Challenger Energy Group PLC (AIM:CEG, OTCQB:BSHPF) this week updated investors on its exploration assets in Uruguay, where work is advancing ahead of seismic.
The company is fully funded through the end of 2026, following a cash payment received from partner Chevron.
The American oiler is covering the majority of costs related to the upcoming 3D seismic campaign at the OFF-1 block in Uruguay.Preparations for that campaign are well underway, with Chevron and Challenger working toward a Q4 2025 start.
Chief executive Eytan Uliel joined the Proactive studio to talk about, and here’s what he shared.
Proactive: Eytan, very good to speak with you. Your released an update yesterday focused on your progress in Uruguay. Firstly, what work is currently being undertaken at OFF-1?
Eytan Uliel: On OFF-1 we're actually remarkably busy at the moment.
I know people who watch this tend to love big, earth-shattering news, but it's the daily grind that makes the business.
We are working with our partner, Chevron, to prepare for a 3D seismic campaign, which should kick off in the last quarter of this year.
There's an enormous amount of contracting and technical preparations to be done.
There's quite literally a team working on this full time. In parallel, as we announced yesterday, the Uruguayan government is processing the necessary permits for the seismic vendors.
This includes a series of public consultations, which have begun and seem to be going fine.
All indications are that the permits will be issued with enough lead time for the campaign to begin, as planned, later this year.
To your question, there's a lot of daily activity — the bread and butter of oil company life — preparing for a 3D seismic campaign, which is no small endeavor.
Proactive: Once the 3D seismic campaign begins, how long will it be until results are released to the market?
Eytan Uliel: Well, I don't know is the short answer. Chevron is the operator following last year's farm-out, so it will be Chevron who processes the data. Their technical analysis capabilities are extensive.
We're probably looking at seeing some initial results in the first or early second quarter of next year, assuming everything proceeds on schedule.
But the key decision point is towards the end of next year — whether Chevron and we proceed with drilling an initial well.
All this seismic and supplementary technical work feeds into that.
Proactive: Moving on to OFF-3, can you share how the initial results of seismic are looking? Are the team excited?
Eytan Uliel: The work there is reprocessing of existing 3D seismic, which is fairly complex.
The bulk of that has been completed and it now moves into interpretation, mapping and volumetrics.
It’s a little too soon for definitive conclusions, but we are excited. It’s following a similar trajectory to the work we did on OFF-1 ahead of the farm-out.
We’ll be in a position to kick off a farm-out process for OFF-3 in the second half of the year.
Our hope is to find a high-quality partner, like with OFF-1.
Proactive: Are you already in talks with potential farm-out partners for OFF-3?
Eytan Uliel: In a manner of speaking. It's a small industry. We're in constant discussions.
Many are waiting for us to formally start the process. But what we learned from OFF-1 is that running a formal, structured process yields the best results.
So while we maintain informal dialogue, nothing really begins until we launch the formal process — once the technical work is complete and the data room is ready.
Proactive: You've agreed an extension for the sale process of your Trinidad assets. What was the reason for this?
Eytan Uliel: In February we agreed to sell the assets. That agreement was conditional on two things — shareholder approval, which we obtained in March, and regulatory approval. That’s common in oil and gas transactions.
Mid-March, a snap election was called in Trinidad, which occurred on April 28.
There was a change of government, and the administrative processes slowed.
We hoped for approvals by end of April, but that didn’t happen. Both parties remain committed and have allowed another 60 days for that process.
Proactive: You recently started trading on the OTC markets in the US. Has there been much interest from US investors?
Eytan Uliel: Yes, quite a lot. After the Chevron farm-out and investment by Charleston Energy, a New York-based energy investor, and institutional buying from firms like Morgan Stanley, we saw growing North American interest.
We pursued an OTC quote to make it easier for these investors to trade our shares.
Daily volume via OTC is increasing, and I’ve attended a few marketing events in the US. Interest has been high.
Proactive: So it looks like you have a busy year ahead. Are you fully funded to complete the work programs planned for the year?
Eytan Uliel: Yes. We received a significant payment from Chevron in October last year.
Our overhead is low, and Chevron covers most costs on OFF-1 under the carried arrangement.
The OFF-3 program is modest in cost, around $1.50 million. So yes, we are fully funded through 2025, 2026 and beyond.
Proactive: Eytan, I hope you'll keep us posted on your progress this year.