions An increase in the forecast shareholder distributions would increase the fair
value and a decrease in the forecast shareholder distributions would decrease
the fair value of the asset.
The sensitivities above are assumed to be independent of each other. There
were no changes to valuation techniques in the period.
14 Non-controlling interests
Oasis Water Limited, a subsidiary of the Group, has immaterial non-controlling
interests (NCI). Summarised financial information in relation to Oasis Water
Limited, before intra-group eliminations, is presented below together with
amounts attributable to NCI:
For the period ended 31 December 31 December 2023 31 December 2022
US$000 US$000
Revenue 80 -
Administrative expenses (52) (6)
Profit/ (Loss) before and after tax 28 (6)
Profit/ (Loss) allocated to NCI 7 (2)
Other comprehensive income allocated to NCI - -
Total comprehensive income/ (loss) allocated to NCI 7 (2)
Cash inflows from operating activities 25 216
Cash outflows from investing activities (380) (215)
Cash inflows from financing activities 390 -
Net cash inflows 35 1
As at 31 December
Assets
Property plant and equipment 580 348
Trade and other receivables 29 1
Cash and cash equivalents 36 1
Liabilities
Trade and other payables (621) (355)
Accumulated non-controlling interests 5 (2)
15 Joint Ventures
At 31 December 2023 the Group has a 24.99% interest in, Etana Energy (Pty)
Limited, which is a separate structured vehicle incorporated and operating in
South Africa. The primary activity of Etana Energy (Pty) Limited is to hold an
electricity trading licence. The contractual arrangement provides the group
with only the rights to the net assets of the joint arrangement, with the
rights to the assets and obligation for liabilities of the joint arrangement
resting primarily with Etana Energy (Pty) Limited. Under IFRS 11 this joint
arrangement is classified as a joint venture and has been included in the
consolidated financial statements using the equity method.
Summarised financial information
Period ended 31 December 2023 2022
US$000 US$000
Loss from continuing operations (69) (57)
Other comprehensive income - -
Total comprehensive (loss)/ income (100%) (69) (57)
Group's share of comprehensive(loss)/ income (24.99%) (17) (14)
Investments in equity-accounted joint ventures
Opening balance 5 -
Shareholder loan to Etana in the year 70 19
Group's share of comprehensive income for the year (17) (14)
(included in administrative expenses)
Closing balance 58 5
As detailed in note 29, in the post balance sheet period the Group increased
its interest in Etana Energy (Pty) Limited to 49%. Following the transaction
the Group will continue to account for its interest using the equity method.
16 Property, plant and equipment
Fixtures, fittings and equipment Energy plant and equipment Assets in the course of construction Total
US$000 US$000 US$000
Cost
At 1 January 2022 1,428 - - 1,428
Additions 40 - 349 389
At 31 December 2022 1,468 - 349 1,817
At 1 January 2023 1,468 - 349 1,817
Additions 22 - 246 268
Transfer on completion of construction - 595 (595) -
At 31 December 2023 1,490 595 - 2,085
Depreciation
At 1 January 2022 1,344 - - 1,344
Charge 45 - - 45
At 31 December 2022 1,389 - - 1,389
At 1 January 2023 1,389 - - 1,389
Charge 35 15 50
At 31 December 2023 1,424 15 - 1,439
Net book value 1 January 2022 84 - - 84
Net book value 31 December 2022 79 - 349 428
Net book value 31 December 2023 66 580 - 646
The net book value of energy plant and equipment relates to the operational
desalination plant in Djibouti owned by a subsidiary of the group, Oasis Water
Limited whose results are reported within the Transitional Power segment.
17 Trade and other receivables
31 December 2023 31 December 2022
US$000 US$000
Other receivables and prepayments 1,263 755
The fair value of trade and other receivables is equal to their book value.
18 Inventory
31 December 2023 31 December 2022
US$000 US$000
Wellheads and casing 1,808 1,424
Inventory is held and retained for use in future
drilling campaigns.
19 Cash and cash equivalents
31 December 2023 31 December 2022
Analysis by currency US$000 US$000
US Dollar 4,449 5,475
Euro 121 209
Sterling 1,315 6,254
Moroccan Dirham 19 51
Other 112 63
6,016 12,052
As at 31 December 2023 US$4.6 million of US Dollar and Sterling cash is held
in UK and Guernsey bank accounts. All other cash balances are held in the
relevant country of operation.
As at 31 December 2023, the cash balance of US$6.0 million (31 December 2022:
US$12.1 million) contains the following cash deposits that are secured against
bank guarantees given in respect of exploration work to be carried out:
31 December 2023 31 December 2022
US$000 US$000
Moroccan licences 1,050 750
1,050 750
The funds are freely transferable but alternative collateral would need to be
put in place to replace the cash security.
20 Leases
The lease relates to the UK office. The group renegotiated the contractual
terms of the lease during the year which increased the lease term by three
years (2022: renegotiated a one-year extension). The lease liability was
remeasured using the discount rate applicable on the modification date, with
the right-of-use asset being adjusted by the same amount.
Right-of-use asset:
31 December 2023 31 December 2022
US$000 US$000
Brought forward 332 328
Effect of modification to lease terms 1,345 431
Depreciation (435) (427)
Carried forward 1,242 332
Lease liability:
31 December 2023 31 December 2022
US$000 US$000
Current 430 359
Non-current 908 -
Total lease liability 1,338 359
The interest expense on lease liabilities during the year to 31 December 2023
was US$43,000 (2022: US$27,000) and the total cash outflow was US$475,000
(2022: US$501,000).
The maturity analysis of the lease liability at 31 December 2023 is as
follows:
31 December 2023 31 December 2022
US$000 US$000
Maturity analysis - contractual undiscounted cashflows
Less than one year 522 372
Between one and two years 522 -
Between two and three years 436 -
Total undiscounted lease liabilities 1,480 372
Effect of interest (142) (13)
Total lease liability 1,338 359
21 Trade and other payables
31 December 2023 31 December 2022
US$000 US$000
Trade payables 2,229 2,264
Accruals 2,200 3,934
4,429 6,198
The fair value of trade and other payables is equal to their book value.
22 Share capital
Allotted, called up and fully paid
31 December 2023 31 December 2023 31 December 2022 31 December 2022
Number US$000 Number US$000
Ordinary shares of 1p each(1) 1,073,269,384 15,714 959,841,091 14,263
1. The authorised and initially allotted and issued share capital on
admission (19 May 2008) has been translated at the historic rate of US$GBP of
1.995. The shares issued since admission have been translated at the date of
issue, or, in the case of share awards, the date of grant and not subsequently
retranslated.
Details of the Ordinary shares issued are in the table below:
Date Description Price US$ No. of shares
31 December 2021 759,587,023
31 January 2022 Issue of shares at £0.055 relating to underwriting commitment 0.07 33,742,396
3 March 2022 Issue of shares at £0.055 relating to underwriting commitment 0.07 33,742,396
13 June 2022 Issue of shares at £0.18 in Placing, Subscription, Open Offer and fees 0.22 130,930,606
10 August 2022 Issue of share award 0.08 833,333
10 August 2022 Issue of share award 0.30 18,533
10 August 2022 Issue of share award 0.30 212,000
10 August 2022 Issue of share award 0.10 72,463
10 August 2022 Issue of share award 0.16 109,795
15 September 2022 Issue of share award 0.50 70,098
15 September 2022 Issue of share award 0.12 76,313
15 September 2022 Issue of share award 0.20 76,313
15 September 2022 Issue of share award 0.05 119,438
15 September 2022 Issue of share award 0.23 137,050
21 October 2022 Issue of share award 0.12 13,750
21 October 2022 Issue of share award 0.20 11,250
21 October 2022 Issue of share award 0.19 9,343
12 December 2022 Issue of share award 0.20 16,250
12 December 2022 Issue of share award 0.05 43,750
12 December 2022 Issue of share award 0.21 18,991
31 December 2022 959,841,091
24 February 2023 Issue to ENEO Water PTE Limited 0.22 2,267,694
17 April 2023 Issue of contingent consideration for acquisition of AEMP 0.07 1,585,678
3 August 2023 Issue of shares at £0.14 in Placing, Subscription, Open Offer and fees 0.18 106,246,564
17 August 2023 Issue of share award 0.08 1,333,334
17 August 2023 Issue of share award 0.22 1,332,095
17 August 2023 Issue of share award 0.18 662,928
31 December 2023 1,073,269,384
23 Other components of equity
The details of other components of equity are as follows:
Shares to be issued reserve Foreign exchange reserve
Contributed equity
Total
US$000 US$000 US$000 US$000
As at 1 January 2022 796 142 - 938
Loss for the year - - - -
Other comprehensive loss - - (3) (3)
Loss and total comprehensive loss for the year - - (3) (3)
As at 31 December 2022 796 142 (3) 935
Shares to be issued reserve Foreign exchange reserve
Contributed equity
Total
US$000 US$000 US$000 US$000
As at 1 January 2023 796 142 (3) 935
Loss for the year - - - -
Other comprehensive loss - - (14) (14)
Loss and total comprehensive loss for the year - - (14) (14)
Transfer of reserves due to lapsed share based deferred consideration - (142) - (142)
As at 31 December 2023 796 - (17) 779
24
Reserves
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal value.
Share premium Amount subscribed for share capital in excess of nominal value.
Share based payments reserve Amount representing the cumulative charge recognised under IFRS2 in respect of
share option, LTIP and RSU schemes.
Contributed equity Amount representing equity contributed by the shareholders
Shares to be issued reserve Deferred consideration on acquisition recognised in equity
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.
25 Related party transactions
Key management personnel comprises the Directors and details of their
remuneration and shareholding are set out in note 6 and the Directors'
Remuneration Report.
Kinsella Consulting Limited, a company of which Adonis Pouroulis is a
Director, incurred costs on behalf of Chariot Limited for which it was
reimbursed during the year of US$1,706 (31 December 2022: US$18,452). The
amount outstanding as at 31 December 2023 was US$Nil (31 December 2022:
US$Nil).
As detailed in note 28, on 1 January 2024 the Group completed its acquisition
of Neura Group's interest in Etana Energy (Pty) Limited. Adonis Pouroulis
beneficially controls 28.21% of the total voting rights in the Neura Group.
26 Financial instruments
The Board of Directors determine, as required, the degree to which it is
appropriate to use financial instruments or other hedging contracts or
techniques to mitigate risk. Throughout the year ending 31 December 2023, no
trading in financial instruments was undertaken (31 December 2022: US$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 cashflows of a
financial instrument will fluctuate because of changes in interest rates
(interest rate risk) and foreign exchange rates (currency risk). Throughout
the year, the Group has held surplus funds on deposit, principally with its
main relationship bank Barclays, on fixed short-term deposits. The credit
ratings of the main relationship bank the Group holds cash with do not fall
below A or equivalent. The Group does not undertake any form of speculation on
long term interest rates or currency movements, therefore it manages market
risk by maintaining a short-term investment horizon and placing funds on
deposit to optimise short term yields where possible but, moreover, to ensure
that it always has sufficient cash resources to meet payables and other
working capital requirements when necessary. As such, market risk is not
viewed as a significant risk to the Group. The Directors have not disclosed
the impact of interest rate sensitivity analysis on the Group's financial
assets and liabilities at the year-end as the risk is not deemed to be
material.
This transactional risk is managed by the Group holding the majority of its
funds in US Dollars to recognise that US Dollars is the trading currency of
the industry, with an appropriate balance maintained in Sterling, Euro and
Moroccan Dirham to meet other non-US Dollar industry costs and ongoing
corporate and overhead commitments.
At the year end, the Group had cash balances of US$6.0 million (31 December
2022: US$12.1 million) as detailed in note 19.
Other than the non-US Dollar cash balances described in note 19, 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$157,000 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 2022: US$658,000).
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. For further details of the Group's position, please refer to
the going concern paragraph in note 2 of these accounts.
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.
For further details of the Group's position, please refer to the going concern
paragraph in note 2 of these accounts.
Credit risk
The Group's policy is to perform appropriate due diligence on any party with
whom it intends to enter into a contractual arrangement. Where this involves
credit risk, the Group will put in place measures that it has assessed as
prudent to mitigate the risk of default by the other party. This could consist
of instruments such as bank guarantees and parent company guarantees.
As such, the Group has not put in place any particular credit risk measures in
this instance as the Directors view the risk of default on any payments due
from the joint venture partner as being very low.
27 Share based payments
Long Term Incentive Scheme ("LTIP")
The plan provides for the awarding of shares to employees and Directors for
nil consideration. The award will lapse if an employee or Director leaves
employment.
Shares granted when an individual is an employee will vest in equal
instalments over a three year period from the grant date and shares granted
when an individual is a Director or otherwise specified will vest three years
from the end of the year or period the period to which the award relates.
The Group recognised a charge under the plan for the year to 31 December 2023
of US$4,652,000 (31 December 2022: US$3,661,000).
The following table sets out details of all outstanding share awards under the
LTIP:
31 December 2023 31 December 2022
Number of awards Number of awards
Outstanding at beginning of the year 68,538,410 28,242,865
Granted during the year 8,413,066 40,888,091
Shares issued for no consideration during the year (3,328,357) (592,546)
Lapsed during year (500,000) -
Outstanding at the end of the year 73,123,119 68,538,410
Exercisable at the end of the year 32,187,495 14,754,985
Non-Executive Directors' Restricted Share Unit Scheme ("RSU")
The plan provides for the awarding of shares to Non-Executive Directors for
nil consideration. An award can be Standalone or Matching.
Standalone share awards are one-off awards to Non-Executive Directors which
will vest in equal instalments over a three year period and will lapse if not
exercised within a fixed period on stepping down from the Board.
Matching share awards will be granted equal to the number of existing Chariot
shares purchased by the Non-Executive Director in each calendar year capped at
the value of their gross annual fees for that year. The shares will vest in
equal instalments over a three year period and will lapse if not exercised
prior to stepping down from the Board or if the original purchased shares are
sold prior to the vesting of the relevant Matching award. Any potential
Matching awards not granted in a calendar year shall be forfeited and shall
not roll over to subsequent years.
The Group recognised a charge under the plan for the year to 31 December 2023
of US$485,000 (31 December 2022: US$492,000).
The following table sets out details of all outstanding share awards under the
RSU:
31 December 2023 31 December 2022
Number of awards Number of awards
Outstanding at beginning of the year 11,037,280 8,755,156
Granted during the year 427,723 3,528,248
Lapsed (4,880,210)
Shares issued for no consideration during the year - (1,246,124)
Outstanding at the end of the year 6,584,793 11,037,280
Exercisable at the end of the year 2,300,602 4,251,485
Post-acquisition share-based payment charges
Africa Energy Management Platform ("AEMP")
During the year, contingent payments settled through the issue of 1,588,678
new ordinary shares were made to key members of the Chariot Transitional Power
Africa team regarding the acquisition of the business of Africa Energy
Management Platform in June 2021.
Retention and target conditions attached to the issuance of the remaining
contingent payments were extended until 22 March 2024. The modification of the
non-market performance and retention conditions did not impact the fair value
after the modification. As at 31 December 2023 remaining contingent payments
representing a maximum of 2,378,514 new ordinary shares are payable to the
same key members of the Chariot Transitional Power Africa team. These
contingent payments have been recognised as share-based payments in the
Consolidated Statement of Comprehensive Income over the retention period.
The Group recognised a charge of US$15,000 in the year to 31 December 2023 (31
December 2022: $15,000).
Other share-based payments arrangements
ENEO Water PTE Limited ("ENEO")
On 27 January 2023 the group entered into an agreement for the acquisition of
the business and loan receivable assets of an independent water producer, ENEO
Water PTE Limited, an African company founded and partially owned by key
members of the Chariot Transitional Power Africa team, focused on delivering
clean water solutions using renewable energy.
On 24 February 2023, the Company issued 2,267,694 new ordinary shares to ENEO
Water Pte Limited for the successful financial close of the Djibouti water
project, recognising a charge of US$0.5 million in the year to 31 December
2023.
The agreement includes contingent payments linked to the achievement of
financial close on pipeline projects payable in Chariot Ordinary shares. As at
31 December 2023 remaining contingent payments representing a maximum of
1,824,595 new ordinary shares are potentially payable to ENEO Water Pte
Limited.
28 Contingent liabilities
From 30 December 2011 the Namibian tax authorities introduced a withholding
tax of 25% on all services provided by non-Namibian entities which are
received and paid for by Namibian residents. From 30 December 2015 the
withholding tax was reduced to 10%. As at 31 December 2023, based upon
independent legal and tax opinions, the Group has no withholding tax liability
(31 December 2022: US$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.
29 Events after the balance sheet date
The Directors consider these events to be non-adjusting post balance sheet
events.
Completion of partnering agreement with Energean Group plc
On 7 December 2023 the Group announced a Sale and Purchase Agreement to sell a
portion of its interest in, and transfer operatorship of the Lixus Offshore
Licence, where the Anchois gas development project is located, and the Rissana
Offshore licence in Morocco, to Energean plc group ("Energean"). Completion
of the agreement occurred in the post balance sheet period and was announced
on 10 April 2024.
Following the post balance sheet completion, the Group's interest in the Lixus
licence is 30% (Energean: 45%) and in the Rissana licence is 37.5% (Energean:
45%). The Office National des Hydrocarbures et des Mines retains its 25%
carried interest in both licences.
The Group received US$10 million on completion of the transaction, and will
receive a further US$15 million subject to reaching Anchois Final Investment
Decision ("FID"), and a US$85 million gross carry including all Lixus costs up
to FID which is repayable from 50% of Chariot's future net sales revenues from
the Lixus licence with a coupon of 7% over the one year Secured Overnight
Financing Rate (SOFR). Planned Rissana seismic acquisition costs are
separately capped at US$7 million.
Following completion of the Anchois well, Energean have the right to acquire a
further 10% of the group's equity in the Lixus licence for US$50 million
5-year zero coupon convertible loan note with a strike price of £20 adjusted
down for dividends or issuance of three million Energean plc shares, at the
group's option on FID, a US$850 million gross development carry to first gas
(including the US$85 million gross carry), and a 7% royalty payment on
Energean's gas production revenues in excess of a base hurdle on the realised
gas price (post transportation costs).
Increased holding in Etana Energy (Pty) Limited
On 1 January 2024 the Group completed the transaction to increase its holding
in Etana Energy (Pty) Limited from 24.99% to 49%. Contemporaneously, H1
Holdings (Pty) Limited ("H1") has increased its holding from 26% to 51%. The
transaction involves the Group and H1 in substance acquiring the 49% interest
in Etana Energy (Pty) Limited previously held by the Neura Group, on identical
pro rata terms
Upfront net cash consideration of US$0.3 million was paid on completion with
a further net c.US$0.7 million paid in April 2024.
Future success based contingent payments are payable of net c.US$1.6
million on financial close of a 250MW generation project and a further
consideration of net c.US$2.6 million payable in 2028, subject to further
significant generation projects reaching financial close.
Following the transaction the Group will continue to account for its interest
in Etana Energy (Pty) Limited in the consolidated financial statements using
the equity method.
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