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(Sharecast News) - Challenger Energy announced the signing of the AREA OFF-3 licence on Monday, marking a significant milestone for the Caribbean and Americas-focussed energy company.
The AIM-traded firm said the licence was awarded on 2 June 2023 under Uruguay's 'Open Uruguay Round' process, with exploration set to start on 7 June 2024 and lasting four years until 6 June 2028.
Covering 13,252 square kilometres in relatively shallow waters about 100 kilometres off Uruguay's coast, the licence held substantial promise.
Benefitting from extensive 2D and 3D seismic coverage, the block boasted two previously-identified prospects with estimated gross resource potential of about two billion barrels of oil and up to nine trillion cubic feet of gas.
During the initial exploration phase, Challenger Energy said its obligations were focussed yet impactful, involving licensing, reprocessing and reinterpretation of 1,000 kilometres of legacy 2D seismic data, along with two geotechnical studies.
Following a successful strategy akin to the AREA OFF-1 licence, which saw a farm-out to Chevron announced on 6 March, the company said it aimed to expedite its technical work programme to enhance its existing prospects, identify new opportunities, and attract strategic partners.
The AREA OFF-3 licence's strategic positioning adjacent to significant regional players such as Shell and APA Corporation, coupled with prior seismic activity, underscored its potential.
Notably, the adjacent Amalia prospect, partially within AREA OFF-3, and the entirely contained Morpheus prospect, presented substantial opportunities for exploration and development.
Renewed interest in similar plays triggered by recent discoveries offshore southwest Africa further bolstered the optimism surrounding Uruguay's offshore potential.
With enhanced technical understanding and confidence in the regional petroleum system, Challenger said it was poised to leverage that momentum, accelerating its work programme with a keen eye on introducing strategic partnerships at an early stage.
"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," said chief executive officer Eytan Uliel.
"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."
Uliel said the company believed AREA OFF-3 had strong technical merit, offering 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."
At 1259 GMT, shares in Challenger Energy Group were down 1.7% at 0.15p.
Reporting by Josh White for Sharecast.com.
