Chariot Oil shares plunge as well comes up dry

LONDON (Reuters) - Oil explorer Chariot Oil & Gas Ltd lost more than half its stock market value on Monday after the company said a keenly awaited well located in the Nimrod prospect offshore Namibia had come up dry.

Shares in the company, a favourite play among many retail investors, plunged over 60 percent to 35 pence. Volume reached nearly 47 million shares, worth more 16 million pounds, by 11:33 a.m. British time.

The stock has seen volatile moves in recent weeks, hitting a one-month peak of 125.8p last week on speculation about the well result. However the latest slump echoes a sharp drop on May 14 after the company said another well offshore Namibia was dry.

Chariot said it had plugged and abandoned the Kabeljou well in the Nimrod prospect - the second in its drilling programme in the area - after tests showed there was no commercially viable oil or gas.

"The Nimrod prospect was our largest target in the south but there are still other areas of interest in this licence and these well results may provide us with the ability to identify additional prospectivity in other horizons," Chief Executive Paul Welch said in a statement.

The Nimrod prospect is located in a block in the Orange Basin where Chariot has a 25 percent stake, with Petrobras holding 30 percent and BP the rest.

MATERIAL BLOW

"The Nimrod prospect was Chariot's largest target in the south and although there are still other areas of interest in this licence, the miss at Kabeljou represents a material blow to Chariot's equity story," said analysts at Investec, changing their stance on the stock to "hold" from "buy".

Analysts at Peel Hunt also downgraded their recommendation, moving to "sell" from "hold" and cutting their target price to 40p from 150p.

"Despite having a robust balance sheet with about $100m net cash, Chariot's pipeline of drilling-related news looks to have run dry until the first half of 2013 at the earliest," the brokerage said.

Chariot shares had gradually recovered from their May setback until last week, when they began to slip again and fell around 20 percent last Tuesday, prompting Chariot to issue a statement saying the results of the Kabeljou well were not yet known.

The company has long been a darling of the largely unregulated internet message boards, where day traders swap rumours, counter-rumours and accusations.

It remained the most discussed stock on the popular Interactive Investor board on Monday, as posters celebrated or - more commonly - fretted over the news.

"Back to (computer game) Football Manager for a few months, it's a less volatile world," said one.

(Additional reporting by Karen Rebelo in Bangalore; Editing by Saumyadeb Chakrabarty and David Holmes)

Source: http://news.yahoo.com/chariot-oil-shares-plunge-well-comes-dry-114244707--finance.html

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