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Highlights:
- Challenger Energy progresses its transformative farm-out deal with Chevron for the OFF-1 licence.
- The company reports stable production from its core assets in Trinidad and Tobago during the first half of 2024.
- Future plans include marketing a similar farm-out deal for the OFF-3 acreage by mid-2025, targeting late 2025 or early 2026 for completion.
Challenger Energy Group PLC (LSE:CEG) has described the first half of 2024 as "truly transformational," according to chief executive Eytan Uliel, primarily due to the company’s significant farm-out deal with Chevron. This partnership revolves around the OFF-1 licence in Uruguay and promises to unlock a high-impact exploration opportunity for the energy firm.
Challenger announced the Chevron farm-out in March 2024, and the transaction is advancing toward completion. Once finalized, Challenger will receive $12.5 million in cash and retain a 60% stake in the project. Following this, Chevron will fund a 3D seismic survey, with up to $15 million allocated to the campaign, and, subject to positive results, will cover the first $20 million of Challenger’s well drilling costs if the project progresses to that stage.
The company expects the finalization of the farm-out within the next 4-8 weeks, marking a significant milestone for its operations. Looking forward, Challenger intends to replicate this success by marketing a similar deal for its OFF-3 acreage, with plans to initiate farm-out talks by mid-2025. The company hopes to secure a partner by late 2025 or early 2026.
Meanwhile, Challenger reported stable production levels from its core assets in Trinidad and Tobago. Across the Goudron, Inniss-Trinity, and Icacos fields, production averaged 283 barrels of oil per day in the first half of the year. This stable output, combined with the company's focus on cost savings and operational consistency, has contributed to an improved financial position.
Uliel commented on the company’s progress, stating, “The first half of 2024 has been truly transformational for our company. We solidified much of the hard work from the past several years, achieved a remarkable outcome with the AREA OFF-1 farm-out, and laid the groundwork for substantial future growth.”
Challenger's success in solidifying key partnerships and stabilizing production signals a strong foundation for future operations as it moves into the second half of the year.
