REG - Challenger Energy - Uruguay Update

Challenger EnergyAnnouncement

03/01/2023 07:00

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RNS Number : 4042L  Challenger Energy Group PLC  03 January 2023

 

3 January 2023

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

 

Uruguay Update

Challenger Energy (AIM: CEG), the Caribbean and Americas focused oil and gas
company, with oil production, appraisal, development and exploration assets
across the region, notes recent media reports and confirms as follows:

 

·      On 27 December 2022 ANCAP, Uruguay's national energy company,
announced that a further two offshore blocks in Uruguay have been awarded
following competitive bids received in the Second 2022 ANCAP Open Bidding
Round.

·      The AREA OFF-4 deep-water offshore block, which is immediately
adjacent to Challenger's AREA OFF-1 shallow water exploration block, has been
awarded to a consortium of Shell and APA Corporation (formerly known as
Apache). AREA OFF-4 was the subject of competitive bids received from the
winning consortium and from YPF (the Argentinian National Oil Company). ANCAP
has reported that the consortium has committed to undertake extensive work on
the AREA OFF-4 block in the initial 4-year exploration period, including 3D
seismic acquisition.

·      Additionally, the AREA OFF-5 deep-water offshore block has been
awarded to YPF. ANCAP has reported that YPF has committed to undertake an
extensive technical work program on the AREA OFF-5 block in the initial 4-year
exploration period.

·      The award of these two blocks is in addition to the award to
Challenger of the AREA OFF-1 block in May 2020, and the awards in May 2022 of
the AREA OFF-2 and AREA OFF-7 blocks to Shell, and the AREA OFF-6 block to
APA.

·      As a result of the recent awards, all but one of the available
offshore exploration blocks in Uruguay have now been licenced, and, with the
exception of Challenger Energy, all have been licenced to global oil and gas
majors.

·      The aggregate value of work now committed across blocks AREA
OFF-2, AREA OFF-4, AREA OFF-5, AREA OFF-6 and AREA OFF-7 by Shell, APA
Corporation and YPF during the next 4 years, in respect of both technical and
exploration activities including well drilling, is estimated by ANCAP to be in
excess of approximately US$230 million.

·      The full text of the announcement by ANCAP is available on
ANCAP's website - www.ancap.com.uy (http://www.ancap.com.uy/)

·      It is noted that in addition to work that will now be undertaken
by Shell, APA Corporation and YPF on their Uruguayan blocks, various public
statements and news releases indicate that relevant additional work and
drilling activities are currently underway or being planned by multiple
parties for 2023, including additional exploration and appraisal wells being
drilled in Namibia, and 3D seismic acquisition in the adjacent Northern
Argentina Basin. These activities are expected to further the regional
technical understanding and thereby enhance the technical understanding of
AREA OFF-1.

·      In particular, the Company notes recent reports to the effect
that YPF has received environmental approval to acquire 3D seismic on its CAN
102 block in offshore Argentina, commencing in 2023. This block is immediately
proximate to AREA OFF-1 in Uruguay.

·      Challenger Energy considers that the rapid entry through the
course of 2022 into Uruguay of well-regarded international companies, and
their commitments to undertake sizeable and meaningful work programs in the
near-term (including 3D seismic acquisition and new well drilling), validates
both the Company's decision to enter Uruguay in 2020, and underscores the
solid technical foundation and excellent value proposition represented by the
AREA OFF-1 block.

·      Further, the Company's technical view is that its AREA OFF-1
licence area, and the broader offshore Uruguay play system, is analogous to
offshore Namibia, where there have been recent prolific, conjugate margin
discoveries made by TotalEnergies (the Venus well) and Shell (the Graff well),
and where reported multi-billion-barrel Cretaceous turbidite reservoirs have
been encountered. Specifically, the AREA OFF-1 licence exhibits the same
Aptian age play source rock and petroleum systems being present on existing 2D
seismic.

·      As noted in previous Company releases, the AREA OFF-1
shallow-water block is in Year 1 of an initial four-year exploration period,
which commenced on 25 August 2022, and during which time The Company's
low-cost work commitment is to undertake G&G studies, 2D seismic data
licencing and 2D reprocessing and interpretation. This work is currently
underway, and Challenger Energy expects to substantially complete all required
work in the first half of 2023, well ahead of schedule.

·      The AREA OFF-1 block contains a management estimated resource
potential exceeding 1.5 billion barrels of oil equivalent recoverable (BBOE),
based on current mapping from multiple exploration plays and leads in
relatively shallow waters, and with significant upside running room. This
estimate is corroborated by formal resource estimates provided by ANCAP of
1.35 BBOE as a P50 expected ultimate recoverable resource.

·      The Company's strategy in relation to the AREA OFF-1 block
remains unchanged, which is to seek an appropriate farm-in partner in the
near-term, that will realise value for the Company, as well as enable an
accelerated work program on the block. Further updates will be provided as
appropriate.

·      An updated presentation in relation to the AREA OFF-1 block will
today be placed on the Company's website - www.cegplc.com
(http://www.cegplc.com/) .

 

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

"In 2020, Challenger Energy successfully bid for the AREA OFF-1 block in
Uruguay, and in so doing strategically gained first mover status offshore
Uruguay. We were able to secure the block with a modest initial work
commitment, which we are already well advanced to completing, considerably
ahead of schedule.

Subsequently, in May 2022, three more blocks were awarded in a contested open
round, to Shell (two blocks) and Apache (one block). Now, a further two blocks
have been awarded in Uruguay in another contested open round, to each of a
Shell-APA consortium and YPF, and YPF with partner Equinor is also poised to
commence 3D seismic acquisition in a neighbouring block in Argentina. The
estimated collective spend by those companies over the coming years on these
activities is significant, in excess of $US230 million.

Overall, this means that almost all available offshore acreage in Uruguay has
now been taken up, and apart from Challenger Energy, all by majors and NOCs
who have committed to very sizeable work programs. This dramatic increase in
interest in Uruguay and the neighbouring region is directly related to the
very sizeable discoveries made in the conjugate margin Orange Basin in early
2022, and through the course of 2023 we hope to move forward with a farm-in,
so as to capitalise on that increased interest and allow for accelerated work
on our block. Further updates will be provided in due course."

---

 

In accordance with the AIM Note for Mining and Oil & Gas
Companies, CEG discloses that Mr. Randolph Hiscock the Company's New
Business Director and Uruguay Managing Director, is the qualified person who
has reviewed the technical information contained in this document. He has a
Masters in Science (Geology) and is a member of the AAPG & PESGB.  He has
over 35 years' experience in the oil and gas industry.  Randolph
Hiscock consents to the inclusion of the information in the form and context
in which it appears.

 

For further information, please contact:

 

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

 Eytan Uliel, Chief Executive Officer
 Strand Hanson Limited - Nomad               Tel: +44 (0) 20 7409 3494

 Rory Murphy / James Spinney / Rob Patrick
 Arden Partners plc - 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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