The Challenger Energy Group PLC (LON: CEG) share price jumped 14.1% after releasing an update about its operations in Uruguay. The report highlighted the award of multiple licenses in the country’s offshore oil exploration blocks to global oil and gas companies.
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The oil and gas company noted that the AREA OFF-4 deep-water offshore block, which is adjacent to its AREA OFF-1 shallow-water exploration block, was awarded to a consortium of Shell and APA Corporation after a competitive bidding process.
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Challenger Energy also reminded investors that the AREA OFF-2 and AREA OFF-7 blocks were awarded to Shell in May 2022, while the AREA OFF-6 block was allocated to APA. The AREA OFF-1 block was awarded to Challenger Energy in May 2020.
Overall, most of the available blocks in the offshore region were awarded to multinational oil and gas companies with a rich history of identifying exploration blocks with significant potential and bridging them to production.
Challenger Energy’s AREA OFF-1 block has a management estimated resource potential exceeding 1.5 billion barrels of oil equivalent recoverable (BBOE). The estimates are based on current mapping from explorations in relatively shallow waters.
Investors cheered the news, given the presence of global oil companies in the region, indicating that the potential for massive oil discoveries and recoveries is relatively high. The company’s strategy in the region remains the same as it focuses on attracting a farm-in partner.
The farm-in partners would help Challenger speed up the work program on the block. The firm is currently in the first year of a four-year work program, undertaking 2D seismic data licencing, G&G studies, and 2D reprocessing and interpretation. The firm expects to complete the program by the end of H1 2023.
Eytan Uliel, Challenger Energy’s CEO, said: “In 2020, Challenger Energy successfully bid for the AREA OFF-1 block in Uruguay, and in so doing, strategically gained first mover status offshore Uruguay. We secured the block with a modest initial work commitment, which we are already well advanced to completing, considerably ahead of schedule.”
The companies awarded blocks in the area are expected to spend over US$230 million in the coming years.
*This is not investment advice.
Challenger Energy's (CEG) share price.
The Challenger Energy share price rallied 14.13% to trade at 0.105p, rising from Friday’s closing price of 0.092p.
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