TIDMCEG
RNS Number : 4228X
Challenger Energy Group PLC
26 April 2023
26 April 2023
Challenger Energy Group PLC
("Challenger Energy" or the "Company")
URUGUAY AREA-OFF 1 UPDATE
Challenger Energy (AIM: CEG), the Caribbean and Americas focused
oil and gas company, with a range of oil production, development,
appraisal, and exploration assets, provides the following
highlights from its technical assessment of the AREA OFF-1 block,
offshore Uruguay.
HIGHLIGHTS
-- An initial prospect inventory of 1 to 2 billion barrels has
been defined from CEG's 2D seismic reprocessing work
-- Three sizeable prospects have thus far been identified,
derived from a range of play types consistent with those de-risked
by recent successful conjugate margin drilling in Namibia by
TotalEnergies and Shell
-- Prospects are seismically-derived, and supported / further
de-risked by Amplitude Variation with Offset ("AVO") analysis
-- Play robustness is corroborated by geochemical sampling and satellite seep analysis
-- Conjugate margin success, competitive recent licensing rounds
in Uruguay, and technical uplift from CEG's 2023 work will drive
farm-out process, soon to be initiated
SUMMARY
-- The geotechnical assessment programme of the Company's AREA
OFF-1 licence is on-track to be completed by Q3 2023. This
accelerated work will satisfy the entire minimum work obligations
for the block's initial four-year exploration period (i.e., to
August 2026).
-- Reprocessing of 2,100 kms of legacy 2D seismic (completed)
and interpretation and mapping (ongoing) has confirmed considerable
value uplift for the AREA OFF-1 licence, with at least three high
potential prospects identified from two material play types to
date.
-- Technical de-risking has resulted from a range of
workstreams, including AVO analysis, geochemistry seabed sampling,
and satellite seep and slick imagery.
-- Prospect details are:
o "Teru Teru" prospect - a Cretaceous turbidite play; analogous
petroleum system and reservoir age to Namibian ultra-deepwater
discoveries; 460 km(2) in areal extent; Class II AVO supported; an
estimated ultimate recoverable resource in excess of 700 MMboe;
located in approximately 750 metres water depth; and with a
reservoir depth of approximately 4,300 metres.
o "Anapero" prospect - a Cretaceous turbidite play; analogous
petroleum system and reservoir age to Namibian ultra-deepwater
discoveries; 500 km(2) in areal extent; Class III AVO supported; an
estimated ultimate recoverable resource in excess of 500MMboe;
located in approximately 750 metres water depth; and with reservoir
depth of approximately 3,800 metres.
o "Lenteja" prospect - an Early Cretaceous alluvial fan
representing a large stratigraphic trap; analogous to proven legacy
shelf discoveries in Namibia and South Africa; 425 km(2) in areal
extent; an estimated ultimate recoverable resource c. 500MMboe;
located in approximately 85 meters water depth; and with a
reservoir depth of approximately 5,000 metres.
-- Continuing discretionary technical work will seek to define
additional leads and prospects, further refine previous mapping of
identified prospects, generate volumetrics of identified prospects,
and seek to further constrain key technical risks.
-- The Company has compiled a comprehensive data-room, which
includes all new work completed, and following unsolicited interest
from a number of industry counterparties a farm-out process is to
be formally launched. Further announcements will be made as
appropriate.
-- The objective is for the Company to accelerate value
realisation from the AREA OFF-1 licence in Uruguay by introducing a
strategic partner(s) during 2023, to fast-track 3D seismic
acquisition, potentially via a multi-client acquisition in early
2024, as a precursor to further value-creating field activity.
An update Uruguay AREA OFF-1 presentation is now also available
on the Company's website at www.cegplc.com . Additional details are
also set out in the Appendix to this RNS.
Eytan Uliel, Chief Executive Officer of Challenger Energy,
said:
"In 2020, when no other parties were ready to commit, Challenger
Energy was first-mover into offshore Uruguay, securing the AREA
OFF-1 block on an uncontested basis and on highly advantageous work
terms. Since then, margin-opening discoveries offshore Namibia by
TotalEnergies and Shell have made it possible to correlate what are
now proven, oil producing source rocks directly across into the
conjugate margin basins of Uruguay's waters.
As a result, Uruguay has become a new global exploration
hotspot, evidenced by the fact that in the last 12 months all but
one of the available offshore blocks have been licenced by oil
majors and NOCs, bidding sizeable work programs.
In direct response to the exploration success in adjacent
analogue basins and the emerging industry interest it generated, we
committed to remaining ahead of the game, and in late 2022 opted to
accelerated our AREA OFF-1 work program. The goal was to generate a
newly derived, modern dataset supporting prospect definition. The
resulting prospect inventory is now informed by reprocessed legacy
2D seismic, supported by AVO attribute analysis (hugely significant
as this technique is widely used in the industry as a key indicator
of potential hydrocarbons), and corroborated by additional
geochemical and seep analysis studies.
The results from this work have been extremely promising, in
that we are now able to announce a technically supported prospect
inventory of between 1 to 2 billion barrels in this globally
attractive exploration hotspot.
Our next-step objective is to farm-out to an industry
partner(s), so we can fast-track a 3D seismic acquisition. The
high-quality data set we have now compiled, and the intellectual
property created, positions us well, and we will shortly be
initiating a formal farm-out process.
The world for Challenger Energy is changing rapidly. I look
forward to updating shareholders as the year progresses."
For further information, please contact:
Challenger Energy Group PLC Tel: +44 (0) 1624 647
Eytan Uliel, Chief Executive Officer 882
WH Ireland - Nomad and Joint Broker Tel: +44 (0) 20 7220
Antonio Bossi / Darshan Patel / Enzo 1666
Aliaj
Zeus Capital Limited - Joint Broker Tel: +44 (0) 20 3829
Simon Johnson 5000
CAMARCO Tel: +44 (0) 20 3757
Billy Clegg / Hugo Liddy / Sam Morris 4980
Notes to Editors
Challenger Energy is a Caribbean and Americas focused oil and
gas company, with a range of oil production, development, appraisal
and exploration assets and licences, located onshore in Trinidad
and Tobago, and Suriname, and offshore in the waters of Uruguay and
The Bahamas. In Trinidad and Tobago, Challenger Energy has a number
of producing fields and appraisal / development projects. In
Suriname, Challenger Energy has on onshore appraisal / development
project. Challenger Energy's exploration licences in Uruguay and
The Bahamas offer high-impact value exposure within the overall
portfolio value.
Challenger Energy is quoted on the AIM market of the London
Stock Exchange.
https://www.cegplc.com
COMPETENT PERSON STATEMENT
Technical work referred to in this announcement has been
undertaken by various independent third-party specialist advisors.
This technical work has been overseen by Mr. Randolph Hiscock the
Company's New Business Director and Uruguay Managing Director.
In accordance with the AIM Note for Mining and Oil & Gas
Companies, CEG discloses that Mr. Randolph Hiscock is the qualified
person who has reviewed the technical information contained in this
presentation. He has a Masters in Science (Geology) and is a member
of the AAPG & PESGB, and has over 35 years' experience in the
oil and gas industry. Randolph Hiscock consents to the inclusion of
the information in the form and context in which it appears.
APPIX - AREA OFF-1 UPDATE: ADDITIONAL INFORMATION
Background
-- The Company was awarded the AREA OFF-1 block, offshore
Uruguay, in June 2020. Following presidential approval, formal
signing of the licence took place on 25 May 2022, and the initial
four-year exploration term commenced on 25 August 2022.
-- The AREA OFF-1 block is a large, offshore block covering
approximately 14,557 km(2) located approximately 100 kms offshore
Uruguay, in water depths ranging from 80 meters to 1,000
meters.
-- The Company has a 100% working interest in the AREA OFF-1 licence.
-- The Company's minimum work commitments in the initial
four-year exploration period required licencing 2,000 kms of legacy
2D seismic data from ANCAP (the Uruguayan national oil company and
energy regulatory body), reprocessing of same 2D seismic data, and
completion of a geological and resource potential study. There is
no requirement to acquire 3D seismic or drill a well during the
initial four-year exploration period. The Company is, however,
permitted to accelerate work from future exploration periods into
the current initial exploration period, with any accelerated work
credited against subsequent period obligations.
Conjugate context - the significance of Namibian
super-discoveries
-- The AREA OFF-1 licence is located in the Punta del Este
Basin, along the Uruguay-Argentina continental margin. This basin
is a direct conjugate to the Orange Basin offshore southern Namibia
and northern South Africa - i.e., these two basins were co-joined
prior to continental separation and, are believed to have similar
geological characteristics (as demonstrated by correlating regional
2D seismic data across the South Atlantic), particularly in terms
of the potential presence of source rocks and petroleum
systems.
-- Offshore Namibia, two substantial margin-opening discoveries
have been made over the past 15 months, being TotalEnergies' Venus
well (February 2022), later confirmed by Shell's Jonker well (March
2023) and a second play by Shell with its Graff & La Rona
discoveries (February and April 2022).
-- These discoveries have transformed industry perception not
just of Namibia, but also of the potential of the South Atlantic
conjugate margin (i.e., those basins across the Uruguay-Argentina
continental margin, including the AREA OFF-1 in the Punta del Este
Basin). This is because the Early Cretaceous Aptian source interval
that charges Venus and Jonker can be seismically correlated to the
South Atlantic (Uruguay-Argentina) conjugate basins , including the
Punta del Este Basin in which AREA OFF-1 is located. This
establishes the potential for a new, prolific petroleum system
along the South Atlantic (Uruguay-Argentina) conjugate basins.
Impact on activity in Namibia
-- The recent discoveries in Namibia have resulted in
considerable additional industry activity in Namibia now being
planned over the next 12 to 18 months. TotalEnergies has commenced
a drilling campaign to drill up to four appraisal wells from March
2023, the objective being to define the scale and scope of the
Venus discovery, and fast-track an ultra- deepwater development. It
has been announced that over 50% of TotalEnergies' global
exploration budget for 2023 is earmarked for Namibia.
-- Similarly, Shell has indicated that it intends to drill up to
ten Namibian wells in 2023 / 2024 (a mix of exploration and
appraisal wells), GALP has advised it will be drilling a well in
2023 on PEL83 in Namibia, and Maurel & Prom have indicated a
five well campaign offshore Namibia, commencing 2023.
-- Additionally, the recent discoveries in Namibia have seen an
increase in high-value transactional activity relating to Namibian
licences. In October 2022, Chevron farmed-in to PEL 90 offshore
Namibia, for a reported majority interest and operatorship, and
with a carry to the farminee that covers a seismic campaign and
initial exploration well drilling - estimated transaction value
circa US$80 million. In March 2023, Woodside secured an exclusive
option to acquire 56% working interest in PEL 87 offshore Namibia
by funding a fully carried 3D seismic survey - estimated value at
US$35m - and an optional carry on an initial exploration well.
-- The Company believes a similar activity trajectory is likely
over the coming years in Uruguay and northern Argentina.
Impact on activity regionally
-- The recent discoveries in Namibia have also had an impact
south of Uruguay, offshore Argentina. There, the country's first
ultra-deepwater well (Argerich-1) is planned for spud during Q2
2023 with Equinor (the Norwegian state-owned oil and gas company)
as the operator and Shell as partner. The well is to be drilled
approximately 300 kms offshore Argentina, in water depths of
approximately 1,500 meters, to a projected total depth (TD) of
approximately 4,050 meters. The well is targeting Cretaceous basin
floor sandstones similar to TotalEnergies' Venus well offshore
Namibia.
-- Additionally, Equinor in conjunction with partner YPF has
received environmental approvals to acquire 3D seismic across three
blocks offshore Argentina, and other operators including Shell and
TotalEnergies, along with partners BP and Qatar Energy, are
likewise anticipated to acquire 3D seismic during 2023 / 2024.
-- The Company considers that Uruguay will benefit from these
activities / operations being conducted in the broader area and
which are now being accelerated as a result of the Namibian
conjugate margin discoveries.
Uruguay licensing activity
-- The Company considers that the conjugate margin discoveries
in Namibia have also validated its early entry strategy in
Uruguay.
-- Specifically, the Company was the first operator to enter
Uruguay in 2020, pre-dating the conjugate margin discoveries
offshore Namibia. Until the start of 2022, the Company was the only
offshore acreage holder in Uruguay, having bid for the AREA OFF-1
licence on the basis of a modest, low-cost work programme.
-- However, since the discoveries offshore Namibia, five blocks
offshore Uruguay have been awarded, all in 2022, to Shell, APA
Corporation (formerly, Apache) and YPF (the Argentinian state-owned
oil and gas company), such that now all but one available Uruguay
offshore blocks is licenced, and the Company is the only junior
present.
-- These new entrants have made substantial work programme
commitments for the first four-year exploration periods of their
relevant licences, including 3D seismic licensing, acquisition and
reprocessing, exploration well drilling and geological and
geophysical studies. The estimated aggregate value of the work
program bid for these subsequent licences is approximately US$250
million (in aggregate, across the five blocks).
AREA OFF-1 Technical work update
-- Following the conjugate margin drilling successes in Namibia
referred to above, and given the interest this has generated in
Uruguay, in late 2022 the Company decided to accelerate its initial
work program for the AREA OFF-1 block. The objective was to rapidly
improve the geotechnical understanding of the block and to assemble
a state-of-the-art offshore data set, thereby optimally positioning
the Company for securing a farm-out partner.
-- Work commenced in late 2022, and since that time the minimum
work program obligation of licencing and reprocessing legacy 2D
seismic has been substantially completed. The Company is on-track
to fully complete the minimum work program obligation in Q3 2023,
through the preparation of required Geological and Geophysical
("G&G") reports. Thereafter, the Company will have no
obligatory work program commitments until the second exploration
period, which will only commence in August 2026.
-- In addition to work required to satisfy the minimum work
program obligation, over the past six months the Company has also
executed certain additional technical work items, aimed at further
de-risking and high-grading the identified leads and prospects.
This includes Amplitude Variation with Offset (AVO) attribute
analysis of select 2023 reprocessed 2D seismic lines, seabed
geochemistry analysis, and acquiring a satellite seeps and slicks
imaging study. Each of these is discussed in brief detail
below.
2D Seismic reprocessing and interpretation
-- The Company acquired 4,760 kilometres of legacy 2D seismic
data from ANCAP (the Uruguayan energy regulatory body), and
licenced a further 2,100 kilometres of high-graded legacy 2D
seismic data from ANCAP for seismic reprocessing. This licenced 2D
seismic data has now been fully reprocessed in both time and depth
domains, the work having been conducted by Down Under Geophysics, a
specialist seismic reprocessing firm in the United Kingdom.
-- This work has resulted in a substantial uplift in seismic
imaging and improved data resolution. This in turn, has provided
enhanced fault definition, and enabled better identification of
seismic facies and refined prospect mapping. The newly reprocessed
2D data has also facilitated an AVO attribute analysis study
referred to below.
AVO attribute analysis
-- Amplitude Variation with Offset (AVO) attribute analysis is
an advanced processing workflow used in the international
hydrocarbon exploration industry because (in general terms) certain
AVO anomalies are considered to be indicators of the presence of
reservoir zones (sand vs. shale) and potentially, hydrocarbons /
fluids in reservoir.
-- The Company selected six reprocessed high-graded 2D seismic
lines for an initial AVO screening. This work was undertaken by
LEAN Geosolutions, a specialist firm in advanced seismic attribute
evaluation based in Houston. This initial AVO analysis has led to
the identification and definition of three primary prospects
(described further below) from the reprocessed and reinterpreted 2D
seismic data, and corroborated by the other geochemical studies
described below.
-- Based on the excellent results from AVO attribute analysis
thus far, a further seven lines of reprocessed 2D seismic data have
now been selected for similar assessment, with work commenced -
this is expected to be completed in approximately two months.
Seabed geochemistry study
-- The Company acquired and integrated a seabed geochemistry
study conducted by Applied Geochemical Imaging, Houston, in 2017.
In this study, 59 box core seabed samples were acquired across all
Uruguay offshore maritime areas, to determine the presence of
active petroleum systems and detect micro-petroleum seepage from
subsurface reservoirs. 117 geochemical samples from these 59
locations were analyzed for hydrocarbons.
-- This study indicates that the highest hydrocarbon values are
to be found within the AREA OFF-1 block. The hydrocarbon compound
responses and signatures are consistent with active petroleum
micro-seepage along the continental shelf break of AREA OFF-1 that
forms an anomalous fairway along the block's southern boundary and
directly overlies seep and slick anomalies (described below) - thus
increasing geological confidence.
Satellite seep and slicks imagery
-- A second study commissioned by the Company was a review of
available satellite seep and slick imagery. Satellite images
covering approximately 4,000 km(2) of AREA OFF-1, analysed over
several decades for repeatability, were analysed for seeps and
slicks. The study was conducted by SAR Satellite Oil Seeps, a
specialist firm in France.
-- This study validated the presence of 31 oil seeps. When
overlaid on the Company's seismic data set, good geospatial
alignment of those identified seeps to mapped seismic prospects is
observed, thus providing additional corroboration of seismically
defined prospects at the same locations.
Integration, seismic interpretation, and mapping
-- A final body of required work was to interpret the results of
the reprocessed 2D seismic, and then integrate that with the result
of the AVO attribute analysis and other workstreams, to identify
leads and prospects, and to generate prospect maps. This work
(still ongoing) is being conducted by Molyneux Advisors,
geotechnical interpretation consultants based in Perth, and has
thus far resulted in three primary prospects being identified and
mapped, each of which is described briefly below.
Teru Teru prospect
-- The Teru Teru prospect is a Mid Cretaceous onlap turbidite
play with the same petroleum system and reservoir type as evident
in Venus and Jonker discoveries offshore Namibia. This prospect has
been identified based on three reprocessed seismic lines, mapped to
be approximately 460 km(2) in size, corroborated with AVO analysis
indicating porous sand and potential hydrocarbon presence, and
calibrated with the geochemical seabed survey and satellite seeps
studies. On a preliminary basis the Teru Teru prospect is estimated
to contain in excess of 700 MMboe Estimated Ultimate Recovery
("EUR") (subject to final volumetric determination). Based on
current mapping, this prospect straddles the AREA OFF-1 and AREA
OFF-4 boundary. However, and critically, the up-dip termination is
believed to lie on AREA OFF-1, including the trapped area above the
projected oil-water contact.
Anapero prospect
-- The Anapero prospect is a slightly younger Upper Cretaceous
shelf margin turbidite play with the same petroleum system and
reservoir type as reported in the Venus and Jonker discoveries, as
with the Teru Teru prospect. This prospect has been identified
based on several reprocessed seismic lines, mapped to be
approximately 500 km(2) in size, and further corroborated with AVO
analysis indicating potential porous sands and again calibrated
with the geochemical seabed survey and the satellite seeps studies.
On a preliminary basis the Anapero prospect is estimated to contain
in excess of 500 MMboe EUR (subject to final volumetric
determination). Based on mapping, this prospect also straddles the
AREA OFF-1 and AREA OFF-4 boundary however, stratigraphic trap
extents are largely contained inside AREA OFF-1.
Lenteja prospect
-- The Lenteja prospect is an Early Cretaceous stratigraphic
syn-rift clastic play similar to the Kudu field in Namibia, the
AJ-1 and Ilhubhesi discoveries in South Africa. This prospect has
been identified based on multiple reprocessed seismic lines, and
mapped to be approximately 425 km(2) in size. Early Cretaceous
drift sediments overlie the Lenteja prospect, which is sealed by a
major Early Cretaceous syn-rift unconformity. The Lenteja prospect
has a highly reflective, isolated seismic facies package within a
NW-SE trending horst block that dips south along with significant
stratigraphic entrapment. On a preliminary basis the Lenteja
prospect is estimated to contain c. 500 MMboe EUR (subject to final
volumetric determination).
Remaining technical work for 2023
-- As noted, completion of the minimum work program obligation
for AREA OFF-1's initial four-year exploration period requires the
Company to generate two specified G&G reports. This work is
imminent after the geophysical mapping is complete, and the Company
anticipates to finalize these studies and report out to ANCAP in Q3
2023.
-- In parallel, further discretionary work is also ongoing, to
complete prospect mapping and integrating the 2023 reprocessed 2D
with the historic 2D seismic data, to conduct AVO analysis of a
further seven reprocessed 2D seismic lines, and to finalise
volumetric assessment and risked ranking of all identified leads
and prospects.
Farm-out process
-- The Company's commercial objective through the remainder of
2023 is to introduce an industry partner(s) to AREA OFF-1, with the
objective of providing the Company certain liquidity and at the
same time to fast-track a discretionary 3D seismic acquisition
programme in early 2024 (either independently or, more optimally,
by participating in a multi-client 3D seismic acquisition
programme).
-- Various seismic vendors have already proposed a multi-client
3D seismic acquisition programme offshore Uruguay, commencing early
2024, which would potentially cover up to 5,000 km(2) of AREA
OFF-1, encompassing all the identified leads and prospects on AREA
OFF-1. The Company understands that these seismic vendors have
already made application for requisite environmental permits from
the Uruguayan Ministry of Environment and ANCAP.
-- A virtual data room has been assembled, and the Company will
shortly be launching a formal farm-out process. The Company will
make further announcements as appropriate in due course.
ENDS
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