Oil and gas firm Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF) said it will turn attention to its Uruguay-based projects this year, suggesting these offer the “most obvious” growth potential.
In an update, the company said it would look to rapidly progress projects in the area, including at its AREA-OFF 1 well which contains an estimated 1bn barrels of oil equivalent, before later farming it out.
This follows the successes seen by the likes of Shell and TotalEnergies in Uruguay, it added.
Challenger also hinted towards an expansion of its Trinidad projects, where most of its production is based, through new licence applications, mergers, acquisitions or joint programs with other firms.
It held US$2.7mln in cash as of early January, alongside no material debt, suggesting all planned work at its Trinidad sites could be supported by local flows this year.
Challenger announced it had dropped two licences worth 10% of its production capacity in December and February, in a bid to maximise cash and reduce risk.
Chief executive Eytan Uliel commented: “During 2022 we reset Challenger Energy's business following earlier non-commercial exploration drilling outcomes.
“We cut costs, reassessed priorities, reshaped operations, recapitalised, and settled legacy creditors.
“Now, as we start 2023, the focus is on those areas that offer the best scope for near-term value upside."
He said Uruguay is "most obvious", with the plan for AREA OFF-1 being to complete the initial low-cost work program and then "proceed rapidly to farm-out the asset, as well as build a broader business in the country".
In Trinidad, he said the goal is to drive profitability from the main producing assets, while seeking to monetise non-core assets which add no or little production but carry significant commitments, ideally whilst retaining exposure to any upside.
“Challenger Energy starts 2023 in a strong place. Existing cash and identified inflows mean we are not under funding pressure.”