Atlantic margins-focussed oil and gas exploration company Chariot Oil & Gas updated the market on its operations on Wednesday, prior to its 31 December year-end.
The AIM-traded firm said that over the past 12 months, it continued to invest in its portfolio to capitalise on the current low-cost environment.
It confirmed it evaluated 3D seismic data acquired in 2016 in Brazil and Namibia, secured a new licence in Morocco and back-in rights in legacy acreage in Namibia, acquired extensive 2D and 3D seismic programmes, and completed the transfer of operatorship in the Rabat Deep Permits in Morocco in the lead up to exploration drilling in the first quarter of 2018.
Through that extensive work programme, the Chariot in-house subsurface team had developed an inventory of drill-ready prospects with material follow-on potential, and initiated partnering processes in Namibia and Morocco.
The board said the recent industry downturn had created a number of opportunities to capture "significant" cost reductions.
Having previously taken advantage of the low seismic acquisition rates, Chariot said it was now focussing on the supply and demand dynamics of the deepwater drilling rig market.
"With rig rates at historic lows, Chariot has initiated a process to analyse how the company can benefit from this lower cost environment," the board explained.
"Utilising the expertise of its newly hired drilling manager, Chariot has conducted a thorough analysis of drilling cost estimates for its key prospects, feeding this data into the current partnering processes."
The board launched drilling preparations in Morocco and Namibia through the initiation of environmental impact assessments, long lead items identification and other operational arrangements.
Its management said it believed that the preparatory work would enable Chariot to avoid unnecessary delays associated with its plans to drill three wells in the near-term, and to capitalise on the current low-cost environment for drilling.
Chariot said it was continuing to apply strict capital discipline, and had reduced its annual cash overhead for the fourth consecutive year.
As a result, the company was in a strong cash position in excess of licence commitments, and remained debt-free.
"We have continued to make significant progress throughout the year, refreshing and de-risking the portfolio by securing a new licence, delivering an innovative option based on Chariot's reputation for partnering and continuing to mature all parts of the portfolio through the acquisition of new data and the evaluation of data acquired in 2016," said Chariot CEO Larry Bottomley.
"We have also continued to apply rigorous portfolio management and capital discipline, leaving us in a very strong financial position going forward."
Bottomley said that over the last two years, Chariot had been able to capitalise on the low-cost base for seismic acquisition and processing, and had consequently been able to mature its portfolio and build a drilling inventory of "potentially transformational" prospects.
"This readjustment of costs following the oil price
fall of 2014 has now affected the drilling market, and the company is looking to capitalise on drilling costs as successfully as we delivered in our seismic campaigns.
"Looking ahead, we are focused on delivering three exploration wells in the near-term and have established an in-house drilling team to deliver this programme safely, efficiently and cost-effectively," Bottomley added.
"Whilst we have seen some improvement in market conditions, we remain vigilant and conservative in our forecasting to ensure we remain well-positioned to deliver on our plans."