Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF) chief executive Eytan Uliel called the firm’s first half of 2024 “truly transformational”, as its farm-out deal with Chevron promises to unlock a high impact exploration project.
In March, Challenger unveiled the Chevron partnership for the OFF-1 licence, in Uruguay, and the transaction is now advancing to completion.
At that point, Challenger will receive $12.5 million in cash as it takes control of the project, with a 60% stake.
Thereafter, Chevron will cover the cost of a 3D seismic campaign for up to $15 million and, subject to results, will pay the first $20 million of Challenger’s well drilling costs (if the project advances to that stage).
Challenger expects the farmout to be finalised within the next 4-8 weeks.
Looking ahead, Challenger intends to repeat the feat as it markets a similar deal for its OFF-3 acreage, with the new farm-out proves starting by ‘mid-2025’ – with the company hoping to secure a partner in the second half of 2025 or early 2026.
Meanwhile, Challenger reported stable production from its core assets in Trinidad and Tobago.
Production from the Goudron, Inniss-Trinity, and Icacos fields averaged 283 barrels of oil per day during the first half of 2024.
The company has focused on cost savings and consistent production, which has led to improvements in its financial performance.
“Overall, the first half of 2024 has been truly transformational for our company, during which time we solidified much of the hard work over the past several years, produced an outstanding result on our AREA OFF-1 farmout ambitions, and clearly laid the foundations on which we hope considerable shareholder value will be built over the coming year,” Uliel said in a statement.