29th Oct 2024 17:06
(Alliance News) - Challenger Energy Group PLC on Tuesday said that it has completed the farmout of a 60% interest in the Area Off-1 block to Chevron Mexico Finance LLC.
Accordingly, the Atlantic margin-focused energy company has received a cash payment of USD12.5 million, while retaining a 40% non-operating interest in Area Off-1.
Chevron has assumed operatorship of the block and going forward will carry 100% of the company's share of the costs associated with a 3D seismic campaign.
Should Chevron decide to drill an initial exploration well on the block, it will also carry 50% of the Challenger's share of costs associated with that well, up to a maximum of USD20 million net to Challenger Energy.
"The cash received and farmout terms will ensure that our company is fully funded for the foreseeable future. And, just as important, this farmout validates our capabilities in terms of securing early-access to promising exploration blocks, and progressing them rapidly via high-quality technical work," said Chief Executive Officer Eytan Uliel.
"In the coming months we expect to communicate plans for 3D seismic acquisition on AREA OFF-1, and at the same time we will be fully engaged in a technical work program for our second Uruguay licence, AREA OFF-3, applying the learnings from work on AREA OFF-1 - our objective is to be in a position to kick off a farm-out process for that block in mid-2025. The next year will thus be an exciting and busy time for Challenger Energy."
Shares in Challenger Energy Group closed 11% higher at 6.39 pence each in London on Tuesday.
By Holly Beveridge, Alliance News senior reporter
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