REG - Challenger Energy - Sale of Caribbean Rex

Challenger EnergyAnnouncement

14/02/2023 07:00

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RNS Number : 7845P  Challenger Energy Group PLC  14 February 2023

14 February 2023

 

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

 

Sale of Caribbean Rex

Challenger Energy (AIM: CEG), the Caribbean and Americas focused oil and gas
company, with oil production, appraisal, development and exploration assets
across the region, is pleased to announce that it has entered into and
simultaneously completed a transaction for the sale of its St Lucia domiciled
subsidiary company, Caribbean Rex Limited ("Caribbean Rex").

 

Highlights

 

·    Sale of Caribbean Rex and associated assets and subsidiary entities
for for a value of US$1.5m:

o immediate cash payment of US$1 million, received

o subsequent payment of US$0.2 million due in mid-March 2023, and

o US$0.3 million of third party liabilities have been assumed by the buyer

·    In addition, a three well drilling obligation at the South Erin field
(at a potential cost of up to US$5 milion) will now pass from the Company to
the buyer, with the Company retaining an 18-month option to repurchase a 49%
interest in the South Erin field in the event of the buyer's drilling success

 

Key terms of the Transaction

·    The Company has sold Caribbean Rex, an indirectly wholly-owned St
Lucia incorporated subsidiary. Caribbean Rex in turn holds various assets and
subsidiary entities in St Lucia and Trinidad. This includes (via interposed
subsidiaries) CEG South Erin Trinidad Limited ("CSETL"), a Trinidadian company
that is party to a farm-out agreement for, and is the operator of, the South
Erin field, onshore Trinidad. The buyer of Caribbean Rex is a Trinidadian
drilling and oil services company.

·    The transaction was entered into and completed simultaneously, and is
not subject to any condition precedent. The agreed consideration is US$1.5
million, consisting of US$1.2 million payable in cash (of which US$1 million
has been received by the Company and US$0.2 million is payable by 15 March
2023), and approximately US$0.3 million in third-party liabilities that have
been assumed by the buyer.

·    In addition, the buyer has committed to fulfil CSETL's 2023 drilling
commitments at the South Erin field, thereby relieving the Company of these
commitments (3 new wells with an estimated cost of up to US$5 million).

·    As part of the transaction, the Company has retained a back-in
option, granting the Company the right to repurchase a 49% non-operating
interest in the South Erin field. This back-in option may be exercised at the
Company's election, at any time in the next 18 months. Consideration payable
if the Company exercises the back-in option is a fixed cash amount of US$1
million, plus 49% of all amounts spent by the buyer on South Erin field
activities and new well drilling.

·    The South Erin field currently produces approximately 35 bopd
(representing less than 10% of CEG's total Trinidadian production), but new
well drilling by the buyer could significantly increase production through the
course of 2023 - CEG will be able to commercially assess the value of
exercising the back-in option against the outcomes of the drilling campaign
and the level of increased production.

·    For the year to 31 December 2021, CSETL made a loss of TT$3.5 million
(or approximately US$0.5 million). As at 31 December 2021, CSETL had negative
net book value (net liability position) of approximately TT$51.6 million (or
approximately US$7.6 million) of which approximately TT$48.1 million (or
approximately US$7.1 million) is intra-group and will be written-off as at the
Completion Date. Cash received from the transaction will be used for general
working capital in the Company's operations.

Eytan Uliel, Chief Executive Officer of Challenger Energy, said:

"Through the transaction announced today we get upfront cash, we give up only
a small percentage of overall production, we are relieved of various
liabilities as well as the cost of a committed drilling campaign, and we
retain optionality while someone else drills those wells and funds that cost.
This is consistent with the structure we adopted for the previously announced
transaction relating to the Cory Moruga licence, and is, generally speaking,
the model for how we intend to take smaller, non-core assets in Trinidad
forward: through transactions that monetise the assets and offset our
operating and financial risks, yet retain upside exposure in a success case."

--

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, which forms part of United Kingdom domestic law by
virtue of the European Union (Withdrawal) Act 2018 (as amended).

 

For further information, please contact:

 

 Challenger Energy Group PLC                  Tel: +44 (0) 1624 647 882

 Eytan Uliel, Chief Executive Officer
 WH Ireland - Nomad and Joint Broker          Tel: +44 (0) 20 7220 1666

 Antonio Bossi / Darshan Patel / Enzo Aliaj
 Zeus Capital Limited - Joint Broker          Tel: +44 (0) 20 7614 5900

 Simon Johnson
 CAMARCO                                        Tel: +44 (0) 20 3757 4980

 Billy Clegg / Hugo Liddy / Sam Morris

Notes to Editors

 

Challenger Energy is a Caribbean and Americas focused oil and gas company,
with a range of exploration, appraisal, development and production assets and
licences, located onshore in Trinidad and Tobago, and Suriname, and offshore
in the waters of Uruguay and The Bahamas. In Trinidad and Tobago, Challenger
Energy has five (5) producing fields, two (2) appraisal / development projects
and a prospective exploration portfolio in the South West Peninsula. In
Suriname, Challenger Energy has on onshore appraisal / development project.
Challenger Energy's exploration licences in Uruguay, the South West Peninsula
of Trinidad, and The Bahamas offer high-impact value exposure within the
overall portfolio value.

 

Challenger Energy is quoted on the AIM market of the London Stock Exchange.

 

https://www.cegplc.com (https://www.cegplc.com/)

 

ENDS

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