Challenger Energy reports progress in sale of Cory Moruga

The AIM-traded company said the step followed the binding term sheet signed by both firms on 20 December, and the entry into fully-termed long-form legal documentation.

Under the agreed terms, Predator would acquire 100% of the issued share capital of T-Rex Trinidad - an indirectly wholly-owned subsidiary of Challenger Energy that holds the company's 83.8% interest in, and operates, the Cory Moruga licence.

Challenger Energy would retain the option to repurchase 25% of Predator's share in T-Rex in the future on an agreed basis.

The two companies also entered into a collaboration agreement in relation to carbon dioxide-enhanced oil recovery activities and projects in other areas of Trinidad.

Additionally, they had agreed to a mutual settlement and discharge of all disputes and claims in relation to the Inniss-Trinity carbon dioxide EOR pilot project.

However, the completion of the transaction remained conditional on the Trinidadian Ministry of Energy and Energy Industries consenting to a revised work programme for the Cory Moruga licence, proposed by Predator.

The ministry would also need to agree to a revision of future fees for the licence, and a settlement and cancellation of past claimed dues pertaining to the licence.

Challenger said the parties would work to secure the required consents and agreements, with completion expected on or before 30 May, with a long stop date of 31 August.

Once completed, the transaction was expected to provide a gross potential value proposition to Challenger of up to $9m, including a cash payment of $2m from Predator, with $1m paid on completion and a further $1m six months after that.

An additional $1m conditional cash payment would be made once the Cory Moruga field production reached 100 barrels of oil per day.

“The transaction, in addition to the transaction involving Caribbean-Rex as announced on 14 February, is in line with the company's strategy in Trinidad and Tobago of seeking to monetise assets not in the core area of operation, so as to maximise cash and offset risk and work program commitments, but at the same time retain upside exposure,” the board said in its statement.

At 1015 GMT, shares in Challenger Energy were flat at 0.11p.

Reporting by Josh White for Sharecast.com.