Chariot Oil & Gas agrees with Cairn Energy for 35% stake of Mauritania
A farm-out deal was signed between Chariot Oil & Gas Ltd and Cairn Energy Plc. A farm out agreement is when a company assigns all or part of its oil or natural gas interest to a third party, usually in an effort to reduce risk. Under the terms of the agreement, Chariot will own a 35% stake in the Mauritania licence of a unit of Cairn Energy. The stake is worth USD 26 million and it also encompasses the 3D seismic data cost which Chariot purchased on block 19. The said block is located just 30 km off the Mauritanian coast.
The farm-out agreement was a good move for Chariot as its shares increased by as much as 34% when the deal was announced. An RBC Capital Markets analyst also said that this will generate renewed interest for the company. "Chariot's share price in (the first half of 2013) was weighed down by disappointing results from HRT Participações SA's drilling campaign offshore Namibia ... however, management has today embarked on its own initiative to create value and generate new interest in the stock," analyst Al Stanton told Reuters.