Challenger Energy Group PLC (AIM:CEG, OTCQB:BSHPF) told investors it has completed the first phase of technical work on its AREA OFF-3 licence offshore Uruguay and has now initiated a formal farm-out process.
The review identified two primary prospects, Benteveo and Amalia, which are estimated to host some 380 million barrels of recoverable oil.
Challenger said it expects to receive offers from interested partners by the end of 2025.
Chief executive Eytan Uliel described "strong momentum" across the business, and added that the company is executing its plan to advance exploration activities in Uruguay.
"We have completed the first phase of technical work on AREA OFF-3 with encouraging results, and our farm-in process for this block has now commenced," Uliel said in a statement.
"Meanwhile, AREA OFF-1 remains on track to see 3D seismic acquisition commence at the end of this year, we completed our full exit from Trinidad and Tobago, and prudent cash management means we have sufficient funds for everything we plan to do over the next 18 months."
He added: "The upcoming period promises to be busy and exciting for Challenger Energy - I look forward to updating shareholders as to our continued progress."
Challenger highlighted that the Benteveo and Amalia prospects lie in shallow water with moderate reservoir depths, which would support lower development costs and improve the potential commercial viability, even at modest discovery volumes.
The company said it also sees additional upside in leads located in the north-east of the block, which shares geological characteristics with recent South Atlantic discoveries.