Challenger Energy Group PLC (AIM:CEG, OTC:BSHPF) welcomed the entry of Shell PLC (LSE:SHEL, NYSE:SHEL) and APA Corp into Uruguay following the award of three offshore blocks in the country’s latest licensing round.
ANCAP, the Uruguayan state-owned petroleum company, announced the award of three of the six available blocks and noted the return to the country of leading companies after not receiving proposals of this type for 10 years.
Two blocks have been awarded to Shell (formerly Royal Dutch Shell): a shallow offshore block immediately adjacent to Challenger's OFF-1 block (OFF-2) and a deep-water block (OFF-7); while APA Corp (formerly Apache) has been awarded a deep-water block (OFF-6).
ANCAP said the total value of work committed across blocks OFF-2, OFF-6 and OFF-7 by Shell and APA over the next four years is about US$200mln.
“Challenger Energy considers the entry into Uruguay of two well regarded international companies, and the commitment by both to undertake sizeable and meaningful work programs during an initial exploration period (including 3D seismic acquisition and new well drilling), to be a highly positive development, validating both the company's decision to enter Uruguay in 2020 and underscoring the solid technical foundation and excellent value proposition represented by the OFF-1 block,” the AIM-traded company said in a statement.
ANCAP said the offers received were driven by discoveries in geologies similar to those of the Uruguay basins, on the west coast of Africa, and based on the prestige and reputation of the country in terms of its democratic, economic and legal stability, as well as its demonstrated respect for the commitments made.
Challenger Energy also considers its OFF-1 licence area and the broader offshore Uruguay play system to be similar to discoveries made offshore Namibia by TotalEnergies (the Venus well) and Shell (the Graff well), where multi-billion-barrel reservoirs have been encountered.