Challenger Energy (LON: CEG) shares have plunged on Wednesday after the company released an update on the ongoing production testing of the Saffron-2 appraisal well.
Challenger said that the well in Trinidad has been successfully drilled and completed, with work underway to improve production levels.
However, it did not achieve sustained production from zones due to technical and mechanical issues encountered during tests.
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The AIM-quoted company has established a commercial production rate of 81 barrels of oil per day at Saffron-2, with the produced oil already being sold and generating immediate revenue.
While the company is generating revenue from the oil, the rate has disappointed investors, with Challenger Energy shares down 24.03% at 1.31p so far on Wednesday.
Challenger is currently working on a plan to maximise production revenues from the Middle Cruse units and bring on additional production from the as yet unperforated Upper Cruse units.
“Pleasingly, testing in the Middle Cruse has resulted in an economic level of production thus far being achieved, and we are working to increase production further,” said Eytan Uliel, CEO of Challenger.
“Focus now turns to integrating what we have learned from this well, to updating our resource estimate accordingly, and to defining the best way forward for the project as a whole – building production and cashflow remains our overarching strategic imperative,” added Uliel.
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