Chevron, Challenger Energy partner to develop “promising” exploration region offshore Uruguay
(WO) – Challenger Energy and its wholly-owned Uruguayan subsidiary, CEG Uruguay SA, have entered into a farm-out agreement with Chevron Uruguay Exploration Limited ("Chevron"), a wholly-owned subsidiary of Chevron Corporation, related to a 60% interest in the AREA OFF-1 block, offshore Uruguay.
Chevron will acquire a 60% participating interest in the AREA OFF-1 block and will assume operatorship of the block. CEG Uruguay will retain a 40% non-operating interest in the
Chevron will pay to CEG $12.5 million cash on completion of the transaction. Chevron will carry 100% of CEG Uruguay's share of the costs associated with a 3D seismic campaign on AREA OFF-1, up to a maximum of $15 million net to CEG Uruguay.
Following the 3D seismic campaign, should Chevron decide to drill an initial exploration well on the AREA-OFF 1 block, Chevron will carry 50% of CEG Uruguay's share of costs associated with that well, up to a maximum of $20 million net to CEG Uruguay.
The AREA OFF-1 block is a large offshore block covering approximately 14,557 km2, located approximately 100 km offshore Uruguay in water depths ranging from 80 meters to 1,000 m. The company was awarded the AREA OFF-1 license in June 2020 under the Open Uruguay Round process. Formal signing of the license took place on 25th May 2022, and the license’s initial four-year exploration term commenced on 25th August 2022.
Eytan Uliel, Chief Executive Officer of Challenger said, "We are absolutely delighted to announce the farm-out of our AREA OFF-1 block in Uruguay to Chevron, a globally recognized industry leader. We firmly believe that AREA OFF-1 holds enormous potential, and this farm-out is strong validation of the high-quality technical work CEG has done to-date.
“Our stated strategy for AREA OFF-1 was to introduce a larger industry player as operating partner, with a view to rapidly progressing the block via an accelerated 3D seismic campaign followed by, we hope, exploration well drilling. The farm-out achieves this aim, and we look forward to continuing on our exciting journey in Uruguay, both on AREA OFF-1, now in partnership with Chevron, and also on our still wholly owned AREA OFF-3 block. We are grateful to ANCAP for the confidence shown in CEG when awarding these blocks, and we thank our stakeholders for their continuing support."
