Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF) has reported new estimates which show that in the 'upside case' its exploration project offshore Uruguay could be host to as much as 4.9bn barrels of recoverable oil resources.
A more conservative ‘base case’ estimation identifies a possible 6.5bn barrels of ‘in place’ oil across three prospects (Teru Teru, Anapero and Lenteja) which corresponds to some 2bn barrels of recoverable resources.
The 4.9bn barrel ‘upside’ estimate meanwhile relates to some 16bn barrels of ‘in place’ oil.
For important context, the small-cap explorer noted that it believes that the "economic field size" for a new discovery in this location would be in the range between 150mln and 200mln barrels.
"We continue to be encouraged by the opportunity that our AREA OFF-1 licence in Uruguay represents,” said chief executive Eytan Uliel.
“Our technical work highlights how AREA OFF-1 is clearly world class acreage with massive resource potential, in what has become a global exploration hotspot."
Challenger added that ongoing technical work continues to identify further exploration leads and prospects in the licence (which is tagged ‘AREA OFF-1’).
Previously, in April, Challenger told investors it had estimated AREA OFF-1 had between 1bn and 2bn barrels of potential resources across its exploration prospects, following a reprocessing of 2D seismic.
Today’s blue-sky data reveal comes as Challenger continues to progress a farm-out process which seeks to bring in a partner to support the funding for future phases of exploration in the Uruguay project.
It noted that, as previously advised, it has compiled a comprehensive data-room for interest parties.
The company has now kicked off a formal adviser-led farm-out process, after it received several unsolicited approaches and strong interest from leading industry participants.
The aim is to complete a farm-out transaction before the end of 2023 in order to accelerate value realisation from the asset and including meeting the timeline to include AREA OFF-1 in a larger regional multi-participant 3D seismic data acquisition campaign that is anticipated in 2024.
“I can confirm that a farm-out process has now commenced, with very strong initial indications of interest received from multiple major oil companies,” Ulliel added.
“Our target is to complete a farm-out transaction by year end, so that we can continue to rapidly progress work on the block, and thereby generate value for shareholders."
Challenger was an early entrant to offshore Uruguay before the broader industry rated it amongst the last remaining hotspots for oil exploration.
Since the AIM-quoted firm secured its interests in AREA OFF-1, the surrounding area has been snapped up by the likes off Shell PLC (LSE:SHEL, NYSE:SHEL), Argentina’s YPF (NYSE:YPF) and national oil companies.