Challenger Energy establishes £3.3m funding facilitiy

Challenger Energy announced a series of strategic initiatives on Wednesday, most notably the establishment of a £3.3m convertible loan note funding facility.

The AIM-traded firm said the facility aimed to bolster business development, particularly focusing on accelerated technical work programs in Uruguay.

Additionally, the company revealed plans to progress business opportunities in Trinidad.

Of the £3.3m loan facility, £0.55m had already been drawn.

The company said it retained the option for the future drawdown of the remaining amount.

Challenger said the primary aim of the funding was to support the accelerated technical work in both the AREA OFF-1 and the newly awarded AREA OFF-3 blocks in Uruguay.

The loan was also intended to advance business development in Trinidad - another market where Challenger Energy had shown interest.

Challenger Energy said iit had also been granted a three-month extension for completing the sale of the Cory Moruga asset in Trinidad and Tobago.

The transaction was currently awaiting regulatory approval, with the move said to be in alignment with the company's overall strategy, which emphasised focusing on core assets.

In line with that strategy to focus on core assets, the firm said it had relinquished the Weg Naar Zee production sharing contract (PSC) in Suriname.

Further strengthening the company’s internal confidence, the company meanwhile said its chief executive officer intended to purchase around 60 million shares.

That, it said, would increase his aggregate shareholding to around 6% of the company.

In another move aimed at cost-effectiveness, Challenger Energy said it would issue around 315 million new shares to various service providers in lieu of cash fees.

“In the last year, across the broader Challenger Energy business, we have completed value-enhancing technical work, improved production operations, high-graded our portfolio, secured new assets, and ensured a range of options are available to deliver additional funds into the business,” said chief executive officer Eytan Uliel.

“Progress has been substantial, but the timing of when we need to spend and when we will see cash inflows is not always within management's control.

“We have therefore now taken steps to ensure that we have flexible additional funding available, if and when needed, so that we can press on with accelerating new licences and high prospect business development opportunities in both Uruguay and Trinidad.”

Uliel said that in the current market, the company saw benefit in having an established facility in place, even if it ultimately did not use it all.

“Personally, I am excited with how Challenger Energy is now poised - a honed portfolio, a clear focus on those assets which are world-class and have the potential to deliver a major value uplift in the near term, and the financial flexibility to take disciplined portfolio decisions when opportunity presents.

“Day by day I believe we are creating intrinsic value which I strongly believe will ultimately be rewarded, and which is why I am increasing my personal holding in the Company at this time.

“I look forward to sharing news of continued progress with fellow shareholders over the coming months.”

At 1100 BST, shares in Challenger Energy Group were down 5.88% at 0.08p.

Reporting by Josh White for Sharecast.com.