Challenger Energy Group PLC (AIM:CEG, OTCQB:BSHPF) this week provided an update on its operations, highlighting progress across its Uruguay assets following the release of interim results.
The company told investors that it achieved all the objectives it set out for the first half, which included advancing technical studies on its Uruguay licences, finalising the sale of its Trinidad operations, and maintaining a strong cash balance.
On the OFF-1 block, Challenger Energy highlighted the successful farm-out agreement with Chevron, completed at the end of last year. Chief executive Eytan Uliel said the partnership is working well, with Chevron now operating the block.
Uliel joined the Proactive studio. Here we take a closer look at what he said.
Proactive: Eytan, very good to speak with you. You’re out with your interim results last week. Could you take us through some of the highlights of the first six months?
Eytan Uliel: Hi. Morning. Nice to be here, as always. It was a good six months. We did all the things that we said we were going to do. The area OFF-1 program in Uruguay continues as planned. We did a lot of technical work on area OFF-3, which we’ve now completed. We finalized the sale of our business in Trinidad and we kept running the show on a lean basis. So we have a very healthy cash position as we look forward.
Proactive: Let’s talk about area OFF-1, because you’ve handed over operatorship to Chevron. How’s that partnership working and what should investors expect next?
Eytan Uliel: We completed the farm-out with Chevron at the end of last year. The first six months of this year were about the handover of operatorship. That partnership is going fantastically well. Chevron are the right choice for us. The big milestone is the commencement of 3D seismic acquisition, which we hope will begin by the end of this year, pending environmental permits from the Uruguayan Ministry of Environment. That’s a hugely value-adding step, and we hope it leads to drilling shortly after.
Proactive: You’ve just finished the first phase of work on area OFF-3 and launched a farm-out. What makes this block attractive?
Eytan Uliel: Area OFF-3 is our second Uruguay block. It’s shallower water and shallower reservoirs. Our commitment was technical work, which we completed. That included reprocessing and interpreting existing 3D seismic data and other studies. We identified two material prospects: Benteveo and Amalia. Together they have around 380.00 million barrels recoverable, with upside to one billion. That’s attractive to industry majors. We’ve started the farm-out process and hope to select a partner early next year.
Proactive: You’ve now fully exited Trinidad and Tobago. How does this sharpen your focus?
Eytan Uliel: It greatly simplifies operations. Trinidad required a large team and daily operational management. That’s now gone. We added cash from the sale, and now our focus is entirely on Uruguay. Both assets are world-class, and without distractions, we are fully committed to progressing them.
Proactive: Challenger is fully funded into 2027. How does that position shape your ability to deliver?
Eytan Uliel: We can deliver on everything without raising money. The Chevron farm-out brought a big cash infusion. Our operations are lean. OFF-1 costs are carried by Chevron. Technical work on OFF-3 is complete. We have a healthy balance sheet and low operating costs. Over the last four or five years, we’ve shown we do what we say, and now it’s about execution.
Proactive: Looking ahead to the next 12 to 18 months, what are the key milestones investors should watch?
Eytan Uliel: For OFF-1, the seismic permit is key. That means seismic acquisition by year-end, followed by processing, and then a drilling decision next year, which Chevron as operator will make. For OFF-3, we aim to secure a partner, complete a second phase of technical work, and prepare for a drilling decision. If things go well, within two years we could be looking at two wells, one on each block.
Proactive: Eytan, thank you very much for speaking with us today.