Final Results

31 May 2011

Chariot Oil & Gas Limited

("Chariot", the "Company" or the "Group")

Final Results

Significant prospective resources in place, poised to drill first well

Chariot Oil & Gas Limited (AIM: CHAR), an independent oil and gas exploration group, today announces its audited final results for the twelve months ended 28 February 2011.

Highlights During and Post Period

·; Increased gross mean unrisked prospective resources to 15.5 billion barrels ("Bbbls") (11.2 Bbbls net to Chariot)

·; Identified game-changing mega structure - Nimrod - with gross mean unrisked prospective resource volume of 4.6 billion barrels and an estimated 25% Chance of Success

·; Farm-out datarooms received strong interest from numerous majors with deepwater expertise - negotiations with potential farm-out partners at advanced stage

·; Further 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

Paul Welch, CEO of Chariot, commented: "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."

For further information please contact:

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

CHAIRMAN'S STATEMENT

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 twelve 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 basins

- Largest exploration programme spend offshore Namibia to date - significant amount of high quality 2D and 3D seismic data acquired

- Drill ready inventory - 16 prospects in total, one "Mega" prospect - Nimrod - 4.6 Bbbls

- Well 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 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 the 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 back in October 2010, which corroborated the Company's in-house work. A further CPR is currently underway to seek verification on the latest resource estimates and the results of that report are expected in Q3 2011.

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 value

We 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 Concurrently

The 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 Review

During 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 million, compared to US$3 million in the prior year, reflecting in particular the full cost of strengthening and increasing the size of the technical team.

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 Changes

It 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.

Conclusion

Chariot 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, and 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 Pouroulis

Chairman

CEO'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 Value

During 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.

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 500km² 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 Update

Our 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.

Drilling to Commence

Our 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 deepwater offshore Namibia. Drilling 'off shelf' is key as it notably differentiates our exploration efforts from those undertaken 'on shelf' in the 1990's. 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 intend to drill a further four to five wells to fully test the area.

Operating in Namibia

It 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 deepwater 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 10 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.

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 Opportunities

As 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.

Outlook

I would like to take this opportunity to thank our staff and shareholders for all their work and support over the past twelve 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 Welch

CEO

EXPLORATION OVERVIEW

Chariot has a substantial acreage position offshore Namibia, which is held through our wholly owned subsidiary Enigma Oil & Gas Exploration (Pty) Limited, and totals 30,504km² - 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.

The 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 focus area in this pursuit. Exploration success has demonstrated the capability for giant oil accumulations offshore West Africa north of the traditional "salt basin" fairway but exploration drilling south of that fairway 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 which include:

·; Oil prone source rocks - both thick and mature

·; Surface oil slicks- evidence of hydrocarbon systems

·; Hydrocarbon shows in previously drilled wells

·; Excellent reservoir quality sandstones in existing wells

·; Numerous play types.

Namibia remains hugely under-explored due to the legacy of political history (offshore exploration did not get underway 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 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. The 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 all 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 5km 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 charge kitchen (circa 2000 m) 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 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 4km. 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.

Northern Blocks

The 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 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.

Also mapped on the 3D survey is the Zamba lead which is formed of 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.

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

Southern Blocks

In the Southern blocks, 2714 A&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 corroborates 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 to be present, both with a DHI in the Albian and there is also a deeper Barremain 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.

Key Objective: To drill the Nimrod prospect in 2012.

Central Blocks

The 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 indicates 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 2,500km² is being planned over areas of specific interest. Three leads with an unrisked mean 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.

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

Consolidated Statement of Comprehensive Income

for the year ended 28 February 2011

Consolidated statement of changes in equity

for the year ended 28 February 2011

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 13 to 29 form part of these financial statements

Consolidated Statement of financial position

at 28 February 2011

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

Robert Sinclair

Director

The notes on pages 13 to 29 form part of these financial statements.

Notes forming part of the financial statements

for the year ended 28 February 2011

1 General information

Chariot Oil & Gas Limited is a Company incorporated and domiciled in Guernsey with registration number 47532. The address of the registered office is Sydney Vane House, Admiral Park, St Peter Port, Guernsey, GY1 2HU. 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 currency of the US Dollars and presentational currency of the Group is US Dollars.

2 Accounting policies

Basis of preparation

The 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 concern

The 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 twelve months.

New Accounting Standards

The 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. 

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

(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:

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.

* Not yet endorsed by European Union.

Intangible fixed assets

The 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.

Taxation

Income 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.

2 Accounting policies(Continued)

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.

Foreign currencies

Transactions entered into by Group entities in a currency other than the currency of theprimary economic environment in which they operate (their "functional currency") are recordedat the rates ruling when the transactions occur. Foreign currency monetary assets andliabilities are translated at the rates ruling at the reporting date. Exchange differences arisingon the retranslation of unsettled monetary assets and liabilities are recognised immediately inprofit or loss, except for foreign currency borrowings qualifying as a hedge of a net investmentin a foreign operation, in which case exchange differences are recognised in othercomprehensive income and accumulated in the foreign exchange reserve.When a gain or loss on a non-monetary item is recognised in other comprehensive income, anyexchange 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, anyexchange component of that gain or loss shall be recognised in profit or loss.

On consolidation, the results of overseas operations are translated into US Dollar 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 depreciation

Property, 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.

Leases

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

2 Accounting policies(Continued)

Share based payments

Where 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 are 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 consolidation

Where 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 instruments

The 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 arrangements

Joint 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.

2 Accounting policies(Continued)

Critical accounting estimates and judgements

The 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 assets

Under 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 review

The 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 payments

Directors 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 analysis

In 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

2010

4 Loss from operations

5 Leases commitments

6 Employees

7 Finance income and expense

8 Investment

The Company's directly (*) and indirectly (**) held wholly owned subsidiary undertakings at 28 February 2011 are:

9 Taxation

The Company is tax resident in Guernsey, where corporate profits are taxed at zero percent.

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 period

The 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:

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.

9 Taxation (continued)

Namibian Taxation and royalties

Normal Taxation

The petroleum income tax is payable annually at a rate of 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 Tax

In 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 share

The 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

12 Property, plant and equipment

(*): 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

14 Cash and cash equivalents

15 Trade and other payables

Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going costs.

16 Share capital

(*): 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.

16 Share capital continued

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

17 Capital commitments

At the balance sheet date the Group had no capital commitments (2010 - US$1.05 million).

18 Related party transactions

Details 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.

18 Related party transactions continued

- 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 instruments

The 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 - Nil).

There is no material difference between the book value and fair value of the Group cash balances, short term receivables and payables.

Market risk

Market 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 risk

The 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$29,440 and a 10% favourable movement in exchange rates would lead to a corresponding reduction, the effect on net assets would be the same as the effect on profits. (2010 - US$ US$32,100)

19 Financial instruments continued

Capital

The 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 program commitments and with the fundraising subsequent to year end, the Group currently holds sufficient capital to meet its ongoing needs for the next twelve months.

Liquidity risk

The 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 risk

The 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 measure 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 payments

Share Option Scheme

During 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:

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.

20 Share based payments (continued)

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

(*): these options relate to those that were forfeited by a Director who resigned during the year.

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:

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 2 years.

20 Share based payments (continued)

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 3 year period. Also during the year, 283,333 shares were issued to employee for no consideration as part of the LTIP scheme.

The Company recognised total expenses (all of which related to equity settled share-based payment transactions) under the plan of:

Warrants

The following table sets out details of all outstanding warrants.

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 $US0.46 (30.0p) using exchange rate of £ = US$ 1.5224.

21 Contingent liabilities

There are no outstanding contingent liabilities as at 28 February 2011.

22 Post balance sheet events

On 7 March 2011, the Company announced a placing of 35,958,376 Ordinary Shares (the "Placing Shares") at a price of 250 pence per share (the "Placing") to raise gross proceeds of £90 million (approximately US$146 million). 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.