Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF) CEO Eytan Uliel talked with Proactive about the company's strategic shift following the sale of its remaining operations in Trinidad and Tobago. Uliel explained that this move allows Challenger Energy to fully focus on its high-impact offshore exploration in Uruguay, where it has a robust program planned for the next 18 months.
Discussing the deal, Uliel clarified that Challenger Energy will receive a total cash consideration of $1.75 million, with additional value from liabilities transferred to the buyer, Predator Oil & Gas PLC. There is also a potential performance-based bonus of up to $2 million, depending on future production outcomes. He described the agreement as beneficial for all parties, emphasizing that the company now has no residual exposure to Trinidad and Tobago operations.
Turning to Uruguay, Uliel highlighted progress on the farm-out of Area OFF-3, following the successful farm-out of Area OFF-1 to Chevron. The company is currently reprocessing seismic data, conducting various geological studies, and aims to commence a farm-out process in July, with the goal of securing a partner by year-end.
Investor interest in Challenger Energy has grown, particularly in North America, with Morgan Stanley increasing its stake. Uliel attributed this to the company’s credibility and track record, stating, “We said we would do good quality work on OFF-1, and we did it. We said we'd get a farm-out partner of global cachet, and we did it.”
Proactive: Eytan, very good to speak with you. You’ve announced the sale of your remaining operations in Trinidad and Tobago. So really a big focus on your Uruguay operations going forward?
Eytan Uliel: Yes, exactly. That was the news yesterday. We've been talking about it for quite some time. We really needed to figure out the right way forward for our operations in Trinidad and Tobago. Ultimately, we came to the conclusion that the business was stable, managing month to month without costing us anything, but also not generating any returns.
We were unable to define a way forward for scaling and profitability without significant investment in time and capital. Given our ongoing success in Uruguay, we decided that the best course of action was to exit from Trinidad and Tobago. We announced that transaction yesterday.
Proactive: And it looks like a pretty good deal. You got an upfront payment of $6 million, but there's also deferred consideration depending on production outcomes?
Eytan Uliel: Yes. To be precise, the total cash consideration we will receive is $1.75 million, which will be paid in stages—some upfront, some upon deal completion, and some in deferred installments. Additionally, part of the payment is in Predator Oil & Gas PLC shares, which we can hold or sell.
The balance of the deal includes Predator and West Indian Energy Group Limited taking over the business with all its commitments, liabilities, and work program obligations. That was valued at $4.25 million. There is also an upside performance payment—if they increase production and recover their costs, we could receive an additional $2 million in the future.
So, it’s a strong deal for us. It's also a good deal for Predator and West Indian Energy, but most importantly, it allows us to move forward with our core focus: high-impact offshore exploration in Uruguay.
Proactive: Speaking of Uruguay, following the successful farm-out of Area OFF-1 to Chevron, you're now preparing Area OFF-3 for a similar process. Where are you with that?
Eytan Uliel: Work is progressing every day across multiple parallel work streams. We’ve licensed historic 3D seismic data, which is currently being reprocessed. This includes data reconditioning, AVO analysis, a satellite seep study, and a seabed box coring study. These efforts feed into our broader reinterpretation and remapping initiatives.
All of these work streams are on track to come together in July, allowing us to populate a data room and formally start the farm-out process. Our objective remains to secure a farm-out partner by the end of the year.
Proactive: It looks like investors are supportive of the steps you’re taking. Morgan Stanley recently increased its stake.
Eytan Uliel: Yes. Since closing the Chevron deal, we’ve seen growing interest in the company, including from investors who previously hadn’t engaged with us. We now have a marquee partner, strong assets, and operate in a region attracting considerable attention.
Notably, we are seeing increased interest from North America. Traditionally, we struggled to gain traction there, but now I’m receiving calls, being invited to roadshows, and seeing North American buyers invest in our stock.
This is very gratifying. Over the past four years, we have worked hard to execute on our plans and build credibility. We said we would do good quality work on OFF-1—we did. We said we'd get a farm-out partner of global standing—we did. We said we’d progress OFF-3—we are. We said we would resolve Trinidad—we have.
As we continue to deliver on our commitments, investors recognize the long-term value proposition. In oil exploration, if we successfully drill and make a discovery, our company could be worth 10 to 15 times what it is today. Investors who understand the industry’s timeframes and risk-reward dynamics are showing increased interest.
Proactive: Eytan, I hope you’ll keep us updated on any additional progress. Thank you very much for speaking with us today.