Reuters: Hot Stocks: UPDATE 1-Chariot Oil jumps on Mauritania farm-out deal with Cairn Energy

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UPDATE 1-Chariot Oil jumps on Mauritania farm-out deal with Cairn Energy Aug 8th 2013, 07:47 Thu Aug 8, 2013 3:47am EDT (Adds analysts' comments and share movement) Aug 8 (Reuters) - Chariot Oil & Gas Ltd signed a farm-out agreement with a unit of Cairn Energy Plc for a 35 percent stake in its Mauritania licence, sending its shares up as much as 34 percent. The stock was trading up 20 percent at 20.84 pence at 0734 GMT, making it one of the top percentage gainers on the London Stock Exchange. The deal for about $26 million includes the cost of the 3D seismic data acquired by Chariot on block C19, located 30 km off the coast of Mauritania. RBC Capital Markets analyst Al Stanton said Cairn's endorsement of the acreage should help generate new interest in Chariot. "Chariot's share price in (the first half of 2013) was weighed down by disappointing results from HRT Participações SA's drilling campaign offshore Namibia ... however, management has today embarked on its own initiative to create value and generate new interest in the stock." Post the deal, Chariot will hold a 55 percent stake and continue to operate the licence. Société Mauritanienne des Hydrocarbures (SMH) will hold the remaining 10 percent interest. "(The) farm-out deal with Cairn demonstrates Chariot is significantly undervalued and underlines the premium industry will pay for high-potential exploration acreage," FinnCap analyst Will Arnstein said in a note. Cairn said that it would contribute 38.89 percent to exploration costs while Chariot would contribute 61.11 percent. "The opportunity in Mauritania presents an attractive new country entry, building on our existing Atlantic Margin portfolio in Senegal and Morocco," Cairn Energy Chief Executive Simon Thomson said in a statement. Cairn said Chariot would support an application to operate the block if it raised its stake to more than 50 percent before the first phase of the licence ends. (Reporting by Roshni Menon in Bangalore; Editing by Supriya Kurane) Link this Share this Digg this Email Reprints

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