Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF), the Caribbean and Americas-focused oil and gas company, said it has entered into a binding head of terms with Predator Oil & Gas Holdings PLC (LSE:PRD) to sell it its Trinidadian licence.
Included in the agreement is the conditional sale of Challenger’s interest in the non-producing Cory Moruga licence in Trinidad and a framework for future CO2 collaboration between the two.
Challenger holds an 83.3% interest in the Cory Murga licence, which will be sold to Predator by way of the sale of 100% of the issued share capital of T-Rex Resources, Challenger's subsidiary that operates the Cory Moruga licence.
There will also be a 25% back-in right, allowing Challenger to repurchase 25% of T-Rex, based on future drilling and enhanced oil recovery activity (EOR) and associated future production.
Additionally, the pair have signed a "mutually agreed settlement in relation to all matters relating to the Inniss-Trinity CO2 enhanced oil recovery pilot project previously carried out by Predator at the company’s Inniss-Trinity block.”
Challenger said it will receive up to US$9mln in an aggregate value proposition, which includes US$2mln in staged cash, US$1mln in contingent cash, removal of all liabilities and potential exposures with the Cory Moruga licence, retention of residual back-in rights and a full settlement with Predator in relation to the Inniss-Trinity CO2 EOR pilot project.
“Predator intends to aggressively take the block forward to production, through a combination of new technical studies, CO2-enhanced oil recovery activities, and new well drilling,” said Challenger CEO Eytan Uliel in a statement.
“In the event Predator are successful, we retain a future ability to come back into a 25% interest, and we have put in place a new framework to work with Predator on considering the application of CO2 EOR techniques on our other Trinidadian assets," he added.