Challenger Energy, the Caribbean and Americas focused energy company, with oil production, development, appraisal, and exploration assets in the region, is pleased to announce the formal signing of its AREA OFF-3 licence, offshore Uruguay.
The AREA OFF-3 licence was awarded to the Company on 2nd June 2023 under the Open Uruguay Round process and, following final regulatory approvals being granted, was signed in Montevideo on 7th March 2024 (the "Licence"). Accordingly, AREA OFF-3's first exploration period will commence on 7th June 2024, and will run for four years, until 6th June 2028.
The AREA OFF-3 licence covers an area of 13,252 km2 located in relatively shallow water depths (from 20 to 1,000 meters) approximately 100 kms off the Uruguayan coast. The block has substantial existing 2D and 3D seismic coverage, with two previously identified material prospects possessing currently estimated gross resource potential of up to ~2 billion barrels of oil and up to ~9 trillion cubic feet gas.
During the initial exploration period, the Company's minimum work obligations on the AREA OFF-3 block are relatively modest, comprising licencing and reprocessing of 1,000 kms of legacy 2D seismic data, and undertaking two geotechnical studies. The Company intends to follow a similar strategy to that successfully adopted for the AREA OFF-1 licence (the farm-out of which to Chevron was announced on 6th March 2024), specifically to accelerate its technical work programme including additional discretionary work, with the objective of high-grading existing prospects and identifying new plays and prospects, and ultimately with a view to introducing a strategic partner at an early stage.
Eytan Uliel, Chief Executive Officer of Challenger Energy, said:
"Following on from our recently announced farm-out of the AREA OFF-1 licence to Chevron (pending regulatory approvals), we are very pleased to announce that the AREA OFF-3 licence has now been formally signed, cementing Challenger Energy's position as a significant industry participant in Uruguay's offshore. AREA OFF-3 represents a successful expansion of the Company's business in Uruguay, a country that has fast become one of the world's frontier exploration hotspots. We believe that AREA OFF-3 has strong technical merit and offers an exciting value-creation opportunity. Therefore, like with AREA OFF-1, our immediate strategy for AREA OFF-3 is to commence accelerated technical work, in support of seeking an early farm-out. We look forward to keeping shareholders informed of our progress".
An updated presentation on the Company's assets in Uruguay has today been posted to the Company's website - www.cegplc.com
ABOUT AREA OFF-3 LICENCE
· As part of the Open Uruguay Round, First Instance of 2023, CEG submitted a bid for the AREA OFF-3 block, offshore Uruguay. On 2nd June 2023, Administración Nacional de Combustibles Alcohol y Pórtland ("ANCAP"), the Uruguayan national regulatory agency, advised that CEG 's offer for AREA OFF-3 had been accepted. Following final regulatory approvals, the AREA OFF-3 licence was formally signed in Montevideo on 7th March 2024, and thus the licence's first four-year exploration period will commence on 7th June 2024.
· The AREA OFF-3 licence covers 13,252 km2 and is situated in relatively shallow water depths, from 20 to 1,000 meters, approximately 100 km off the Uruguayan coast. To the west the block is adjacent to the AREA OFF-2 block held by Shell, with the Amalia prospect straddling both the AREA OFF-2 and AREA OFF-3 blocks. To the east the block is adjacent to the Brazilian maritime border, an area that was subject to considerable licencing in December 2023, with thirteen nearby Brazilian blocks licenced variously to Chevron, Shell, CNOOC and Petrobras. To the south, the block is adjacent to two deepwater Uruguayan blocks, AREA OFF-6, held by APA Corporation (and on which block APA has a commitment to drill an initial exploration well in that block's initial four-year exploration period), and AREA OFF-7, which is held by Shell.
· There has been considerable prior seismic activity on the AREA OFF-3 block, comprising ~4,000 kms of legacy 2D (various vintages) and ~7,000 km2 of legacy 3D (2012). There are no wells on the block. Based on this prior data, AREA OFF-3 is believed to be highly prospective, with two material-sized prospects having previously been identified and mapped in water depths of approximately 250 meters, being:
- the Amalia prospect, with P10/50/90 resource estimates of 2,189 / 980 / 392 (EUR mmboe, gross; source: ANCAP). As noted, the Amalia prospect straddles the boundary with Shell's AREA OFF-2 - current estimates are that ~ 30% of the Amalia prospect is contained within AREA OFF-3; and
- the Morpheus prospect, with P10/50/90 resource estimate of 8.96 / 2.69 / 0.84 (EUR TCF, gross; source: ANCAP). The Morpheus prospect is entirely contained with AREA OFF-3.
· The Company's minimum work obligations during AREA OFF-3's first four-year exploration period are modest, consisting of licencing, reprocessing and reinterpretation of 1,000 kms of legacy 2D seismic data, and undertaking two geotechnical studies. The Company has no obligation to acquire new seismic data or to drill an exploratory well during the block's initial four-year exploration period.
· Recent conjugate margin discoveries offshore Southwest Africa have triggered renewed interest in the types of plays present in Uruguay. In particular, the data and enhanced technical understanding provided from recent discoveries offshore Namibia (Venus - TotalEnergies, Graff and Jonker - both Shell) provides greater confidence that the regional petroleum system charging those discoveries is likely to be present offshore Uruguay. As a result, new exploration plays, in addition to the Lower Cretaceous deepwater turbidites discovered by Venus and others, are believed to be present and charged by the same petroleum system and source rock.
· Thus, the Company considers that it would be an opportune time to accelerate its technical work programme for AREA OFF-3, on a discretionary basis, with a view to high-grading currently mapped prospects as well as identifying new plays, and with the ultimate objective of introducing a strategic partner to AREA OFF-3 at an early stage (similar to the strategy adopted by the Company in relation to the AREA OFF-1 licence). Further announcements will be made as this work progresses.