Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF) reported an encouraging first quarter whilst highlighting further production growth in recent weeks.
Total gross oil production for the first three months of 2022 amounted to 32,183 barrels, equating to a daily rate of 358 bopd – before reaching and sustaining a rate some 12% higher at 400 bopd into April.
The bump in production was the result of successful recompletion work undertaken in March and April and the company is planning other near-term production enhancement activities for the coming months (with a further 10% production growth targeted).
Challenger said it sold 29,727 barrels of oil in the quarter, at an average realised price of US$83.37 per barrel for the quarter (by the month of March the average had risen to US$97.13). The company noted that the oil is priced at a 10% discount to the WTI benchmark and it does not use any hedging instruments, so it fully benefits from higher crude prices.
The company said it generated US$1.17mln of revenue from oil sales in the quarter, with net revenue after government royalties and adjustments marked at around US$39.29 (and was US$46.20 for the month of March). Challenger told investors it had a pre-tax operating cash surplus of US$200,000 for the quarter.
“This encouraging first quarter result reflects a renewed focus on routine operations, stringent cost control, and the committed efforts of everyone in the Challenger Energy team,” said chief executive Eytan Uliel.
“I'd also note that both average production and realised prices achieved in the first quarter of 2022 are considerably below the levels we are seeing as we start the second quarter, where the company is benefitting from continued strong oil prices globally and higher production.
“The increased and more stable base line production we are currently enjoying has been gained through a targeted work programme aimed at production enhancement, made possible due to the successful completion of our restructuring and recapitalisation in March 2022.”
Challenger noted that its improved first-quarter performance came despite material disruptions to operations and production caused by grid power supply issues, including a nationwide grid outage in February.
It is taking steps to avoid such problems in the future with plans to upgrade in-field power infrastructure including installation of a new transformer and several generator-sets in the company's primary producing fields.