Uruguay’s state-owned oil company and regulator, Ancap, has approved Challenger Energy’s farm-out of the AREA OFF-1 licence to Chevron. The approval, granted in March 2024, marks a major step forward for the partnership between Challenger Energy and the US energy giant. Chevron will take over as the operator of the offshore block, assuming a 60% participating interest, while CEG Uruguay will retain a 40% non-operating stake.
Under the terms of the agreement, Challenger Energy is set to receive a payment of $12.5 million from Chevron once the transaction is complete. Eytan Uliel, CEO of Challenger Energy, expressed satisfaction over the regulatory approval, noting that the company has been diligently navigating the necessary processes to get to this point. He described the approval as “key” in enabling the collaboration to move forward.
The upcoming tasks include notifying the Uruguayan Ministry of Industry, Energy and Mining about the agreement and completing the registration with the Ministry of Economy and Finance, which involves a 20-day notification period. Uliel communicated to investors that the company expects to finalise the transaction within four to eight weeks, emphasising that the remaining procedural steps should not take much time.
Once these processes are concluded, Chevron will take the lead as the block’s operator and intends to expedite 3D seismic acquisition, targeting an early 2025 start. The AREA OFF-1 block, located about 100 km offshore Uruguay, covers an area of approximately 14,557 km². Challenger Energy initially acquired the licence in June 2020, with the first four-year exploration phase officially beginning in August 2022. By the end of December 2023, Challenger had successfully completed the minimum work requirements for this phase.
The approval for Chevron’s participation represents a significant advancement for Challenger’s interests in Uruguay, paving the way for further exploration and development in the promising AREA OFF-1 region.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
