6 March
2024
Challenger Energy Group
PLC
("Challenger Energy", "CEG" or the "Company")
FARM-OUT OF 60% OF AREA OFF-1
BLOCK IN URUGUAY TO CHEVRON
Challenger Energy (AIM: CEG), the
Caribbean and Americas focused energy company, with production,
development, appraisal, and exploration assets in the region, is
pleased to announce that it and its wholly-owned Uruguayan
subsidiary, CEG Uruguay SA ("CEG
Uruguay") have entered into a farm-out agreement with Chevron Uruguay Exploration Limited
("Chevron"), a wholly-owned
subsidiary of Chevron Corporation (NYSE: CVX), related to a 60%
interest in the AREA OFF-1 block, offshore Uruguay (the
"Transaction").
The primary terms of the Transaction
are:
·
Chevron will acquire a 60% participating interest
in the AREA OFF-1 block, and will assume operatorship of the
block.
·
CEG Uruguay will retain a 40% non-operating
interest in the block.
·
Chevron will pay to CEG US$12.5 million cash on
completion of the Transaction, these funds will be used to support
the further development of the Company's business.
·
Chevron will carry 100% of CEG Uruguay's share of
the costs associated with a 3D seismic campaign on AREA OFF-1, up
to a maximum of US$15 million net to CEG Uruguay.
·
Following the 3D seismic campaign, should Chevron
decide to drill an initial exploration well on the AREA-OFF 1
block, Chevron will carry 50% of CEG Uruguay's share of costs
associated with that well, up to a maximum of US$20 million net to
CEG Uruguay.
·
Completion and financial close of the Transaction
will be subject to the satisfaction of conditions precedent and
customary third-party approvals from the Uruguayan regulatory
authorities, which are anticipated to take several months to
finalise - the parties have commenced engagement with the
regulators.
Eytan Uliel, Chief Executive Officer of Challenger
said:
"We are absolutely delighted to announce the
farm-out of our AREA OFF-1 block in Uruguay to Chevron, a globally
recognised industry leader. We firmly believe that AREA OFF-1 holds
enormous potential, and this farm-out is strong validation of the
high-quality technical work CEG has done to-date. Our stated
strategy for AREA OFF-1 was to introduce a larger industry player
as operating partner, with a view to rapidly progressing the block
via an accelerated 3D seismic campaign followed by, we hope,
exploration well drilling. The farm-out achieves this aim, and we
look forward to continuing on our exciting journey in Uruguay, both
on AREA OFF-1, now in partnership with Chevron, and also on our
still wholly owned AREA OFF-3 block. We are grateful to ANCAP for
the confidence shown in CEG when awarding these blocks,
and we thank our stakeholders for their continuing
support."
Gneiss Energy Limited acted as
financial advisor to CEG on the Transaction.
ABOUT CHEVRON
CORPORATION
Chevron is one of the world's
leading integrated energy companies and believes that affordable,
reliable and ever-cleaner energy is essential to enabling human
progress. Chevron produces crude oil and natural gas; manufactures
transportation fuels, lubricants, petrochemicals and additives; and
develops technologies that enhance its business and the industry.
Chevron aims to grow its oil and gas business, lower the carbon
intensity of its operations and grow lower carbon businesses in
renewable fuels, carbon capture and offsets, hydrogen and other
emerging technologies. More information about Chevron is available
at www.chevron.com.
ABOUT AREA
OFF-1
The AREA OFF-1 block is a large
offshore block covering approximately 14,557 km2,
located approximately 100 kms offshore Uruguay in water depths
ranging from 80 meters to 1,000 meters. The Company was awarded the
AREA OFF-1 licence in June 2020 under the Open Uruguay Round
process. Formal signing of the licence took place on
25th May 2022, and the licence's initial four-year
exploration term commenced on 25th August
2022.
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.
Consequently, since the award of
AREA OFF-1 to the Company, there has been considerable licencing
activity in Uruguay, with all other available offshore exploration
blocks now licenced to Shell, APA Corporation and YPF, with
significant work program commitments including 3D seismic
acquisition and new well drilling. To the south, AREA OFF-1 is
adjacent to AREA OFF-4, a block jointly held by APA Corporation and
Shell (APA is the operator), and where two key prospects of
interest straddle both blocks. To the east, AREA OFF-1 is adjacent
to AREA OFF-2, which is licenced to Shell, and to the west AREA
OFF-1 is adjacent to the Argentinian maritime boundary.
The Company's minimum work
commitment in the initial four-year exploration period of AREA
OFF-1 required licencing 2,000 kms of legacy 2D seismic data from
ANCAP (the Uruguayan national oil company and energy regulatory
body), reprocessing of that 2D seismic data, and completion of a
geological and resource potential study. There is no requirement to
acquire 3D seismic or drill a well during the initial four-year
exploration period.
As at 31 December 2023, the minimum
work commitment for AREA OFF-1's initial four-year exploration
period had been fulfilled by the Company. In addition, the Company
also completed additional work on a discretionary basis, designed
to further enhance the technical understanding of the block. This
additional work included Amplitude Variation with Offset (AVO)
attribute analysis of select 2023 reprocessed 2D seismic lines,
seabed geochemistry analysis, and acquiring a satellite seeps and
slicks imaging study.
The body of technical work
undertaken by the Company led, through the course of 2023, to the
identification and delineation of three primary prospects on AREA
OFF-1, with total estimated recoverable resource (EUR) of ~ 2.0
billion barrels of oil equivalent (BBOE) across three prospects
(Pmean, unrisked), and approximately 5.0 billion BBOE in an upside
case (P10, unrisked). A table summarising the estimated recoverable
resource is set out below:
|
|
AREA OFF-1 EUR (mmboe),
unrisked
|
Prospect
|
|
P10
|
Pmean
|
P50
|
P90
|
Teru Teru
|
1,647
|
740
|
547
|
158
|
Anapero
|
|
1,627
|
670
|
445
|
88
|
Lenteja
|
|
1,666
|
576
|
198
|
17
|
Total
|
|
4,940
|
1,986
|
1,190
|
263
|
For the financial year ended 31
December 2023, the were no losses attributable to the asset and
capitalised costs in relation to the work carried out by the
Company amounted to approximately US$2.1 million.
The proposed farm-out of a 60%
participating interest in the AREA OFF-1 licence to Chevron
(pending regulatory approvals) aims to facilitate and fund an
accelerated 3D seismic acquisition (and associated interpretation
work), with the intention being that such 3D seismic acquisition
will occur during the initial four-year exploration period. Further
announcements will be made as appropriate.
The
information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 which forms part of
domestic UK law pursuant to the European Union (Withdrawal) Act
2018 ("UK MAR"). With the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
For further information,
please contact:
Challenger Energy Group PLC
Eytan Uliel, Chief Executive
Officer
|
Tel: +44 (0) 1624 647 882
|
WH
Ireland - Nomad and Joint Broker
Antonio Bossi / Darshan Patel /
Isaac Hooper
|
Tel: +44 (0) 20 7220 1666
|
Zeus Capital - Joint Broker
Simon Johnson
|
Tel: +44 (0) 20 3829 5000
|
Gneiss Energy Limited - Financial Adviser
Jon Fitzpatrick / Paul Weidman /
Doug Rycroft
|
Tel: +44 (0) 20 3983 9263
|
CAMARCO
Billy Clegg / Hugo Liddy / Sam
Morris
|
Tel: +44 (0) 20 3757
4980
|
Chevron
Sally Jones
|
Tel: +44 78 2725 3868
|
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
ENDS