(Sharecast News) - Caribbean and Americas oil and gas company Challenger Energy updated the market on its activities around the AREA OFF-1 block, offshore Uruguay on Wednesday, as it kicked off a farm-out process.
The AIM-traded firm said it recently completed a volumetric assessment of the block's three primary prospects - Teru Teru, Anapero, and Lenteja.
Additionally, ongoing technical work uncovered new leads and prospects, which were expected to contribute to the overall resource and prospect inventory of the AREA OFF-1 block.
The board said the volumetric assessment revealed an estimated recoverable resource of about two billion barrels within the primary prospects.
In a more optimistic scenario, the estimated recoverable resource reached more than 4.9 billion barrels.
Challenger said the ongoing technical work had confirmed the presence of significant resources, and had also identified additional leads and prospects.
Once the evaluation of the new opportunities was complete, they were expected to further enhance the resource and prospect inventory of the AREA OFF-1 block.
In light of the developments, Challenger Energy said it had initiated a formal adviser-led farm-out process.
The company said it had received strong interest from potential partners who were keen to participate in the development of the AREA OFF-1 block.
It said the farm-out process was designed to bring in partners who could provide the necessary expertise, resources, and capital to unlock the full potential of the block's oil and gas resources.
"We continue to be encouraged by the opportunity that our AREA OFF-1 licence in Uruguay represents," said chief executive officer Eytan Uliel.
"Our technical work highlights how AREA OFF-1 is clearly world class acreage with massive resource potential, in what has become a global exploration hotspot."
Uliel said that to capitalise on that, a farm-out process was launched, with "very strong" initial indications of interest received from multiple major oil companies.
"Our target is to complete a farm-out transaction by year end, so that we can continue to rapidly progress work on the block, and thereby generate value for shareholders."
At 1315 BST, shares in Challenger Energy Group were up 13.51% at 0.11p.
Reporting by Josh White for Sharecast.com.
Challenger Energy (CEG)