In a Y/E letter to shareholders Challenger Energy reports significant progress regarding its two prime exploration blocks offshore Uruguay.
AREA OFF-1
2024 saw the successful farmout of the AREA OFF-1 block to Chevron announced on 6 March 2024. This transaction was a result of our high-quality technical work, that established the licence area's multi-billion-barrel prospectivity. Chevron's commitment to fully carry the Company's share of costs for a 3D seismic campaign - and 50% of the costs for an initial exploration well should Chevron move forward with it - positions AREA OFF-1 for significant progress in the coming year, but with reduced financial risk.
Successful completion of the farmout also delivered a $12.5 million cash payment to Challenger Energy and, at the same time, we retain a 40% non-operating interest in the block, affording us enormous flexibility in how we participate in this block's future.
AREA OFF-3
On 11 March 2024, we formalized our AREA OFF-3 license, marking the start of an initial four-year exploration period. This highly prospective 13,252 km² area, located in relatively shallow waters about 100 kilometers off the Uruguayan coast, benefits from extensive 2D and 3D seismic coverage and, like AREA OFF-1, has multi-billion-barrel resource potential from multiple play types.
We have since commenced our technical work program for AREA OFF-3, which centers around reprocessing 3D seismic data. This critical activity, set to conclude in the first half of 2025, will refine the prospect inventory, identify potential drill locations, and support a formal farmout process targeted to commence in mid-2025. The anticipated costs of our work program, projected at $1-1.5 million, reflect our commitment to a disciplined and value-driven approach to early-stage exploration.
Trinidad & The Bahamas
We are currently reviewing our assets in Trinidad and The Bahamas, and anticipate making a decision on their future in the first half of 2025.
Financial
The funds received on completion of the Chevron farmout means that we are fully funded for the foreseeable future - both in terms of corporate overhead and all planned work programs - with no debt, a healthy cash surplus, and no unfunded commitments or obligations. Thus, as we exit 2024 and head into 2025, I believe our Company is in the best financial position it has been in for many years.
2024 underscores Challenger Energy's ability to navigate complex projects, partner with leading industry players, and leverage our assets to create value for shareholders. As we look ahead to 2025, our focus remains steadfast: advancing exploration activities in Uruguay, optimizing our portfolio, and continuing to execute on our business strategy.