CHALLENGER ENERGY CONSIDERS FAST TRACK FOR SIGNIFICANT OIL AND GAS DISCOVERY OFFSHORE URUGUAY

(WO) – Challenger Energy announced the formal signing of its AREA OFF-3 license offshore Uruguay.

Source: Challenger Energy

The AREA OFF-3 license was awarded to the company on June 2, 2023, under the Open Uruguay Round process. Accordingly, AREA OFF-3's first exploration period will commence on June 7, 2024, and will run for four years, until June 6, 2028.

The AREA OFF-3 license covers an area of 13,252 km2 in relatively shallow water depths (from 20 to 1,000 m), approximately 100 km offshore Uruguay. The block has substantial existing 2D and 3D seismic coverage, with two previously identified material prospects possessing currently estimated gross resource potential of up to 2 Bboe and up to 9 Tcfg.

To the west the block is AREA OFF-2 block held by Shell, with the Amalia prospect straddling both the AREA OFF-2 and AREA OFF-3 blocks. To the east the block is the Brazilian maritime border, an area that was subject to considerable licensing in December 2023, with thirteen nearby Brazilian blocks licensed variously to Chevron, Shell, CNOOC and Petrobras.

To the south are two deepwater Uruguayan blocks, AREA OFF-6, held by APA Corporation (and on which block APA has a commitment to drill an initial exploration well in that block's initial four-year exploration period), and AREA OFF-7, which is held by Shell.

There has been considerable prior seismic activity on the AREA OFF-3 block, comprising roughly 4,000 km of legacy 2D (various vintages) and about 7,000 km2 of legacy 3D (2012). There are no wells on the block. Based on this prior data, AREA OFF-3 is believed to be highly prospective, with two material-sized prospects having previously been identified and mapped in water depths of approximately 250 m, being:

• the Amalia prospect, with P10/50/90 resource estimates of 2,189 / 980 / 392 (EUR mmboe, gross; source: ANCAP).
• the Morpheus prospect, with P10/50/90 resource estimate of 8.96 / 2.69 / 0.84 (EUR TCF, gross; source: ANCAP). The Morpheus prospect is entirely contained with AREA OFF-3.

During the initial exploration period, the company's minimum work obligations include licensing and reprocessing of 1,000 km of legacy 2D seismic data, and undertaking two geotechnical studies.

Challenger Energy intends to follow a similar strategy for the AREA OFF-1 license (the farm-out of which to Chevron was announced on March 6, 2024), specifically to accelerate its technical work program, including additional discretionary work, with the objective of high-grading existing prospects and identifying new plays and prospects, with a view to introducing a strategic partner at an early stage.

Recent conjugate margin discoveries offshore Southwest Africa have triggered renewed interest in the types of plays present in Uruguay. In particular, the data and enhanced technical understanding provided from recent discoveries offshore Namibia (Venus - TotalEnergies, Graff and Jonker - both Shell) provides greater confidence that the regional petroleum system charging those discoveries is likely to be present offshore Uruguay.

As a result, new exploration plays, in addition to the Lower Cretaceous deepwater turbidites discovered by Venus and others, are believed to be present and charged by the same petroleum system and source rock.

Eytan Uliel, Chief Executive Officer of Challenger Energy, said, "Following on from our recently announced farm-out of the AREA OFF-1 license to Chevron (pending regulatory approvals), we are very pleased to announce that the AREA OFF-3 license has now been formally signed, cementing Challenger Energy's position as a significant industry participant in Uruguay's offshore.

“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. We believe that AREA OFF-3 has strong technical merit and offers 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".