REG - Challenger Energy - URUGUAY AREA OFF-3 LICENCE SIGNING

Challenger EnergyAnnouncement

11/03/2024 07:00

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RNS Number : 2297G  Challenger Energy Group PLC  11 March 2024

11 March 2024

Challenger Energy Group PLC

 

("Challenger Energy" or the "Company")

 

URUGUAY AREA OFF-3 LICENCE SIGNING

Challenger Energy (AIM: CEG), the Caribbean and Americas focused energy
company, with oil production, development, appraisal, and exploration assets
in the region, is pleased to announce the formal signing of its AREA OFF-3
licence, offshore Uruguay.

The AREA OFF-3 licence was awarded to the Company on 2(nd) June 2023 under the
Open Uruguay Round process and, following final regulatory approvals being
granted, was signed in Montevideo on 7(th) March 2024 (the "Licence").
Accordingly, AREA OFF-3's first exploration period will commence on 7(th) June
2024, and will run for four years, until 6(th) June 2028.

The AREA OFF-3 licence covers an area of 13,252 km(2) located in relatively
shallow water depths (from 20 to 1,000 meters) approximately 100 kms off the
Uruguayan coast. The block has substantial existing 2D and 3D seismic
coverage, with two previously identified material prospects possessing
currently estimated gross resource potential of up to ~2 billion barrels of
oil and up to ~9 trillion cubic feet gas.

During the initial exploration period, the Company's minimum work obligations
on the AREA OFF-3 block are relatively modest, comprising licencing and
reprocessing of 1,000 kms of legacy 2D seismic data, and undertaking two
geotechnical studies. The Company intends to follow a similar strategy to that
successfully adopted for the AREA OFF-1 licence (the farm-out of which to
Chevron was announced on 6(th) March 2024), specifically to accelerate its
technical work programme including additional discretionary work, with the
objective of high-grading existing prospects and identifying new plays and
prospects, and ultimately with a view to introducing a strategic partner at an
early stage.

 

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

"Following on from our recently announced farm-out of the AREA OFF-1 licence
to Chevron (pending regulatory approvals), we are very pleased to announce
that the AREA OFF-3 licence has now been formally signed, cementing Challenger
Energy's position as a significant industry participant in Uruguay's offshore.
AREA OFF-3 represents a successful expansion of the Company's business in
Uruguay, a country that has fast become one of the world's frontier
exploration hotspots. We believe that AREA OFF-3 has strong technical merit
and offers an exciting value-creation opportunity. Therefore, like with AREA
OFF-1, our immediate strategy for AREA OFF-3 is to commence accelerated
technical work, in support of seeking an early farm-out. We look forward to
keeping shareholders informed of our progress".

 

An updated presentation on the Company's assets in Uruguay has today been
posted to the Company's website - www.cegplc.com (http://www.cegplc.com)

 

ABOUT AREA OFF-3 LICENCE

·    As part of the Open Uruguay Round, First Instance of 2023, CEG
submitted a bid for the AREA OFF-3 block, offshore Uruguay. On 2(nd) June
2023, Administración Nacional de Combustibles Alcohol y Pórtland ("ANCAP"),
the Uruguayan national regulatory agency, advised that CEG 's offer for AREA
OFF-3 had been accepted. Following final regulatory approvals, the AREA OFF-3
licence was formally signed in Montevideo on 7(th) March 2024, and thus the
licence's first four-year exploration period will commence on 7(th) June 2024.

 

·    The AREA OFF-3 licence covers 13,252 km(2) and is situated in
relatively shallow water depths, from 20 to 1,000 meters, approximately 100 km
off the Uruguayan coast. To the west the block is adjacent to the AREA OFF-2
block held by Shell, with the Amalia prospect straddling both the AREA OFF-2
and AREA OFF-3 blocks. To the east the block is adjacent to the Brazilian
maritime border, an area that was subject to considerable licencing in
December 2023, with thirteen nearby Brazilian blocks licenced variously to
Chevron, Shell, CNOOC and Petrobras. To the south, the block is adjacent to
two deepwater Uruguayan blocks, AREA OFF-6, held by APA Corporation (and on
which block APA has a commitment to drill an initial exploration well in that
block's initial four-year exploration period), and AREA OFF-7, which is held
by Shell.

 

·    There has been considerable prior seismic activity on the AREA OFF-3
block, comprising ~4,000 kms of legacy 2D (various vintages) and ~7,000 km(2)
of legacy 3D (2012). There are no wells on the block. Based on this prior
data, AREA OFF-3 is believed to be highly prospective, with two material-sized
prospects having previously been identified and mapped in water depths of
approximately 250 meters, being:

-     the Amalia prospect, with P10/50/90 resource estimates of 2,189 /
980 / 392 (EUR mmboe, gross; source: ANCAP). As noted, the Amalia prospect
straddles the boundary with Shell's AREA OFF-2 - current estimates are that ~
30% of the Amalia prospect is contained within AREA OFF-3; and

-     the Morpheus prospect, with P10/50/90 resource estimate of 8.96 /
2.69 / 0.84 (EUR TCF, gross; source: ANCAP). The Morpheus prospect is entirely
contained with AREA OFF-3.

 

·    The Company's minimum work obligations during AREA OFF-3's first
four-year exploration period are modest, consisting of licencing, reprocessing
and reinterpretation of 1,000 kms of legacy 2D seismic data, and undertaking
two geotechnical studies. The Company has no obligation to acquire new seismic
data or to drill an exploratory well during the block's initial four-year
exploration period.

 

·    Recent conjugate margin discoveries offshore Southwest Africa have
triggered renewed interest in the types of plays present in Uruguay. In
particular, the data and enhanced technical understanding provided from recent
discoveries offshore Namibia (Venus - TotalEnergies, Graff and Jonker - both
Shell) provides greater confidence that the regional petroleum system charging
those discoveries is likely to be present offshore Uruguay. As a result, new
exploration plays, in addition to the Lower Cretaceous deepwater turbidites
discovered by Venus and others, are believed to be present and charged by the
same petroleum system and source rock.

 

·    Thus, the Company considers that it would be an opportune time to
accelerate its technical work programme for AREA OFF-3, on a discretionary
basis, with a view to high-grading currently mapped prospects as well as
identifying new plays, and with the ultimate objective of introducing a
strategic partner to AREA OFF-3 at an early stage (similar to the strategy
adopted by the Company in relation to the AREA OFF-1 licence). Further
announcements will be made as this work progresses.

 

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 / Isaac Hooper
 Zeus Capital - Joint Broker                     Tel: +44 (0) 20 3829 5000

 Simon Johnson
 Gneiss Energy Limited - Financial Adviser       Tel: +44 (0) 20 3983 9263

 Jon Fitzpatrick / Paul Weidman / Doug Rycroft
 CAMARCO                                           Tel: +44 (0) 20 3757 4980

 Billy Clegg / Hugo Liddy / Sam Morris

 

Notes to Editors

 

Challenger Energy is a Caribbean and Americas focused energy company, with oil
production, development, appraisal, and exploration assets in the region. The
Company's primary assets are located in Uruguay, where the Company holds high
impact offshore exploration licences, and in Trinidad and Tobago, where the
Company has a number of producing fields and earlier-stage exploration /
appraisal projects.

 

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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