(Sharecast News) - Challenger Energy, an oil and gas company focused on the Caribbean and Americas region, announced the sale of its St Lucia-based subsidiary Caribbean Rex on Tuesday for a total value of $1.5m (£1.23m).
The AIM-traded firm said it had already received an immediate cash payment of $1m.
It said the buyer would assume $0.3m of third-party liabilities, and was expected to make a subsequent payment of $0.2m in mid-March.
As part of the deal, the buyer would also take on a three-well drilling obligation at the South Erin field, which could cost up to $5m.
Challenger said it was retaining an 18-month option to repurchase a 49% interest in the South Erin field if the buyer achieved success with its drilling.
"Through the transaction announced today we get upfront cash, we give up only a small percentage of overall production, we are relieved of various liabilities as well as the cost of a committed drilling campaign, and we retain optionality while someone else drills those wells and funds that cost," said chief executive officer Eytan Uliel.
"This is consistent with the structure we adopted for the previously announced transaction relating to the Cory Moruga licence, and is, generally speaking, the model for how we intend to take smaller, non-core assets in Trinidad forward - through transactions that monetise the assets and offset our operating and financial risks, yet retain upside exposure in a success case."
At 1407 GMT, shares in Challenger Energy Group were down 3.48%, at 0.11p.
Reporting by Josh White for Sharecast.com.
Challenger Energy (CEG)