Challenger Energy makes progress in Uruguay

Caribbean and Americas-focussed Challenger Energy updated the market on its Uruguayan assets on Thursday, having submitted geotechnical reports for AREA OFF-1 to ANCAP, the Uruguayan regulator, fulfilling its minimum work program obligation on 11 December.

The AIM-traded firm said the reports were now subject to ANCAP's final review and approval.

It said the submission marked the completion of the minimum work programme for the first exploration period of the AREA OFF-1 licence, which began in August 2022 and extended until August 2026.

Additionally, Challenger Energy said it had undertaken discretionary work items to enhance technical understanding.

On 12 December, contracts for four offshore exploration licences in Uruguay - AREAs OFF-2, OFF-5, OFF-6, and OFF-7 - were executed at a signing ceremony in Montevideo.

The licences were awarded to Shell, YPF, and APA Corporation, and Challenger Energy was invited to and attended the event.

ANCAP indicated that the contract for AREA OFF-4, an APA-Shell consortium block adjacent to AREA OFF-1, was expected to be signed shortly.

The contract for Challenger Energy's AREA OFF-3 licence, the last remaining offshore block awarded to the company in May, was also expected to follow soon.

Challenger said the minimum work programmes for the newly awarded licences would involve a significantly more extensive scope and cost than the AREA OFF-1 and AREA OFF-3 blocks.

That would include 3D seismic acquisition and reprocessing and, in the case of APA Corporation's OFF-6 block, one deepwater exploration well.

Signing the contracts would allow seismic acquisition companies to begin permitting and approval processes for potential 3D seismic acquisition programmes in Uruguay.

Pending permitting and approvals, such surveys could start as early as late 2024 or early 2025.

"This week has been extremely significant for the emerging Uruguayan offshore exploration sector, and highlights how exciting we think the next few years will be," said chief executive officer Eytan Uliel.

"Challenger has now completed AREA OFF-1's minimum work programme well ahead of schedule.

"At the same time, the finalisation of contracts with global industry heavyweights for multiple offshore blocks has defined Uruguay's operator landscape, provided certainty as to their upcoming, substantial exploration programmes, and has also laid out the pathway to a potential 3D seismic shoot in late 2024 [or] early 2025, including coverage of prospects of interest on AREA OFF-1.

"These are all important commercial, technical and operational inputs relevant to our ongoing AREA OFF-1 farm-in process which, given developments this week, we now expect to be able to successfully conclude in the first quarter of 2024."

At 1220 GMT, shares in Challenger Energy Group were down 5% at 0.11p.

Reporting by Josh White for Sharecast.com.