chariot oil & gas limited · 2019-09-25 · annual report & accounts 2011 chariot oil &...

CHARIOT OIL & GAS LIMITEDANNUAL REPORT & ACCOUNTS 2011www.chariotoilandgas.com

Chariot Oil & Gas LimitedRegistered Office:PO Box 100Trafalgar CourtAdmiral ParkSt. Peter PortGuernseyGY1 3ELChannel Islands

www.chariotoilandgas.com

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NTS 2011

Unlocking Africa’s Oil and Gas Potential

CHARIOT OIL & GAS LIMITED (AIM: CHAR) IS AN INDEPENDENT OIL & GAS EXPLORATION COMPANY WITH INTERESTS IN NAMIBIA. ENIGMA OIL & GAS EXPLORATION (PTY) LIMITED IS A WHOLLY OWNED SUBSIDIARY OF CHARIOT AND IS THE OPERATOR OF THE LICENCE AREAS

CHARIOT HAS FOUR LICENCES COVERING EIGHT OFFSHORE BLOCKS AND HOLDS THE EIGHTH LARGEST ACREAGE POSITION IN WEST AFRICA – ONE OF THE LAST FRONTIERS FOR OIL AND GAS EXPLORATION

FRONTIER REGION – HIGH IMPACT EXPLORATION – HUGE GROWTH POTENTIAL

Enviable Position in Namibia

Strong Cash Position

Substantial Identified Hydrocarbon Potential

Highly Experienced Management

Drill Ready Inventory

Clear Strategy and Goals

CoMPaNy ovERvIEw

1 Highlights During and Post Period

2 At a Glance3 Next Phase4 Chairman’s Statement6 Chief Executive Officer’s

Report8 Exploration Overview12 Board of Directors14 Senior Management Team

CoRPoRatE GovERNaNCE

16 Directors’ Remuneration Report

18 Social Responsibility Statement

19 Corporate Governance Statement

20 Report of the Directors22 Independent Auditors’

Report

fINaNCIal StatEMENtS

23 Consolidated Statement of Comprehensive Income

24 Consolidated Statement of Changes in Equity

25 Consolidated Statement of Financial Position

26 Consolidated Cash Flow Statement

27 Notes forming part of the financial statements

ibc Advisers

REGIStERED offICECHaRIot oIl & GaS lIMItEDPO Box 100Trafalgar CourtAdmiral ParkSt. Peter PortGuernseyGY1 3ELChannel Islands

NoMINatED aDvISERRBC CaPItal MaRkEtSThames CourtOne QueenhitheLondonEC4V 4DEUnited Kingdom

JoINt BRokERSRBC CaPItal MaRkEtSThames CourtOne QueenhitheLondonEC4V 4DEUnited Kingdom

UBS INvEStMENt BaNk1 Finsbury AvenueLondonEC2M 2PPUnited Kingdom

REPoRtING aCCoUNtaNt aND aUDItoRBDo llP55 Baker StreetLondonW1U 7EUUnited Kingdom

fINaNCIal PUBlIC RElatIoNS aDvISERfDHolborn Gate26 Southampton BuildingsLondonWC2A 1PBUnited Kingdom

lEGal aDvISERS to tHE CoMPaNyaS to BRItISH lawMEMERY CRYSTAL LLP44 Southampton BuildingsLondonWC2A 1APUnited Kingdom

aS to NaMIBIaN lawLORENTz ANGULA INC. Windhoek 3rd floorLA ChambersAusspann PlazaWindhoekNamibia

aS to GUERNSEy lawBABBEPO Box 6918–20 Smith StreetSt. Peter PortGuernseyGY1 3ELChannel Islands

REGIStRaRSCaPIta REGIStRaRSRegistered Address:The Registry34 Beckenham RoadBeckenhamKentBR3 4TUUnited Kingdom

CoMPaNy SECREtaRyaRtEMIS SECREtaRIES lIMItEDPO Box 100Trafalgar CourtAdmiral ParkSt. Peter PortGuernseyGY1 3ELChannel Islands

Advisers

Annual Report & Accounts 2011 Chariot Oil & Gas Limited 1

1 Company Overview 2 Corporate Governance 3 Financial Statements

Increased gross mean unrisked prospective resources to 15.5 billion barrels (“Bbbls”) >

(11.2 Bbbls net to Chariot)Identified mega structure – Nimrod – with a gross mean unrisked prospective >

resource volume of 4.6 Bbbls and an estimated 25% Chance of SuccessFarm-out datarooms received strong interest from numerous majors with deep >

water expertise – negotiations with potential farm-out partners at advanced stagesFurther strengthened Board, technical and management teams >

Drill ready inventory established – multiple play types, multiple objective horizons >

Placing completed in April 2011 raised US$140 million – enables adherence to >

planned exploration programme of drilling first well in Q4 2011 and increases optionality – giving current cash position of US$148 million

“It has been another sIgnIfIcant year for charIot wIth a great deal of work completed across all aspects of the busIness. we remaIn on track to delIver on all of our strategIc objectIves. charIot Is In control of Its destIny and we look forward to sharIng our progress wIth you as we move towards commencIng our drIllIng campaIgn later thIs year”paul welchChieF exeCutive OFFiCeR

highlights During and Post Period

N A M I B I A

Leads and Prospect

Prospective Trends

2D Seismic

3D Seismic

1811A ENIGMA

1811B ENIGMA

2312A&B ENIGMA

2412A&B (NORTHERN HALVES) ENIGMA

2714B ENIGMA

2714A ENIGMA(PETROBRAS 50%)

overvIew

Licences in three geologically distinct basins >

Highly prospective acreage – significant holding: >

30,504 km2

Largest exploration programme undertaken >

offshore Namibia to dateStrong technical and corporate team with a >

complete skill set in-house: G&G, engineering and commercialA wealth of knowledge of both Namibian >

geology and operating in countryExtensive geological and geophysical work >

completed across large seismic data sets

progress to date

Exceeded work commitments; cumulative >

exploration cost US$93mAttracted Petrobras as 50% joint venture partner >

Increased gross mean unrisked prospective >

resources from 3.9 Bbbls to 15.5 BbblsNimrod structure identified (4.6 Bbbls) >

16 prospects and five leads identified to date >

Successful fundraising of US$140m provides >

sufficient funds to retain control over timeline, well design, secure rig and long lead itemsAdvanced negotiations underway with potential >

farm-out partners

mIlestones

2008 – Listed on

AIM raising US$90m– Increased mean

unrisked prospective resources from 3.9 to 5.24 Bbbls

2009 – Signed farm-out

agreement with Petrobras for 50% of block 2714A

2010 – Completed all

seismic acquisition programmes

– Increase in gross mean unrisked prospective resources – up from 5.2 to 8.5 Bbbls due to additional potential identified in Central blocks

– Further increase

in gross mean unrisked resource potential to 10.1 Bbbls. 11 prospects, six leads based on 3D seismic

– CPR from NSAI supports Chariot’s internal gross mean unrisked prospective resources figure

2011 – Mega structure

(Nimrod) identified increasing gross mean unrisked resource potential to 13.2 Bbbls

– Increase of 700 mbbls identified in Northern block upped gross mean unrisked resource potential to 13.9 Bbbls

– Placing raised

US$140m– Increase of 1.5

Bbbls identified in Southern blocks; gross mean unrisked prospective resources now 15.5 Bbbls

2 Chariot Oil & Gas Limited Annual Report & Accounts 2011

At a Glance

our lIcences:

GREATERLONDON

M25

M25M25

M25

20 kilometres

STRUCTURENIMROD

commencIng drIllIng campaIgn

Conclude farm-out agreements – >

negotiations at advanced stages, expect to secure 2–3 additional partners in near-termCommence drilling campaign in Q4 2011; >

one in North Q4 2011, one in South Q1 2012Frontier region-further wells to be drilled in >

due course to fully test the area: target to drill 4–5 wells through to 2013Consider acquisition of nearer-term >

production assets in Africa: balance risk profile and accelerate first oil

nImrod resource potentIal IdentIfIed

Over 500 km > 2 in area4.6 Bbbls of gross mean unrisked >

resource potentialSeismic anomalies identified in >

structural closure25% chance of success >

Oil generating kitchen >

future plans – CPR update – Shoot 2,500 km2

3D seismic on Central blocks

– Secure rig contract – Conclude farm-out

agreements – Drill first well on

Tapir North (Northern Licence)

– Drill first well on

Nimrod (Southern Licence)

– 3D seismic from Central blocks to be processed and interpreted

2 Chariot Oil & Gas Limited Annual Report & Accounts 2011 Annual Report & Accounts 2011 Chariot Oil & Gas Limited 3


Next Phase

nImrod prospect:


Chairman’s Statement

we believe significantly differentiates Chariot from many of its Namibia focused peers.

The exploration work has continued to enhance the Company’s understanding and increased conviction of the potential of offshore Namibia and, as a result, we continue to believe that the acreage we have under licence across the Namibian margin is second to none. With the Company’s licences situated in three geologically distinct regions – the Namibe, Lüderitz and Orange basins – we have a spread of assets all of which, importantly, are oil prone.

The spend on our asset base now totals approximately US$90 million – the biggest expenditure with regard to oil and gas exploration in the country to date. This was primarily due to the extensive 2D and 3D seismic acquisition programmes Chariot carried out and the subsequent processing and interpretation thereof, which yielded excellent geological information.

A combination of geological and geophysical work, including remapping and seismic attribute analysis has led to the identification of our current gross mean unrisked prospective resource estimate of 15.5 Bbbls (11.2 Bbbls net to Chariot) with a drill-ready inventory of 16 prospects (one being the giant Nimrod prospect) and a further five leads of specific interest. We were very pleased to have our resource figures of 10.1 Bbbls confirmed by Netherland Sewell in October 2010, which corroborated the Company’s in-house work. A further CPR is currently under way to seek verification on the latest resource estimates and the results of that report are expected in Q3 2011.

Dear Shareholder,

I am very pleased to present your Company’s latest set of results, my first as Chairman, and to report on a year that saw Chariot continue to grow into a successful mid-cap E & P company. Over the past 12 months, the Company has made significant advances on a technical level by gaining increased knowledge of the geological potential of its acreage in Namibia. The Company has also positioned itself as an attractive investment in the E & P space, as was evidenced in the strong support received in the recent fundraising completed post period end in April 2011 and we see the coming year as one that will deliver further progress on all fronts. We look forward to executing the Company’s plans over the next few months, which will culminate in the drilling of our first well later this calendar year.

asset portfolIo – dIfferentIatIng charIot

Key positioning and best acreage along >

Namibian coastline – three distinct geological basinsLargest exploration programme spend offshore >

Namibia to date – significant amount of high quality 2D and 3D seismic data acquiredDrill ready inventory –16 prospects in total, >

one “mega” prospect – Nimrod: 4.6 BbblsWell funded – Chariot will be the first of the >

current operators in Namibia to commence drilling

Chariot’s growth over the last year has been a direct result of the technical work we have undertaken across the Company’s licence portfolio and it is this work and the current exploration maturity (essentially drill-ready) that

“charIot has contInued to grow Into a successful mId-cap e & p company over the past 12 months and we see the comIng year as one that wIll delIver further progress on all fronts”

adonIs pouroulIsChAiRmAN



Capitalised exploration costs came to US$4.0 million (net of recoveries from Petrobras under the Block 2714A farm-out agreement), the largest items related to the processing and interpretation of 3D seismic information. This level of expenditure was, as expected, significantly lower than the previous year (2010: US$17.6 million), when the final portions of the seismic acquisition campaign took place.

The Group ended the financial year with cash of just over US$9 million. Subsequent to the placing of 35,958,376 new ordinary shares at 250p, raising net proceeds of approximately US$140 million in April 2011, the Group now has a cash balance of circa US$148 million and is well funded to advance into the next phase.

management changesIt was a pleasure to welcome Martin Groak as Chief Financial Officer, who joined us post period end. He has a wealth of experience, having 25 years in the financial sector and has worked worldwide in a variety of managerial roles, specialising in strategic planning, international business, IPOs and M&A activity.

conclusIonChariot has made considerable progress since listing in 2008 and it has been a pleasure to have been part of the story since its inception. I would like to thank all the employees, contractors, the Namibian Ministry of Mines and Energy. I would also like to thank the Namibian government for creating an environment where foreign investment is welcome. Chariot, poised to spud its first well, is at an exciting stage of its evolution and I look forward to the year to come.

adonIs pouroulIsChAiRmAN

Importantly, this technical work and risking undertaken by the Company and Netherland Sewell also resulted in an increase in the Chance of Success on a number of key prospects. Whilst Namibia is still very much a frontier region for exploration and thus carries with it inherent higher risk, this work has served to significantly enhance the potential of the portfolio.

successful fundraIsIng – seekIng to maIntaIn control of your company’s destIny and retaIn shareholder valueWe successfully completed an equity placing in April 2011 raising US$140 million net of expenses. The offering was oversubscribed and we were very pleased with the strong support received from new and existing shareholders. Importantly, it has put Chariot in a robust financial position whereby we as a management team can look to control the Company’s own destiny and seek to execute the planned work programme within the stated timeline. With the funds in place we can now order long lead items for drilling and secure contractors and rigs without delay; we are confident your Company can adhere to the exploration programme laid out. This is important, as having fulfilled our work programme commitments already, the drill date could be pushed out into subsequent years, but we are keen to start this campaign as soon as possible. A definitive drill date will be announced further to signing the drilling rig contact. The funds also provide us with greater optionality and leverage as we continue to seek to create as much shareholder value as possible.

farm-out dIscussIons contInuIng concurrentlyThe funds raised will enable the Company to complete a two-well drilling programme, one on Tapir North and one on the Nimrod prospect, and conduct a substantial 3D seismic programme over the Central blocks. Notwithstanding the enhanced balance sheet, the Company continues to seek farm-out partners to participate in our exploration activities to provide additional deepwater expertise whilst also managing the capital in our portfolio. Any funds received from such agreements will be used for further appraisal and drilling opportunities.

fInancIal revIewDuring the year under review, the Group incurred a loss of US$7.3 million (2010: US$3.1 million). General administrative expenses totalled US$5.0 million, compared to US$3.0 million in the prior year, reflecting in particular the full cost of strengthening and increasing the size of the technical team.

successful placIng

uS$140m RAiSeD


IdentIfIcatIon of the nImrod ‘mega structure’One of the key highlights of the year was the discovery of the Nimrod prospect which was a game changer for the Company and a key driver behind undertaking the fundraising post period end enabling the Company to retain as much equity in this asset as possible. With 4.6 Bbbls of mean unrisked prospective resource potential identified, a Chance of Success of 25%, a structural closure of 500 km² displaying seismic anomalies (indicative of hydrocarbon charge), sitting on top of an oil generating charge kitchen, this is truly a world class prospect. Frontier areas like Namibia are one of the few remaining places where you can find prospects of this size and we are very pleased to have the opportunity to do so.

farm-out updateOur dataroom has been open in earnest since September 2010 and we have been pleased with the level of interest. We had strict criteria with regard to potential visitors, being selective from the perspective that any partner should have ample capability to develop these assets. Work on processing and geophysical interpretation continued throughout resulting in repeat visits from a number of parties.

Whilst the negotiations have taken longer than anticipated, a number of attractive options have been presented to date and the discussions are well advanced. We look forward to providing an update on our activities in this regard in the near future and will release any material news without delay.

Chief executive Officer’s Report

Our work this year has encompassed a range of activities and we, as a team, are pleased with our progress to date. Along with the tangible advances we have made on a technical level, we feel that Chariot has enjoyed a noticeable shift in recognition and we look forward to continuing on this trajectory. With the successful fundraising in April 2011 and our asset development, we feel we have put the Company in a strong position to take the further steps required to execute our plans over the coming months.

exploratIon progress – contInuIng to buIld valueDuring the year under review, we continued to develop our hydrocarbon charge story across our identified prospect inventory. A great deal of work has been done on the charge history of the basins and this has further substantiated that Chariot’s licences are situated within the oil window of multiple sourcing horizons. The prospect portfolio includes several large structural traps and combination structural/stratigraphic closures all of which are expected to be oil prone. A key part of this has been the excellent quality 3D seismic data which provides evidence of these large structures along with direct hydrocarbon indicators (“DHIs”) in the Albian target level. We recently announced a further four prospects identified in the Barremian horizons in our Southern licence 2714A, along with a further upgrade of our mega structure, Nimrod. This led to a further resource update (the third over the past 12 months) taking Chariot’s gross mean unrisked prospective resource total to 15.5 Bbbls and we are pleased to have multiple play types within our prospect inventory.

paul welchChieF exeCutive OFFiCeR

“we are excIted about our future and the future of namIbIa’s presence In the oIl and gas world – we contInue to look to fulfIl our ambItIons as we embark on our next phase”



Should a discovery be made not only will Chariot’s shareholders benefit but Namibia’s economy will be significantly and positively impacted as well. We look forward to generating and sharing any success with the country as a whole.

pursuIng other opportunItIesAs our drilling date gets closer our main focus is on our current portfolio, but we continue to look to augment our assets with new opportunities. Our technical team continues to evaluate new projects and as our Namibian portfolio develops our selection process evolves too, as we seek to add ventures that would be a suitable fit. Adding value is at the core of this strategy and strict criteria are adopted as we look to broaden the portfolio in the most appropriate way.

outlookI would like to take this opportunity to thank our staff and shareholders for all of their work and support over the past 12 months.

We are excited about our future and the future of Namibia’s presence in the oil and gas world as we continue to fulfil our ambitions. This is a pivotal time in Chariot’s existence and I look forward to updating you with our progress throughout the year.

paul welchChieF exeCutive OFFiCeR

drIllIng to commenceOur commitment to drill remains on target for Q4 2011 and we look forward to commencing our drilling campaign within this period. Our identified targets in the North (Tapir) and the South (Nimrod) will be the start of this programme and we will seek to extend this campaign into 2012 and beyond with further wells.

Naturally, drilling our first well will be a critical point and all of our efforts to date have been to achieve this. It will be the beginning of the next stage in Chariot’s development. Our wells will be the second and third wells to be drilled “off shelf” in the deep water offshore Namibia. Drilling “off shelf” is key as it notably differentiates our exploration efforts from those undertaken “on shelf” in the 1990s. Previous drilling was carried out without the benefit of the state of the art 3D seismic technology that we have today. As a result we anticipate our “hit rate” to be significantly higher than that of previous explorers in the area. However, this is the beginning of a longer term programme for Chariot because in frontier areas, with Chances of Success ranging between 20–25%, we envisage drilling a further four to five wells to fully test the area.

operatIng In namIbIaIt is a continuing pleasure to do business in Namibia. We are very pleased to have been an early-entrant into the country, the prospectivity of which has since been realised with the deep water offshore acreage now fully licensed. Matthew Taylor, Julia Kemper and I were all involved in early exploration offshore Namibia from 2002 for another operator and we are excited to have the opportunity to complete what we started almost ten years ago. The oil and gas industry is broadening its horizons in looking for new oil and we believe that Namibia has the potential to be one of the most significant hydrocarbon provinces of the future.

SiGNiFiCANt PROGReSS mADe – POiSeD tO DRiLL FiRSt weLL


exploration Overview

Excellent reservoir quality sandstones in >

existing wellsNumerous play types. >

Namibia remains hugely under-explored due to the legacy of political history (offshore exploration did not get under way until independence in 1990) and exploration history (oil companies traditionally focused on the salt basin whilst frontier exploration such as in Namibia was almost entirely conducted on a “low investment” basis without 3D seismic control). The most recent “frontier” basin drilling in West Africa (Ghana and Sierra Leone), carried out with the benefit of 3D seismic control has been hugely successful and demonstrates that the geological fundamentals for hydrocarbon success can extend throughout the South Atlantic, including Namibia, and not just through the “salt basins”.

charIot Investment – now ready to reap the benefItsChariot has now set the stage, with the acquisition of very large 3D seismic surveys, for an effective drilling campaign offshore Namibia, identifying robust structural and stratigraphic traps which are ready to drill. This investment has also revealed the kind of prospect one hopes to find in less explored frontier basins – an undrilled super-giant structural trap – our Nimrod prospect.

our lIcencesChariot has a substantial acreage position offshore Namibia, which is held through our wholly owned subsidiary Enigma Oil & Gas Exploration (Pty) Limited, and totals 30,504 km² – the eighth largest acreage holding in all of offshore West Africa. It is this large acreage position which underpins the scale of the Chariot opportunity; in the event of success there is huge follow-on potential secured within the Company’s licence areas.

exploratIon hIstoryThe long-term need to find “new oil” and recent successes in new basins are driving the oil and gas industry to venture into frontier environments and Sub-Saharan Africa continues to be a focal area in this pursuit. Recent exploration success has now proven giant oil fields can exist outside of the traditional “salt basin” fairway – so far with exploration to the north in Ghana and Sierra Leone. But exploration drilling south of the salt basin remains very limited. This is despite the same fundamental geological qualities appearing to extend in this direction, south of the salt basin, through offshore Namibia and which include:

Oil prone source rocks – both thick and >

matureSurface oil slicks – evidence of hydrocarbon >

systemsHydrocarbon shows in previously drilled wells >

volume potential 2.6 Bbbls >

Located in the Namibe basin >

wD 0–2,750 m over block >

1,500 km > 2 3D seismic (2008/2009)Five prospects identified to >

date – wD at locations: 700–2,300 mtwo leads identified >

northern blocks

NAmiB iA

ANGOLA

BOtSwANA


Located in walvis basin >

wD 500–3,000 m >

3,000 km of 2D seismic >

(2008)Processing and interpretation >

completed march 2010three leads identified >

central blocks

NAmiB iA

ANGOLA

BOtSwANA


Located in the Orange basin >

wD 100–1,500 m >

3,000 km > 2 3D acquired in 2008/2009Petrobras farmed into Block >

2714A for a 50% interest11 prospects identified to date >

– wD at locations: 400–850 mmega structure (Nimrod) >

identified

southern blocks

NAmiB iA

ANGOLA

BOtSwANA

Summary of Licences in Namibia

“followIng our extensIve exploratIon programme, charIot has set the stage for an effectIve drIllIng campaIgn offshore namIbIa, IdentIfyIng robust structural and stratIgraphIc traps whIch are ready to drIll”



comprising marine shales developed over target sandstones. Older sandstones can suffer from some degradation in quality but it is notable that even these levels can contain good reservoirs; the Kudu field contains highly permeable sandstone even at a depth in excess of 4 km. In the Northern blocks there is the additional potential for Albo-Aptian carbonate reservoirs which have been proven to contain porous reservoirs in previous wells offshore Namibia.

The gross mean unrisked prospective resource potential Chariot has reported to date is for recoverable oil – there are no figures for gas included as the Company has identified oil prone source rocks which, as stated above, are in the oil generating window in the charge kitchens for identified prospects. As such, the Company expects to encounter oil as the primary phase in the event of a discovery. All of the targets identified and added to the prospect portfolio would be a commercial success in their own right.

explorIng for oIlThe main source rocks identified in the offshore Namibian basins (Namibe, Walvis, Lüderitz and Orange) are oil prone lacustrine sequences in the rift section and marine, oil prone shales in the Aptian and mid Cretaceous sections. These are proven to exist in the basins and are the principal source rocks for most discoveries to date in the South Atlantic region. The mapped source rock kitchens for our prospect areas are in the oil window and are at, or near, their maximum maturity present day. This means that we should expect a liquid charge to our traps and, in the event of discovery, oil is the expected primary phase. It is worth noting that the Kudu Field is dry gas located within the Orange Delta – one of Africa’s largest rivers, which has buried the believed rift source rock to more than 5 km in depth where it is highly “overcooked” and gas-generating as a result of this anomalously deep burial. In contrast Chariot’s acreage is north of the main Orange Basin depo-centre and thus has a significantly shallower (some 2 km less) charge kitchen which is currently in the oil window.

Good quality reservoirs have been found in several wells offshore Namibia at a variety of stratigraphic levels. The reservoir sequences are primarily sandstones, ranging from aeolian dunes through deltaic sand sheets to deep marine turbidites with seals generally

15.5BBBLSOF iDeNtiFieD ReSOuRCe POteNtiAL

southern blocks: nImrod prospect

New super-giant prospect “Nimrod” recognised; the benefit of exploring in frontier acreage


exploration Overview continued

Also mapped on the 3D survey is the Zamba lead which is formed by a large fault block overlain by Lower Cretaceous carbonates that appear to be draped by Aptian age salt. This structure is analogous to the giant discoveries (for example the Tupi Field) being made in the Brazilian Santos basin which is conjugate to this segment of the Namibian margin extending as it does north of the Walvis Ridge. Zamba lies on the shelf in relatively shallow water and is a very exciting lead but its character – carbonate reservoir below salt – means it cannot be de-risked with seismically derived DHIs making it more risky than the Tapir trend.

Chariot is in the process of securing a rig to drill the first well. Due to the water depths involved in the area, a DP Drillship will be used.

northern blocksThe Northern blocks, 1811A&B (100% Chariot), are situated to the north of the Walvis ridge and are conjugate to the Santos basin in Brazil. The existing inventory in this area consists of five prospects and two leads, with a total mean unrisked prospective resource potential of 2.631 Bbbls.

Of particular note within these blocks are the Tapir prospects which are formed by a rotated fault block over which are draped deep marine sediments (with mid Cretaceous source rocks at the base), interbedded with turbidite sandstone reservoirs at several mapped levels. On the rotated fault block itself, Albian carbonates form an additional target. The Tapir trend contains three separate prospects each commercial in its own right and success at one will significantly de-risk the other prospects plus additional leads. The Tapir trend will provide the first drilling target in the block.

to be present, both with a DHI in the Albian, and there is also a deeper Barremian sandstone target which will also be penetrated with the first exploration well.

A number of other structural prospects are mapped at the Albian level and these will be attractive follow-on targets in the event of success at Nimrod. Underlying the Nimrod prospect is a large basement arch which is progressively overstepped by Barremian sediments. Stratigraphic traps are formed in this position where sands are interbedded within shales or volcanics that can provide seal. This trapping configuration is believed to be the form of the giant Kudu field which is the same reservoir age and directly along trend. However the Barremian reservoir and source is much less deeply buried in the area of 2714A so better reservoir and oil (not gas) is expected in the 2714 block area.

The Southern licences are located in shallower water depths and as a result an older generation semi-submersible rig will be used.

southern blocksIn the Southern blocks, 2714A&B (50% partnership with Petrobras on 2714A) Chariot has identified 11 prospects over three objective horizons with an unrisked mean prospective resource estimated at 8.507 Bbbls (gross), further to extensive remapping and seismic attribute analysis. As with the Central blocks, with no salt layer to inhibit the seismic acquisition the resultant data set is of excellent quality and has been invaluable in the evaluation work to date.

Of special interest is the Nimrod prospect, the first drilling target in the area. As well as being the largest prospect with gross mean unrisked resource estimate of 4.6 Bbbls, the Chance of Success is also the highest at 25% due to the presence of a DHI over the large closure area which supports both the presence of a charge and the validity of the trap. The primary target, Albian deltaic sandstones, are identified by correlation to the nearest well in which excellent quality reservoir is present at this level. Two separate sands appear

prospective resource potential of 4.318 Bbbls have been identified to date in both structural and stratigraphic targets. These are very large targets and 3D seismic will be key in working these up into prospects. With no salt layer in this region, the 3D data should be of high clarity and capable of indicating the type of fluids contained within the objective horizons. This is similar to what has been achieved in our Northern and Southern areas.

central blocksThe Central blocks, 2312A&B and the Northern halves of 2412A&B (all 100% Chariot) lie adjacent to a shelf area with proven thick deltaic sands and seismic mapping which indicates that these have been reworked via canyon systems into the Central blocks themselves. Here the sands appear to be deposited as extensive submarine fan and channel complexes in the Upper Cretaceous section, likely to be interbedded with deep marine shales forming a good seal.

Our seismic data shows that there is a major rift section underlying, expected to contain synrift source rocks which are in the oil window present day. Detailed source rock and kitchen mapping continues and a sizeable 3D seismic programme of 2,500 km² is being planned over areas of specific interest. Three leads with an unrisked mean



Key Objective: Drilling the Tapir North prospect in Q4 2011, further de-risk other targets.

Key Objective: To drill the Nimrod prospect in 2012.

Key Objective: Commence seismic acquisition in Q4 2011, completion by Q1 2012, processing through Q2 2012.


1 adonIs pouroulIsNON-exeCutive ChAiRmANAdonis, one of the founders of Chariot and Enigma, is an entrepreneur whose expertise lies in the discovery and exploration of natural resources. Adonis is also Chairman of Petra Diamonds Ltd., a pan-African diamond mining company which he founded and listed on London’s AIM market in 1997. Petra is now the world’s largest quoted pure play diamond miner. He has been influential in the admissions to trading of a number of other companies onto AIM and has been instrumental in structuring and raising funds to help finance early stage exploration and mining projects across Africa.

2 paul welchChieF exeCutive OFFiCeRPaul has extensive oil and gas industry experience having worked for Shell International for 12 years, followed by a further nine years with two independent companies; Hunt Oil and Pioneer Natural Resources. He held a wide variety of engineering, management and business development positions throughout Shell’s global operations across all of its core regions of exploration, development and production. At Hunt Oil, Paul evaluated exploration and production opportunities across its international asset portfolio and more recently he worked in Northern Africa with Pioneer, responsible for producing assets in Tunisia. Paul was instrumental in significantly increasing the production profile and overseeing new business development in Algeria, Libya, Morocco, Egypt and Iraq.

3 james burgessCOmmeRCiAL DiReCtORJames set up Everett Financial Management Limited in 1992 and sold it in 2003. Since then, he has been involved in numerous fund raisings and admissions to trading on AIM of a number of companies in the energy and resource sectors operating largely in the African continent. Prior to Everett Financial Management Limited, James worked with Hoare Govett which is now part of RBS.

Board of Directors

4

1 5

2 6

3 7



6 george canjarNON-exeCutive DiReCtORGeorge has 30 years of experience in the oil industry and began his career at Shell having graduated with a Bachelor of Science in Geologic Engineering from the Colorado School of Mines. He subsequently worked with Carrizo Oil & Gas as Vice President of Exploration and Development and more recently he was Executive Vice President and Chief Operating Officer for Davis Petroleum Corporation. His career has spanned a broad spectrum of the E & P sector involving all petroleum engineering and exploration disciplines as well as a variety of corporate activity. His expertise lies in deal structuring, portfolio development, risk analysis, and strategic modelling in addition to being the operational catalyst for bringing successful projects to first production.

7 phIlIp loaderNON-exeCutive DiReCtORPhilip has over 27 years of experience in the upstream oil and gas industry and his core strengths lie in international exploration and business development. He is currently Senior Vice President of Exploration for Mubadala Oil & Gas, accountable for its exploration inventory across the Eastern Hemisphere. Philip began his career as a geophysicist in 1983, and throughout his career has evaluated numerous opportunities across the globe. He has a wealth of experience in Africa, having made discoveries in Tunisia, Algeria and Equatorial Guinea. Prior to Mubadala, Philip worked for Anadarko Petroleum Corporation for over ten years, latterly as Vice President of International Exploration.

4 heIndrIch ndumeCOuNtRy DiReCtOR NAmiBiAHeindrich is a Namibian national with mining exploration experience throughout sub-Saharan Africa. Heindrich has played a unique role within the development of Namibia’s mining and energy strategies, including acting as National Energy Council Secretary and World Energy Council Representative for the Namibian Ministry of Mines and Energy. Heindrich was one of the founding shareholders of Chariot.

5 robert sInclaIrNON-exeCutive DiReCtORRobert is managing director of the Guernsey-based Artemis Fiduciaries and a director of a number of investment fund management companies and investment funds associated with Artemis Fiduciaries. Robert is chairman of Schroder Oriental Income Fund Limited and a director of ING UK Real Estate Income Trust Limited; chairman of its audit committee. He is a Fellow of the Institute of Chartered Accountants in England and Wales and is resident in Guernsey.


Senior management team

1 matthew taylorDiReCtOR OF exPLORAtiONMatthew is a petroleum geologist who has worked in the industry for nearly 30 years. He began his career with BP Exploration in 1980 and subsequently held senior geologist posts with BHP Petroleum and Triton Energy. Further to this Matthew consulted and advised a range of clients including Chevron, Dana Petroleum and Marathon Oil on New Venture projects, both identifying targets and providing detailed prospect and basin evaluations and opportunity assessments. Subsequent to this, he played a major role in the acquisition of exploration acreage in Namibia, Oman, Senegal, Togo and Western Europe working for Hunt Oil.

2 julIa kemperPRiNCiPAL GeOPhySiCiStJulia has more than 25 years of experience in the oil and gas industry having worked as a geophysicist for both BP and Shell and more recently as senior geophysicist with Hunt Oil and MND Exploration & Production. She has been involved in all aspects of geophysical work throughout her career and has been a formative part of, and had key roles in, New Venture divisions. Julia specialises in the development, interpretation and evaluation of 2D and 3D seismic programmes as well as the assessment of new opportunities. She has a long track record working in Namibia and her knowledge of the country contributed to securing the offshore acreage for Hunt Oil in 2005.

3 martIn rIchardsDeveLOPmeNt eNGiNeeRiNG mANAGeRMartin has worked in the oil and gas industry for over 30 years and has an in-depth experience of all aspects of subsurface management, reservoir engineering and petroleum economics. He has worked as both a Chief and Senior Reservoir Engineer for a variety of companies, including Petro-Canada, Suez Oil Company, Deminex and Mobil. He has particular expertise in operational and functional reservoir management, leading multi-disciplinary reservoir studies, asset management and reserves reporting. Martin has had numerous exploration and drilling successes to date.

1

2

3

5

4

6



6 martIn groakChieF FiNANCiAL OFFiCeRMartin has over 25 years of experience in financial and general management and has worked with a range of quoted companies including Indago Petroleum, Chaco Resources (now Amerisur Resources), and The Tanfield Group Plc. He has worked worldwide in a variety of managerial roles – as CFO and CEO – specialising in strategic planning, international business, management information systems, IPOs and M&A activity. He graduated from London University/Queen Mary College with a Bachelor degree in Economics and qualified as a chartered accountant in 1977 with Binder Hamlyn. Martin is also a member of the Institute of Directors.

4 alex greenCOmmeRCiAL mANAGeRAlex has over 20 years of experience in the business development, commercial and financial sectors of the upstream oil and gas industry. Alex began his career as a Petroleum Economist for Clyde Petroleum where he was responsible for developing their corporate business model and evaluating acquisition opportunities. He subsequently worked as a Risk Analyst for BG Plc and moved to Commercial Manager and then Group Economics Manager for Paladin Resources. At Paladin, Alex led successful joint venture negotiations and ran the financial and commercial analysis within their business development team. He also played a key role in developing internal and external financial models.

5 Ian thomasSeNiOR StAFF GeOPhySiCiStIan has a strong technical and commercial background with 29 years of global experience as a geophysicist. His geological and geophysical skills have been applied across a diverse range of assets and he has identified, evaluated and successfully promoted business opportunities in Venezuela, Colombia, North Africa, Kazakhstan and the UK. He started his career with Cities Service, subsequently working for RTZ, Elf and Ultramar, with key roles in the formation of successful farm-in groups, bidding rounds, focused interpretations and New Venture analysis. In 1992 he moved to Nimir where he built up their worldwide exploration and production portfolio and from there joined Silverstone Energy (now Bridge Energy) which made three commercial discoveries during his tenure.


Directors’ Remuneration Report

RemuneRation committeeThe Group’s Remuneration Committee comprises of Adonis Pouroulis (Chairman), Robert Sinclair, George Canjar and Philip Loader.

The purpose of the Remuneration Committee is to:make recommendations to the Board on an overall remuneration policy for Executive Directors and other senior executives in >

order to retain, attract and motivate high quality executives capable of achieving the Group’s objectives; anddemonstrate to shareholders that the remuneration of the Executive Directors of the Group is set by a committee whose >

members have no personal interest in the outcome of their decision, and who will have due regard to the interests of the shareholders.

PRoceduRes foR develoPing Policy and fixing RemuneRationThe Board fixes executive remuneration and ensures that no Director is involved in deciding his or her own remuneration. The Committee is authorised to obtain outside professional advice and expertise.

The Remuneration Committee is authorised by the Board to investigate any matter within its terms of reference. It is authorised to seek any information that it requires from any employee.

details of the RemuneRation PolicyThe basic fees to be paid to the Directors are recommended by the Remuneration Committee, and are subject to approval by the full Board.

diRectoRs’ seRvice agReementsAll service agreements for Directors are terminable by either party on six months notice.

diRectoRs’ RemuneRationThe following remuneration comprising Directors’ fees and benefits in kind, were payable to Directors during the year:

Fees/basic salary

US$’000

Performance cash bonus

US$’000

Benefits inkind(1)

US$’000

Pensioncontribution(2)

US$’000

2011 total

us$’000

2010 Total

US$’000

P Welch 431 375 2 – 808 189

K Broger(5) – – – – – 240

J Burgess 232 118 1 12 363 272

A Pouroulis 69 – – – 69 71

P Kidney(4) 103 – – – 103 275(3)

R Sinclair 52 – – – 52 20

N Leighton(5) – – – – – 14

H Ndume 150 78 6 – 234 156

G Canjar 63 – – – 63 –

P Loader 38 – – – 38 –

Total 1,138 571 9 12 1,730 1,237

1 Benefits typically comprise private health care arrangements and permanent health insurance.2 Pension costs in 2011 in relation to Directors were US$12,000 (2010: US$4,000).3 Includes US$204,000 in prior year for additional services including work on the HRT contract dispute.4 Directors who resigned during the year.5 Directors who resigned during the previous year.




diRectoRs’ inteRests in shaResThe Directors who held office at the end of the year had the following interests in the issued share capital of the Group.

2011 2010

P Welch 250,000 –

J Burgess 2,250,000 2,250,000

A Pouroulis(1) 22,015,971 22,835,971

R Sinclair – –

H Ndume(2) 21,376,171 21,376,171

P Loader – –

G Canjar – –

Total 45,892,142 46,462,142

1 Shares are held by Westward Investments Limited a company which is owned by a discretionary trust of which A Pouroulis is one of a number of beneficiaries.2 Shares are held by Protech Namibia (Pty) Limited of which H Ndume is the sole registered shareholder.

shaRe oPtionsThe Group operates a share option scheme pursuant to which Directors and senior executives may be granted options to acquire ordinary shares in the Company at a fixed option exercise price. During the year, options were granted over a total of 500,000 ordinary shares.

Further details of the above share option scheme and long-term incentive plan can be found in note 20.

diRectoRs’ shaRe oPtionsThe Directors who held office at the end of the financial year had the following interests in the share option scheme:

Options held at 1 March

2010

Options granted

in the year

Options held at 28 February

2011Exercise price (p)

Exercisable from

Expiry date

P Welch 3,000,000 – 3,000,000 26.00 13/11/2011 13/11/2019

J Burgess 200,000 – 200,000 130.00 13/05/2010 13/05/2018

A Pouroulis 100,000 – 100,000 130.00 13/05/2010 13/05/2018

R Sinclair 100,000 – 100,000 130.00 13/05/2010 13/05/2018

H Ndume 250,000 – 250,000 130.00 13/05/2010 13/05/2018

G Canjar – 250,000 250,000 115.00 01/06/2012 01/06/2020

P Loader – 250,000 250,000 119.00 18/08/2012 18/08/2020

Total 3,650,000 500,000 4,150,000

No Director options were exercised during the year. The interests of the Directors to subscribe for ordinary shares have not changed since the year end.

significant shaReholdeRs

Westward Investments Limited 12.1%

Citigroup 12.0%

Protech Namibia (Pty) Limited 11.8%

Generali 5.1%

Baillie Gifford 5.0%

Approximate percentage of ordinary shares not in public hands: 25%

By order of the Board

adonis PouRoulisChAiRMAn OF ThE REMUnERATiOn COMMiTTEE


Social Responsibility Statement

The Group supports the growing awareness of social, environmental and ethical matters when considering business practices. This statement provides an outline of the policies in place that guide the Group and its employees when dealing with social, environmental and ethical matters in the workplace.

code of conductThe Group maintains and requires the highest ethical standards in carrying out its business activities in regard to dealing with gifts, hospitality, corruption, fraud, the use of inside information and whistle-blowing. The Group has a zero tolerance policy towards bribery.

equal oPPoRtunity and diveRsityThe Group promotes and supports the rights and opportunities of all people to seek, obtain and hold employment without discrimination. It is our policy to make every effort to provide a working environment free from bullying, harassment, intimidation and discrimination on the basis of disability, nationality, race, sex, sexual orientation, religion or belief.

emPloyee WelfaReThe Group aims to assist employees at all levels to improve their professional abilities and to develop their skills.

The Group will practice manpower and succession planning in regard to the number and type of personnel resources that will be required in the future. Individual career progression activities are developed with this in mind.

Joint ventuRe PaRtneRs, contRactoRs and suPPlieRsThe Group is committed to being honest and fair in all of its dealings with partners, contractors and suppliers. The Group has a policy to provide clarity and protection, within its terms of business, to ensure the delivery and receipt of products and services at agreed standards. Procedures are in place to ensure that any form of bribery or improper behaviour is prevented from being conducted on the Group’s behalf by joint venture partners, contractors and suppliers. The Group also closely guards information entrusted to it by joint venture partners, contractors and suppliers, and seeks to ensure that it is never used improperly.

oPeRating ResPonsibly and continuous imPRovementThe Group is committed to a proactive quality policy to ensure that stakeholders are satisfied with the Group’s results and the way in which the business operates and to promote continuous improvement in the overall operation of the Group. In pursuit of these objectives, the Group will use recognised standards and models as benchmarks for its management system.

enviRonmental PolicyThe Group adopts an environmental policy which sets standards which meet or exceed industry guidelines and host government regulations. This is reviewed on a regular basis.

As part of the environmental assessment during the time of seismic acquisition, Chariot employed marine mammal observers to travel on board the seismic vessels. These observers were able to compile marine mammal and bird count statistics which will assist in the preparation of future environmental impact assessments.

Social impact will also form part of these assessments and preliminary work in this area will consider the impact on the Namibian coastline in the event that it becomes a petroleum province. Wherever we operate we will develop, implement and maintain management systems for sustainable development that will strive for continual improvement.

The Group is committed to maintaining and regularly reviewing its Health and Safety and Environmental (HSE) policies.




Corporate Governance Statement

the combined codeChariot Oil & Gas Limited’s shares are admitted to trading on AIM and as such, Chariot is not subject to the requirements of the Combined Code on corporate governance, nor is it required to disclose its specific policies in relation to corporate governance. The Directors, however, support high standards of corporate governance and will progressively adopt best practices in line with the Combined Code on Corporate Governance, so far as is practicable.

the boaRd of diRectoRs oPeRates Within the fRameWoRk descRibed beloW

ThE wORkinGS OF ThE BOARD AnD iTS COMMiTTEES

the boaRd of diRectoRsThe Board meets frequently to consider all aspects of the Group’s activities. A formal schedule of matters reserved for the Board has been issued and approved and includes overall strategy and approval of major capital expenditure.

The Board consists of the Chairman, Chief Executive Officer, Executive Directors and Non-Executive Directors. All Directors have access to the advice and services of the Company Secretary and the Group’s professional advisers. Philip Loader and George Canjar are independent Directors.

RemuneRation committeeThe Remuneration Committee comprises of Adonis Pouroulis (Chairman), George Canjar, Philip Loader and Robert Sinclair. Its terms of reference are discussed in the Remuneration Report.

audit committeeThe Audit Committee comprises of Robert Sinclair (Chairman), George Canjar, Philip Loader and Adonis Pouroulis. It meets at least twice each year and at any other time when it is appropriate to consider and discuss audit and accounting related issues. The Audit Committee is responsible for monitoring the quality of any internal controls and for ensuring that the financial performance of the Group is properly monitored, controlled and reported on. It also meets the Group’s auditors and reviews reports from the auditors relating to accounts and any internal control systems.

nomination committeeThe Nomination Committee comprises of Adonis Pouroulis (Chairman), George Canjar, Philip Loader and Robert Sinclair. The committee is responsible for reviewing the structure, size and composition of the Board, preparing a description of the role and capabilities required for a particular appointment and identifying and nominating candidates to fill Board positions, as and when they arise.

Relations With shaReholdeRsCommunications with shareholders are given a high priority by the Board of Directors who take responsibility for ensuring that a satisfactory dialogue takes place. Directors plan to meet with the Company’s institutional shareholders following the announcement of interim and final results and at other appropriate times. The Directors are also in regular contact with stockbrokers’ analysts. The Company has developed a website containing investor information to improve communications with individual investors and other interested parties.

inteRnal contRolThe Directors acknowledge their responsibility for the Group’s system of internal controls and for reviewing its effectiveness. The system of internal control is designed to safeguard the Group’s assets and interests and to help ensure accurate reporting and to help ensure compliance with applicable laws and regulation. Despite the inherent limitations in any system of internal control the Board considers that the Group’s existing systems operated effectively throughout the year.


Report of the Directors

The Directors present their report together with the audited financial statements for the year ended 28 February 2011.

Results and dividendsThe results for the year are set out on page 23.

The Directors do not recommend payment of a final dividend (2010: nil).

PRinciPal activityThe principal activity of the Group is that of oil and gas exploration.

going conceRnThe Directors consider that the Group has adequate financial resources to enable it to continue in operation for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Financial Statements.

business RevieW & PRinciPal Risks and unceRtaintiesA full review of the Group’s activities during the year, recent events, expected future developments and principal risks and uncertainties is contained within the Chairman’s Statement on page 4 to 5. These pages form part of this Directors’ Report.

key PeRfoRmance indicatoRs:The key performance indicators of the Group are as follows:

2011 2010

Cash at bank at 28 February (US$’000) 9,222 16,226

Exploration expenditure for the 12 months ended 28 February (US$’000) 4,078 17,630

financial instRumentsDetails of the use of financial instruments by the Group are contained in note 19 to the financial statements.

diRectoRsThe Directors of the Company during the year were:

Paul Welch (CEO)Peter Kidney (Chairman) Resigned 2 September 2010James Burgess (Executive Director)Heindrich Ndume (Executive Director)Adonis Pouroulis (Chairman)Robert Sinclair (Non-Executive Director)George Canjar (Non-Executive Director) Appointed 10 May 2010Philip Loader (Non-Executive Director) Appointed 18 August 2010

Details of Directors’ interests in shares and share options are disclosed in the Directors’ Remuneration Report on pages 16 to 17.

diRectoRs’ ResPonsibilitiesThe Directors are responsible for preparing the Directors’ Report and the financial statements for the Group in accordance with applicable Guernsey law and regulations.

Guernsey legislation requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that year.

International Accounting Standard 1 requires that the financial statements present fairly for each financial year the Group’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transaction, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s “Framework for the preparation and presentation of financial statements”. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS. A fair presentation also requires the Directors to:

consistently select and apply appropriate accounting policies; >

present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable >

information;




provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to >

understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; andPrepare the financial statements on a going concern basis unless, having assessed the ability of the Group to continue as a going >

concern, management either intends to liquidate the entity or to cease trading, or have no realistic alternative to do so.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements comply with The Companies (Guernsey) Law 2008. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

auditoRsAll of the current Directors have taken all the steps they ought to have taken to make themselves aware of any information needed by the Company’s auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.

BDO LLP were appointed as auditors of the Company by the Directors. BDO LLP have expressed their willingness to continue in office and a resolution to reappoint them as auditors will be proposed at the next general meeting.

by oRdeR of the boaRd

aRtemis secRetaRies ltdSECRETARy27 May 2011


independent Auditors’ Report to the Members Of Chariot Oil & Gas Limited

We have audited the financial statements of Chariot Oil & Gas Limited for the year ended 28 February 2011 which are set out on pages 23 to 26. These financial statements have been prepared under the historical cost convention and in accordance with the accounting policies set out on page 27 to 30.

This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work is undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

ResPective ResPonsibilities of the diRectoRs and auditoRsAs described in the Statement of Directors’ Responsibilities within the Directors’ Report the Company’s Directors are responsible for the preparation of the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with The Companies (Guernsey) Law, 2008. We also report to you if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law is not disclosed.

We read the Directors’ Report and consider the implications for our report if we become aware of any apparent misstatements within it.

basis of oPinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

oPinionIn our opinion the financial statements:

give a true and fair view, in accordance with International Financial Reporting Standards as adopted by the European Union, of the >

state of the Company’s affairs as at 28 February 2011 and of its loss for the year then ended; andhave been properly prepared in accordance with The Companies (Guernsey) Law, 2008. >

bdo llPChARTERED ACCOUnTAnTS AnD REGiSTERED AUDiTORSLondon27 May 2011



for the year ended 28 February 2011

Consolidated Statement of Comprehensive Income

Note

Year ended 28 February

2011 US$’000


2010 US$’000

Share-based payments (2,379) (195)

Other administrative expenses (4,967) (3,028)

Total administrative expenses (7,346) (3,223)

Loss from operations 4 (7,346) (3,223)

Finance income 52 97

Loss for the year before taxation (7,294) (3,126)

Taxation expense 9 – –

Loss for the year attributable to the equity holders of the parent (7,294) (3,126)

Other comprehensive income:

Exchange differences on translating foreign operations – (56)

Total comprehensive income attributable to the equity holders of the parent (7,294) (3,182)

Loss per ordinary share – basic and diluted 10 US$(0.05) US$(0.02)

All amounts relate to continuing activities.

The notes on pages 27 to 40 form part of these financial statements.



Consolidated Statement of Changes in Equity

Share capital

US$’000

Share premium US$’000

Contribution equity

US$’000

Share-based payments

reserve US$’000

Exchange reserve

US$’000

Retained losses

US$’000

Total attributable to equity holders

of the parent US$’000

As at 28 February 2009 2,802 133,209 – 4,405 (1,185) (31,431) 107,800

Total comprehensive income for the year – – – – (56) (3,126) (3,182)

Share-based payments – – – 919 – – 919

Transfer of reserves due to lapsed options – – – (368) – 368 –

As at 28 February 2010 2,802 133,209 – 4,956 (1,241) (34,189) 105,537

Total comprehensive income for the year – – – – – (7,294) (7,294)

Issue of capital 55 2,151 – (123) – – 2,083

Share-based payments – – 796 1,583 – – 2,379

Transfer of reserves due to lapsed warrants and options – – – (1,505) – 1,505 –

Transfer of reserves due to exercised warrants and options – – – (1,633) – 1,633 –

As at 28 February 2011 2,857 135,360 796 3,278 (1,241) (38,345) 102,705

The following describes the nature and purpose of each reserve within owners’ equity.

Share capital Amount subscribed for share capital at nominal value.Share premium Amount subscribed for share capital in excess of nominal value.Contribution equity Amount representing equity contributed by the shareholders.Share-based payments reserve Amount representing the cumulative charge recognised under IFRS2 in respect of share options

and LTIP schemes.Retained earnings Cumulative net gains and losses recognised in the financial statements.Exchange Reserve Foreign exchange differences arising on translating into the reporting currency.

The notes on pages 27 to 40 form part of these financial statements




at 28 February 2011

Consolidated Statement of Financial Position

Note

28 February 2011

US$’000

28 February 2010

US$’000

Non-current assets

Exploration and appraisal costs 11 92,661 88,582

Property, plant and equipment 12 399 486

Total non-current assets 93,060 89,068

Current assets

Trade and other receivables 13 1,041 723

Cash and cash equivalents 14 9,222 16,226

Total current assets 10,263 16,949

Total assets 103,323 106,017

Current liabilities

Trade and other payables 15 618 480

Total liabilities 618 480

Net assets 102,705 105,537

Capital and reserves attributable to equity holders of the parent

Share capital 16 2,857 2,802

Share premium account 135,360 133,209

Contributed equity 796 –

Share-based payments reserve 3,278 4,956

Retained loss (38,345) (34,189)

Foreign Exchange Reserve (1,241) (1,241)

Total equity 102,705 105,537

The financial statements were approved by the Board of Directors and authorised for issue on 27 May 2011.

AdoniS PoUroUliSChAIRmAN




Consolidated Cash Flow Statement


2011 US$’000


2011 US$’000


2010 US$’000


2010 US$’000

Loss for the year before taxation (7,294) (3,126)

Finance income (52) (97)

Finance expense – –

Depreciation 61 11

Foreign exchange differences (15) (189)

Share-based payment expense 2,379 195

2,373 (80)

Net cash flow from operating activities before changes in working capital (4,921) (3,206)

Increase in trade and other receivables (318) (601)

Increase/(decrease) in trade and other payables 138 (7,892)

Net cash outflow from operating activities (5,101) (11,699)

Investing activities

Finance Income 52 97

Payments in respect of property, plant and equipment (148) (403)

Payments in respect of intangible assets (3,906) (16,847)

Proceeds in respect of intangible assets – 16,039

Cash outflow used in investing activities (4,002) (1,114)

Financing activities

Issue of ordinary share capital 2,084 –

Net cash flow from financing activities 2,084 –

Net decrease in cash and cash equivalents in the year (7,019) (12,813)

Cash and cash equivalents at start of year 16,226 28,850

Effect of foreign exchange rate changes on cash and cash equivalents 15 189

Cash and cash equivalents at end of year (note 14) 9,222 16,226






Notes forming part of the financial statements

1 GenerAl inFormAtionChariot Oil & Gas Limited is a Company incorporated and domiciled in Guernsey with registration number 47532. The address of the registered office is Trafalgar Court, Admiral Park, St Peter Port, Guernsey, GY1 2JA. The Company’s administrative & head office is in Guernsey. The nature of the Company’s operations and its principal activities are set out in the Director’s report and in the Review of Operations and the Financial Review.

The functional and presentational currency of the Group is US Dollars.

2 AccoUntinG PolicieSBASiS oF PrePArAtionThe financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations), as issued by the International Accounting Standards Board (IASB), as adopted by the European Union.

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 concernThe Directors are of the opinion that the Group has adequate financial resources to enable it to undertake its planned programme of exploration and appraisal activities over the forthcoming 12 months.

new AccoUntinG StAndArdSThe following new standards and amendments to standards are mandatory for the first time for the Group for financial year beginning 1 March 2010. Except as noted, the implementation of these standards is not expected to have a material effect on the Group.

International Accounting Standards (IAS/IFRS) Effective date

IAS 27 Amendment – Consolidated and Separate Financial Statements 1 July 2009

IFRS 3 Revised – Business Combinations 1 July 2009

IAS 39 Amendment – Financial Instruments: Recognition and Measurement: Eligible Hedged Items 1 July 2009

IFRS 2 Amendment – Group Cash-settled Share-based Payment Transactions 1 January 2010

Improvements to IFRSs (2009) The improvements in this Amendment clarify the requirements of IFRSs and eliminate inconsistencies within and between Standards

Generally 1 January 2010

IFRIC 17 Distributions of Non-cash Assets to Owners 1 January 2010

IFRIC 18 Transfer of Assets from Customers 1 January 2010

IFRIC 9/IAS 39 Amendment – Embedded Derivative 1 January 2010

IFRIC 16 Hedges of a Net Investment in a Foreign Operation 1 January 2010

IAS 32 Amendment – Classification of rights issues 1 February 2010

No other IFRS issued and adopted but not yet effective are expected to have an impact on the Group’s financial statements.


Notes forming part of the financial statements continued

(ii) Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these financial statements which have not been adopted early:

Standard Description Effective date

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

IFRS 1 Amendment – First Time Adoption of IFRS 1 July 2010

IAS 24 Revised – Related Party Disclosures 1 January 2011

IFRIC 14 Amendment – IAS 19 Limit on a defined benefit asset 1 January 2011

IFRS 7* Amendment – Transfer of financial assets 1 July 2011

IFRS 1* Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters 1 July 2011

Improvements to IFRSs (2010)* 1 January 2011

IAS 12* Deferred Tax: Recovery of Underlying Assets 1 January 2012

IFRS 9* Financial instruments 1 January 2013

IFRS 13* Fair Value Measurement 1 January 2013

IFRS 12* Disclosure of Interests in Other Entities 1 January 2013

IFRS 11* Joint Arrangements 1 January 2013

IFRS 10* Consolidated Financial Statements 1 January 2013

* Not yet endorsed by European Union.

The Group has not yet assessed the impact of IFRS 9. Except for the amended disclosure requirements of IAS 24 (the above revised standards), amendments and interpretations are not expected to materially affect the Group’s reporting or reported numbers.

intAnGiBle Fixed ASSetSThe Group applies the full-cost method of accounting under which all expenditure relating to the acquisition, exploration, appraisal and development of oil and gas interests, including an appropriate share of directly attributable overheads, is capitalised within cost pools. The Board regularly reviews the carrying values of intangible assets and writes down capitalised expenditure to levels it considers to be recoverable based on economic modelling of the amounts. Costs pools are determined on the basis of geographical principles. The Group currently has one cost pool, relating to offshore exploration interests in Namibia.

tAxAtionIncome tax expense represents the sum of the current tax and deferred tax charge for the period.

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 balance sheet 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 substantially 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 income statement, 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.

2 AccoUntinG PolicieS continUed




ForeiGn cUrrencieSTransactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation, in which case exchange differences are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss shall be recognised in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss shall be recognised in profit or loss.

On consolidation, the results of overseas operations are translated into US Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

ProPertY, PlAnt And eqUiPment And dePreciAtionProperty, plant and equipment are stated at cost or fair value on acquisition less depreciation. 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.

Property, plant and equipment are depreciated using the straight line method over their estimated useful lives over a range of 2.5–5 years.

The carrying value of tangible fixed assets is assessed annually and any impairment charge is charged to the income statement.

The Group capitalised the portion of depreciation that relates to tangible fixed assets used in oil exploration activities are capitalised to exploration and appraisal costs.

leASeSRent paid on operating leases is charged to the income statement on a straight line basis over the term of the lease.

ShAre-BASed PAYmentSWhere equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated income statement 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 options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the consolidated income statement is charged with the fair value of goods and services received. Where the equity instruments granted for goods and services are capital in nature, the fair value is changed to the intangible asset value.

Where shares already in existence have already been given to employees from shareholders, the fair value of the shares transferred is charged to the consolidated statement of comprehensive income and recognised in reserves as Contribution Equity.

BASiS oF conSolidAtionWhere the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. 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.




FinAnciAl inStrUmentSThe Group’s financial assets consist of current account or short-term deposits at variable interest rates, loans and other receivables. Any interest earned is accrued and classified as interest. Trade and other receivables are stated initially at fair value and subsequently at amortised cost.

The Group’s financial liabilities consist of trade and other payables. All are non-derivative assets. The trade and other payables are stated initially at fair value and subsequently at amortised cost.

Joint ArrAnGementSJoint arrangements are those in which the Group has certain contractual agreements with other participants to engage in joint activities that do not create an entity carrying on a trade or business on its own. The Group includes its share of assets, liabilities, and cash flows in joint arrangements, measured in accordance with the terms of each arrangement, which is usually pro rata to the Group’s interest in the joint arrangement. The Group conducts its exploration, development and production activities jointly with other companies in this way.

criticAl AccoUntinG eStimAteS And JUdGementSThe 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. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

RECOvERAbILITY OF INTANGIbLE ASSETSUnder the full cost based method of accounting, the Group capitalises exploration costs until it is capable of determining whether its exploration efforts were successful and, if they were successful, whether any impairment charges may be required to bring the net book values of assets in line with their economic values.

ImPAIRmENT REvIEwThe carrying amounts of the Group’s assets are reviewed at each balance sheet date and, if there is any indication that an asset may be impaired, its recoverable amount is estimated. The recoverable amount is the higher of its net selling price and its value in use.

Estimates on impairment are limited to an assessment by the Directors of any events or changes in circumstance that would indicate that the carrying value of the asset may not be recoverable.

Any impairment loss arising from the review is charged to administrative expenses whenever the carrying amount of the asset exceeds its recoverable amount.

ShARE-bASED PAYmENTSDirectors’ best estimate of the valuations underlying the share-based payments are based on assumptions made by Directors using updated models previously prepared by external consultants. See note 20 for further details of these assumptions.





3 SeGmentAl AnAlYSiSIn the opinion of the Directors, the operations of the Group companies comprise one single class of business including oil and gas exploration. The Group operates in one geographic area, Namibia. The financial information presented reflects all the activities of this single business.

2011

exploration for oil and Gas

US$’000Unallocated

US$’000total

US$’000

Administrative expenses (456) (6,890) (7,346)

Loss after taxation (448) (6,846) (7,294)

Non-current assets 92,903 157 93,060

Total assets 93,644 9,679 103,323

Total liabilities (109) (510) (619)

2010

Exploration for Oil and Gas

US$’000Unallocated

US$’000Total

US$’000

Administrative expenses (1,629) (1,594) (3,223)

Loss after taxation (1,629) (1,497) (3,126)

Non-current assets 88,913 155 89,068

Total assets 89,158 16,859 106,017

Total liabilities (52) (428) (480)

4 loSS From oPerAtionS

28 February 2011

US$’000

28 February 2010

US$’000

Loss from operations is stated after charging/crediting:

Depreciation 61 11

Share-based payments – share option scheme 913 145

Share-based payments – long-term incentive scheme 670 50

Share-based payments from a contributed equity 796 –

Professional and consultancy fees 930 853

Auditors’ remuneration:

Fees payable to the Company’s auditors for the audit of the Company’s annual accounts 66 50

Audit of the Company’s subsidiaries pursuant to legislation 35 27

Total payable 101 77



5 leASeS commitmentS

28 February 2011

US$’000

28 February 2010

US$’000

Not later than one year 303 214

Later than one year and not later than five years 202 378

Later than five years – –

Total 505 592

6 emPloYeeS

28 February 2011

US$’000

28 February 2010

US$’000

Directors’ fees and emoluments 1,493 617

Wages and salaries – staff costs 2,060 719

Amounts paid to third parties in respect of Directors’ services 225 605

Pension costs 91 20

Total employee costs before non-cash items 3,869 1,961

Share-based payments expense (note 20) 2,379 195

Total employee costs 6,248 2,156

The above employment costs have the following amounts capitalised to exploration costs; included in the Directors’ fees is an amount of US$371,625 (2010: US$292,600), included in wages and salaries is US$876,130 (2010: US$121,000), included in the amounts paid to third parties in respect of Director’s services is US$ nil (2010: US$204,000) and the pension costs include an amount of US$22,983 (2010: nil).

Employee costs above include remuneration to Directors consisting of short-term benefits of US$1,718,000 (2010: US$1,222,000) and long-term benefits of US$12,000 (2010: US$4,000). Within the share-based payments expense, the portion relating to Directors is US$1,015,000 (2010: US$125,000); this includes US$435,000 which is the value attributable to the transfer of shares from Westward Investment Limited to Paul Welch (CEO).

7 FinAnce income And exPenSe

28 February 2011

US$’000

28 February 2010

US$’000

Bank interest receivable 52 97

Foreign exchange (loss)/gain (15) 189

Net finance gain 37 286




8 inveStmentThe Company’s directly* and indirectly** held wholly owned subsidiary undertakings at 28th February 2011 are:

Subsidiary undertaking Principal activity Country of incorporation

Enigma Oil and Gas Exploration (Pty) Limited** Oil and Gas exploration Namibia

Chariot Oil and Gas Investments (Namibia) Limited* Holding Company Guernsey

Chariot Oil and Gas Statistics Limited* Services Company UK

Enigma Petroleo Y Gas N.V** Holding Company Dutch Antilles

Enigma Oil and Gas Fourteen (Pty) Ltd** Holding Company Namibia

Enigma Oil and Gas Fifteen (Pty) Ltd** Holding Company Namibia

Enigma Oil and Gas Nineteen (Pty) Ltd** Holding Company Namibia

Enigma Oil and Gas Beta (Pty) Ltd** Holding Company Namibia

9 tAxAtionThe Company is tax resident in Guernsey, where corporate profits are taxed at zero per cent.

No taxation charge arises in Namibia as the Namibia subsidiary has recorded a taxable loss for the period.

FActorS AFFectinG the tAx chArGe For the cUrrent PeriodThe reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in Guernsey applied to profits for the year are as follows:


2011 US$’000


2010 US$’000

Tax reconciliation

Loss on ordinary activities for the year before tax (7,294) (3,126)

Loss on ordinary activities at the standard rate of corporation tax in Guernsey of 0% (2010: 0%) – –

Difference in tax rates in local jurisdictions at the applicable tax rate of 34% (2010: 35%) (217) (1,366)

Deferred tax effect not recognised 217 1,366

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 in Namibia total US$1,509,390 (2010: US$1,120,909). Deferred tax assets were not recognised as there is uncertainty regarding the timing of future profits against which these assets could be utilised.

nAmiBiAn tAxAtion And roYAltieSNORmAL TAxATIONThe petroleum income tax is payable annually at a rate of 34% (2010: 35%) of the taxable income received by or accrued to any person from a license area in connection with exploration, development or production operations in that area. Each license area is assessed separately and losses in one cannot be set off against profits in another.

ADDITIONAL PROFITS TAxIn addition to the above tax, annually there will be assessed an Additional Profits Tax (“APT”). Additional Profits Tax if payable, shall be payable at the end of each tax year on each petroleum license area and determined on the basis of the rate of return on the project. It is levied on the project’s net cash receipt, the after tax net cash flow achieved above certain defined tiers of threshold rate of return on the project. The first tier rate of APT is 25%.



10 loSS Per ShAreThe calculation of basic loss per ordinary share is based on a loss of US$7,294,000 (2010: loss of US$3,126,000) and on 144,330,066 ordinary shares (2010: 141,173,471), being the weighted average number of ordinary shares in issue during the year. Potentially dilutive options are detailed in note 20, however these are anti-dilutive as the Group reported a loss for the year consequently a separate diluted loss per share has not been presented.

11 exPlorAtion And APPrAiSAl coStS

Namibia Offshore US$’000

Cost and Net book value

At 1 march 2009 86,991

Additions 17,630

Farm-in proceeds (16,039)

At 28 February 2010 88,582

Additions 4,079

At 28 February 2011 92,661

12 ProPertY, PlAnt And eqUiPment

Fixtures, fittings and equipment year ended

28 February 2011

US$’000

Fixtures, fittings and equipment year ended

28 February 2010

US$’000

Cost

At 1 march 659 256

Additions 148 403

Disposals (2) –

At 28 February 805 659

Depreciation

At 1 march 173 47

Charge for the year* 233 126

At 28 February 406 173

Net book value 399 486

* US$173,000 (2010: US$115,000) of the depreciation charge relates to oil exploration activities and has been capitalised to exploration and appraisal costs during the year.




13 trAde And other receivABleS

28 February 2011

US$’000

28 February 2010

US$’000

Other receivables and prepayments 1,041 723

Maturity analysis of financial assets

Amounts due:

Under three months 629 284

Between three and six months – –

Over six months 100 95

729 379

14 cASh And cASh eqUivAlentS

28 February 2011

US$’000

28 February 2010

US$’000

Analysis by currency

Sterling balance 955 279

Namibian dollar balance 17 42

US dollar balance 8,250 15,905

9,222 16,226

15 trAde And other PAYABleS

28 February 2011

US$’000

28 February 2010

US$’000

Trade payables 350 139

Accruals 268 279

Amounts due to related parties – 62

618 480

Maturity analysis of financial liabilities

Amounts payable

Under three months 618 480

618 480

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.



16 ShAre cAPitAl

Authorised

28 February 2011

number

28 February 2011

US$’000

28 February 2010

Number

28 February 2010

US$’000

Ordinary shares of 1p each* 400,000,000 7,980 400,000,000 7,980

Allotted, called up and fully paid

28 February 2011

number

28 February 2011

US$’000

28 February 2010

Number

28 February 2010

US$’000

Ordinary shares of 1p each 144,833,578 2,857 141,173,471 2,802

* The authorised and initially allotted and issued share capital on admission (19 May 2008) have been translated at the historic rate of US$: GBP of 1.995. The shares issued since admission have been translated at the rates ruling on each transaction date.

Details of the ordinary shares issued during the year are given in the table below:

Date Description Price US$ No of shares

28 February 2009 and 2010 Opening Balance 141,173,471

20 May 2010 Exercise of warrants at £0.65 0.94 68,547

27 May 2010 Exercise of warrants at £0.65 0.94 274,191

4 June 2010 Exercise of options at £0.385 0.58 100,000

28 June 2010 Exercise of options at £0.385 0.58 100,000

29 June 2010 Exercise of warrants at £0.30 0.45 2,614,036

29 November 2010 Exercise of options at £1.30 2.08 200,000

1 December 2010 Issue of shares as part of LTIP 0.26 133,333

15 January 2011 Issue of shares as part of LTIP 0.27 150,000

1 February 2011 Exercise of options at £1.30 2.08 20,000

At 28 February 2011 144,833,578

17 cAPitAl commitmentSAt the balance sheet date the Group had no capital commitments (2010: US$1.05m).




18 relAted PArtY trAnSActionSDetails of Directors and key management personnel related party transactions are detailed below. The key management personnel are considered to be the Directors, see note 6 for details of their remuneration.

Westward Investments Limited (“Westward”) (a company of which Robert Sinclair is a Director and is owned by a discretionary >

trust of which Adonis Pouroulis is one of a number of beneficiaries) received administrative services from an employee of Chariot for which Westward Investments Limited paid Chariot US$23,053 for the services provided during the year. The amount outstanding is US$5,912 at year end. In 2010, Chariot paid Westward US$38,954 for the portion of time that this employee spent on Chariot.Westward Investments Limited transferred 291,667 of its shares held in the Company to Chariot Oil and Gas employees, >

including Paul Welch (CEO). This transfer of shares is treated as a capital contribution in the books of the Company and was valued at US$796,000.Pursuant to an agreement dated 1 October, 2007, Artemis Trustees Limited, a Company of which Robert Sinclair is a Director >

and ultimately a shareholder, was appointed by the Company to provide administration secretarial services. The fees paid for the period totalled US$142,651 (2010: US$177,145). The amount outstanding at the year-end was US$21,117 (2010: US$15,224).Chromex Mining PLC, a Company of which James Burgess & Robert Sinclair were Directors, provided services and facilities for the >

Group and received fees totalling approximately US$10,496 for the year (2010: US$29,597). There were no fees outstanding at the year end (2010: US$10,496) as Chariot started providing services and facilities to Chromex, the fees received from Chromex totalled US$7,196.Fintragh Trading and Consulting Limited, a Company of which Peter Kidney is a former Director, provided professional services for >

the Group and received fees totalling approximately US$94,408 (2010: US$178,919). There were no fees outstanding at the year-end (2010: US$24,947).Petra Diamonds Limited, a Company of which Adonis Pouroulis is a Director, utilised office space and facilities during the year and >

paid the Company US$21,160 (2010: US$ nil). The debtor balance at year end was US$6,532 (2010: US$ nil).

19 FinAnciAl inStrUmentSThe 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 28 February 2011 no trading in financial instruments was undertaken (2010: 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 riSkMarket risk arises from the Group’s use of interest bearing and foreign currency financial instruments. It is the risk that future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), and foreign exchange rates (currency risk). Throughout the period the Group has held surplus funds on deposit, principally with its main bankers Barclays, on fixed short-term deposits covering periods of one week to three months, monitoring rates of return whilst assuring the ability to meeting working capital requirements.

The Directors have not disclosed 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.

The Group’s treasury policy is that all significant cash balances are held in the parent company. Therefore the market risk is not deemed significant in any of the subsidiary undertakings.

cUrrencY riSkThe Group has very limited currency exposure in respect of items denominated in foreign currencies comprising;

Transactional exposure in respect of operating costs and capital expenditure incurred in currencies other than the functional >

currency of operations.

This risk is managed with funds being held principally in US Dollars to recognise the trading currency of the industry with a limited balance maintained in sterling and Namibian dollars to meet ongoing corporate and overhead commitments. The Group was not exposed to material movements on its material non-US$ financial instruments as at 28 February 2011 and 2010.

At the year end, the Group had cash balances of US$9.2m as detailed in note 14.

Other than the non-US$ cash balances described in note 14, no other financial instrument is denominated in a currency other than US Dollars. A 10% adverse movement in exchange rates would lead to an increase in the foreign exchange loss of US$29,440 and a 10% favourable movement in exchange rates would lead to a corresponding reduction, the effect on net assets would be the same as the effect on profits. (2010: US$32,100).



cAPitAlThe Company considers its capital to comprise its ordinary share capital, share premium and retained earnings as well as the share-based payments reserve and the contributed capital reserve.

In managing its capital, the Group’s primary objective is to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. The Group has met its work programme commitments and with the fundraising subsequent to year end, the Group currently holds sufficient capital to meet its ongoing needs for the next 12 months.

liqUiditY riSkThe Group’s practice is to regularly review cash needs and to place excess funds on fixed term deposits for periods not exceeding six months with institutions that are top band rated by Standard & Poors.

The Group has sufficient funds to continue operations for the forthcoming year and has no perceived liquidity risk.

credit riSkThe 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 Company will put in place measures that it has assessed as prudent to mitigate the risk of default by the other party. This would consist of instruments such as bank guarantees and letters of credit or charges over assets.

A Group company currently acts as Operator in a Joint Venture relationship over one of its licences and therefore is owed money from time to time. The Group has entered into this Joint Venture with one of the world’s largest oil companies and therefore it has not put in place any particular measures on this occasion as the Directors view the credit risk to be very low.

20 ShAre-BASed PAYmentSShAre oPtion SchemeDuring the year, the Company operated the Chariot Oil & Gas Share Option Plan (“Share Option Scheme”). The Company recognised total expenses (all of which related to equity settled share-based payment transactions) under the plan of:

28 February 2011

US$’000

28 February 2010

US$’000

Share Option Scheme 913 145

The Option Plan provides for an exercise price equal to the closing market price of the Company shares on the date of the grant. The options expire if they remain unexercised after the exercise period has lapsed. For options valued using the Black-Scholes model there are no market performance conditions or other vesting conditions attributed to the options.

The following table sets out details of all outstanding options granted under the Share Option Scheme.

28 February 2011

number of options

28 February 2010

Number of Options

Outstanding at beginning of year 5,540,000 1,840,000

Granted during the year 700,000 4,000,000

Forfeited during the year* (100,000) (300,000)

Exercised during the period (420,000) –

Outstanding at the end of the year 5,720,000 5,540,000

* These options relate to those that were forfeited by a Director who resigned during the year.

19 FinAnciAl inStrUmentS continUed




The range of the exercise price of share options exercisable at the year-end falls between US$0.38 (0.25p) – US$1.98 (130p), (2010: US$0.38 (25p) – US$1.98 (130p)).

The weighted average share price at the date of exercise US$1.90 (117p), using exchange rate of £=US$1.6265 (2010: US$0.39 (0.26p), using exchange rate of £=US$1.5224).

The estimated fair values of options which fall under IFRS 2, and the inputs used in the Black-Scholes model to calculate those fair values are as follows:

Date of grantEstimated fair value

Share price

Exercise price

Expected volatility

Expected life

Risk free rate

Expected dividend

28 April 2008 £0.98 £1.21 £0.385 32% 10 years 4.94% 0%

27 March 2008 £0.62 £1.21 £1.30 32% 10 years 4.94% 0%

13 November 2009 £0.17 £0.26 £0.26 80% 5 years 4.3% 0%

15 January 2010 £0.19 £0.28 £0.25 80% 5 years 4.3% 0%

1 June 2010 £0.89 £1.29 £1.15 80% 5 years 4.3% 0%

17 August 2010 £0.71 £1.09 £1.19 80% 5 years 4.3% 0%

Expected volatility was determined by calculating the annualised standard deviation of the daily changes in the share price. The shares issued during the year have a vesting period of two years.

lonG-term incentive Scheme (“ltiP”)The Plan provides for the awarding of shares to employees. The award will lapse if an employee leaves employment.

During the year 426,000 awards were granted to employees, none of whom are Directors of any Group company. The shares will vest in equal instalments over a three year period. Also during the year, 283,333 shares were issued to employees for no consideration as part of the LTIP scheme.

The following table sets out details of all outstanding share awards under the LTIP:

28 February 2011

number of awards

Outstanding at the beginning of the year 1,531,427

Granted during the year 426,000

Shares issued for non-consideration during the year (283,333)

Outstanding at the end of the year 1,674,094

wArrAntSThe following table sets out details of all outstanding warrants.

28 February 2011

number of warrants

28 February 2010

Number of warrants

Outstanding at the beginning of the year 5,610,055 2,996,019

Granted during the year – 2,614,036

Lapsed during the year (2,653,281) –

Exercised during the year (2,956,774) –

Outstanding at the end of the year – 5,610,055

The range of the exercise price of warrants outstanding at the previous year end fall between US$0.46 (30p) – US$1.87 (130p). The weighted average share price at the date of exercise was US$0.46 (30.0p) using exchange rate of £=US$1.5224.

20 ShAre-BASed PAYmentS continUed


21 continGent liABilitieSThere are no outstanding contingent liabilities as at 28 February 2011.

22 PoSt BAlAnce Sheet eventSOn 7 March 2011, the Company announced a placing of 35,958,376 ordinary shares (the “Placing Shares”) at a price of 250p per share (the “Placing”) to raise gross proceeds of £90m (approximately US$146m). Net proceeds of the Placing, together with existing cash, will be used to further Chariot’s work programme.

On 1 April 2011, a General Meeting took place where a resolution to approve the issue of the placing shares was passed.


Unlocking Africa’s Oil and Gas Potential

CHARIOT OIL & GAS LIMITED (AIM: CHAR) IS AN INDEPENDENT OIL & GAS EXPLORATION COMPANY WITH INTERESTS IN NAMIBIA. ENIGMA OIL & GAS EXPLORATION (PTY) LIMITED IS A WHOLLY OWNED SUBSIDIARY OF CHARIOT AND IS THE OPERATOR OF THE LICENCE AREAS

CHARIOT HAS FOUR LICENCES COVERING EIGHT OFFSHORE BLOCKS AND HOLDS THE EIGHTH LARGEST ACREAGE POSITION IN WEST AFRICA – ONE OF THE LAST FRONTIERS FOR OIL AND GAS EXPLORATION

FRONTIER REGION – HIGH IMPACT EXPLORATION – HUGE GROWTH POTENTIAL

Enviable Position in Namibia

Strong Cash Position

Substantial Identified Hydrocarbon Potential

Highly Experienced Management

Drill Ready Inventory

Clear Strategy and Goals

CoMPaNy ovERvIEw

1 Highlights During and Post Period

2 At a Glance3 Next Phase4 Chairman’s Statement6 Chief Executive Officer’s

Report8 Exploration Overview12 Board of Directors14 Senior Management Team

CoRPoRatE GovERNaNCE

16 Directors’ Remuneration Report

18 Social Responsibility Statement

19 Corporate Governance Statement

20 Report of the Directors22 Independent Auditors’

Report

fINaNCIal StatEMENtS

23 Consolidated Statement of Comprehensive Income

24 Consolidated Statement of Changes in Equity

25 Consolidated Statement of Financial Position

26 Consolidated Cash Flow Statement

27 Notes forming part of the financial statements

ibc Advisers

REGIStERED offICECHaRIot oIl & GaS lIMItEDPO Box 100Trafalgar CourtAdmiral ParkSt. Peter PortGuernseyGY1 3ELChannel Islands

NoMINatED aDvISERRBC CaPItal MaRkEtSThames CourtOne QueenhitheLondonEC4V 4DEUnited Kingdom

JoINt BRokERSRBC CaPItal MaRkEtSThames CourtOne QueenhitheLondonEC4V 4DEUnited Kingdom

UBS INvEStMENt BaNk1 Finsbury AvenueLondonEC2M 2PPUnited Kingdom

REPoRtING aCCoUNtaNt aND aUDItoRBDo llP55 Baker StreetLondonW1U 7EUUnited Kingdom

fINaNCIal PUBlIC RElatIoNS aDvISERfDHolborn Gate26 Southampton BuildingsLondonWC2A 1PBUnited Kingdom

lEGal aDvISERS to tHE CoMPaNyaS to BRItISH lawMEMERY CRYSTAL LLP44 Southampton BuildingsLondonWC2A 1APUnited Kingdom

aS to NaMIBIaN lawLORENTz ANGULA INC. Windhoek 3rd floorLA ChambersAusspann PlazaWindhoekNamibia

aS to GUERNSEy lawBABBEPO Box 6918–20 Smith StreetSt. Peter PortGuernseyGY1 3ELChannel Islands

REGIStRaRSCaPIta REGIStRaRSRegistered Address:The Registry34 Beckenham RoadBeckenhamKentBR3 4TUUnited Kingdom

CoMPaNy SECREtaRyaRtEMIS SECREtaRIES lIMItEDPO Box 100Trafalgar CourtAdmiral ParkSt. Peter PortGuernseyGY1 3ELChannel Islands

Advisers

CHARIOT OIL & GAS LIMITEDANNUAL REPORT & ACCOUNTS 2011www.chariotoilandgas.com

Chariot Oil & Gas LimitedRegistered Office:PO Box 100Trafalgar CourtAdmiral ParkSt. Peter PortGuernseyGY1 3ELChannel Islands

www.chariotoilandgas.com

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chariot oil & gas limited · 2019-09-25 · annual report & accounts 2011 chariot oil &...

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