Challenger Energy Group (CEG) has finalised the sale of a majority stake in an offshore exploration block, AREA OFF-1, located off Uruguay’s coast. This transaction grants Chevron Uruguay Exploration, a subsidiary of Chevron, the role of operator for the block.
CEG, headquartered on the Isle of Man, initially acquired the AREA OFF-1 block from Uruguay’s state-owned ANCAP in May 2020. In 2023, Challenger engaged in a farm-out process, allowing it to sell a 60% interest in the block to Chevron while retaining a 40% non-operating stake. This deal marks a significant step for Challenger, providing both a substantial cash infusion and a strategic partnership with an industry leader like Chevron.
Chevron’s investment includes a cash payment of $12.5 million and a commitment to cover Challenger’s share of costs for a planned 3D seismic survey on the block, with coverage up to $15 million. Additionally, if Chevron chooses to drill an exploration well, it will bear 50% of Challenger’s costs, up to a cap of $20 million. Chevron and Challenger are now collaborating with ANCAP to ensure a seamless transition and plan the seismic survey, anticipated to begin in early 2025. AREA OFF-1 is a large offshore area covering 14,557 km² in depths ranging from 80 to 1,000 metres, located about 100 km from Uruguay’s coast.
Looking ahead, Challenger also aims to advance another exploration block, AREA OFF-3, and apply lessons learned from its work on AREA OFF-1. Challenger intends to initiate a farm-out process for AREA OFF-3 by mid-2025, setting the stage for an active year.
The AREA OFF-1 block shares geological characteristics with offshore Namibia, where recent major discoveries by TotalEnergies and Shell highlight the potential for substantial oil reserves, suggesting a promising future for Challenger’s ventures in Uruguay.
Challenger’s partnership with Chevron brings funding, expertise, and momentum to its Uruguay operations, strengthening its strategic position and operational capabilities.
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.
