Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF) told investors it has now completed the formal signing of the petroleum licence offshore Uruguay, which was awarded to the company in May 2020.
The AREA OFF-1 licence was awarded prior to an extended period of inactivity due to the Covid-19 pandemic.
Following the formal approval and signing, the company has now begun a four-year exploration period. It includes what the company described as "relatively modest" low-cost reprocessing and reinterpretation of historical 2D seismic data – there are no drilling obligations in the initial phase.
“For very low cost we were able to secure an exploration licence of an extremely high quality, with a greater than 1-billion-barrel recoverable resource potential,” said chief executive Eytan Uliel.
“Globally significant developments are now underway along the South American Atlantic margin in Guyana and Suriname - basins with analogous technical characteristics.
“Even more significantly, very recent mega-discoveries from the South Atlantic conjugate margin to Uruguay, offshore Namibia, from two wells drilled by majors in the past few months, have calibrated and confirmed the play source rock and petroleum systems evident on seismic in OFF-1.”
Uliel added: “At the same time, over the remainder of 2022 and into 2023 we will explore partnering options that could lead to an accelerated work program - the object being to quickly and fully evaluate the licence's potential, and to thereby create what we hope will be an opportunity of great value to shareholders."
In the statement, Challenger highlighted that the Uruguay offshore exploration area is directly analogous to the recent prolific, conjugate margin discoveries made offshore Namibia – Total’s Venus discovery and Shell’s Graff - where reported multi-billion-barrel Cretaceous turbidite reservoirs have been encountered.