The Challenger Energy Group PLC (LON: CEG) share price rallied 4.17% after releasing an update about its 2023 strategy and work program. The update covered its operations in multiple countries, including Uruguay, Trinidad and Tobago, Suriname, and the Bahamas. The company has slightly different goals for each country.
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Challenger’s Uruguay strategy is focused on rapidly progressing its AREA OFF-1 block, which is its primary asset. The firm wants to complete the final bits of its 4-year exploration program in Q2 2023, which includes conducting 2D seismic reprocessing and other technical studies. The company also wants to sign a farm-out agreement for the block.
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In Trinidad and Tobago, the oil and gas company focusing on the Americas and the Caribbean wants to focus on its core operations which are the Goudron and Inniss-Trinity fields in the southeast of Trinidad. This is where most of the company’s production comes from and is where it has deployed most of its equipment and resources.
Challenger Energy also wants to monetise its non-core assets to maximise its cash flow and offset risk while eliminating cost work commitments. However, the company still wants to retain the right to buy back into the projects it has offloaded later if they are successful.
The recent sale of Caribbean Rex and the disposal of the Cory Moruga licence in December 2022 allowed the company to eliminate significant costs associated with the further development of the two projects while still retaining the right to buy back into the projects. The programs in the Bahamas and Suriname are still in the early stages.
Eytan Uliel, Challenger Energy’s CEO, said:
“During 2022, we reset Challenger Energy's business following earlier non-commercial exploration drilling outcomes. We cut costs, reassessed priorities, reshaped operations, recapitalised and settled legacy creditors. Now, as we start 2023, the focus is on those areas that offer the best scope for near-term value upside… In Trinidad, the goal is to drive profitability from the main producing assets, while seeking to monetise non-core assets which add no or little production but carry significant commitments, ideally whilst retaining exposure to any upside. The two transactions recently announced are consistent with this approach.”
*This is not investment advice.
The Challenger Energy share price rallied 4.17% to trade at 0.125p, from Wednesday’s closing price of 0.120p.
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