Challenger Energy Group “Uruguay holds significant potential”, Daniel Slater, Zeus Capital

Challenger Energy Group (LON:CEG) is the topic of conversation when Daniel Slater, Director Equity Research at Zeus Capital caught up with DirectorsTalk Interviews for an update on Challenger Energy’s developments.

Q1. In February, CEG announced the sale of Caribbean Rex in St Lucia and, in March, has made further progress on the sale of the Cory Moruga license in Trindad and Tobago. How do you view the company’s strategic approach to these sales? Is there any upside potential?

A1. “These deals have given Challenger Energy a significant amount of cash upfront, allowing this to be redeployed elsewhere in the business. Existing production from the assets is limited, but the company has retained upside exposure via back in rights, which can be utilised if the assets are further developed. In our view, we very much appreciate the wisdom of these deals, which deliver cash now without fully surrendering upside.”

Q2. What are the key developments now with CEG’s Uruguayan offshore license?

A2. “The company’s Uruguay exploration position holds very significant potential for the company. There is helpful read across from discoveries being made offshore Southern Africa, and several major oil companies have also taken exploration acreage around their Uruguay position. The company is currently reprocessing existing seismic in order to begin working up exploration prospects, and further seismic may be acquired in due course. We also expect Challenger to pursue a farm out to help fund and support forward activity on the licence. We keenly await further news here.”

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.

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