Challenger Energy Group PLC has completed a significant transaction, selling a 60 percent stake in Uruguay’s offshore AREA OFF-1 block to Chevron Corporation for $12.5 million in cash. Located in an area with similar geophysical properties to Africa’s Orange Basin, AREA OFF-1 has attracted interest from Chevron, which now assumes operatorship and holds a controlling stake. Challenger, headquartered in Castletown, Isle of Man, will retain the remaining 40 percent share in the project through its subsidiary CEG Uruguay SA.
Chevron has agreed to cover 100 percent of Challenger’s share of the costs for an upcoming 3D seismic campaign on AREA OFF-1, up to a maximum of $15 million. If Chevron decides to drill an exploration well after the seismic campaign, it will fund 50 percent of Challenger’s share for the well, capped at $20 million. Challenger has announced plans to begin the 3D seismic campaign in the first half of 2025, a major milestone for the company.
Eytan Uliel, Challenger’s chief executive, described the completion of the farmout as transformative for the company. The influx of cash and supportive farmout terms ensure financial security for Challenger’s operations and validate its strategy of acquiring early-stage exploration assets. In the months ahead, Challenger will outline further plans for the 3D seismic work on AREA OFF-1 and continue development on its second Uruguayan license, AREA OFF-3, using insights gained from the current project. By mid-2025, Challenger aims to initiate a farm-out process for AREA OFF-3.
Challenger’s licenses cover 19,000 square kilometres, with its exploration strategy fuelled by recent discoveries across Africa’s conjugate margin. The Orange Basin, situated offshore Namibia and neighbouring countries, has proven prolific, with 2.1 billion barrels of recoverable oil equivalent discovered in the last two years, as reported by Rystad Energy. Challenger believes similar potential exists off Uruguay’s coast, where technical data supports the possibility of a new petroleum system.
Chevron’s presence in South America reflects a broader interest in replicating the Orange Basin’s success in conjugate basins. In Brazil’s Pelotas Basin, where Chevron acquired exploration blocks last December, the region’s likeness to Africa’s Pelotas Basin has drawn substantial interest. Chevron also operates in Namibia’s Orange Basin, holding a significant stake in Petroleum Exploration License 90, and has partnered with Sintana Energy in the Walvis Basin on similar initiatives.
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.
