LNG

Challenger Energy, the Americas-focused and London-listed exploration and production company, has formally signed the Area 3 licence offshore Uruguay where field resources include around 9 trillion cubic feet of gas.

The Area 3 licence was awarded under the Open Uruguay Round process and, following final regulatory approvals being granted, was signed in Montevideo on March 7.

“Accordingly, the Area 3 first exploration period will commence on 7th June 2024 and will run for four years, until 6th June 2028,” said Challenger.

Depth and range

The Area 3 licence covers an area of 13,252 square kilometres located in relatively shallow water depths (from 20 metres to 1,000 metres) around 100 kms (62 miles) off the Uruguayan coast.

“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 billion barrels of oil and up to 9 Tcf of natural gas,” said Challenger.

Uruguay’s state-owned oil and gas company ANCAP awarded Challenger with the Area 1 block licence in May 2020 and the company confirmed a farm-out process for the block three years later.

“Thanks to the farm-out agreement with Chevron Corp., the company is in the process of divesting a 60 percent interest in the Area 1 block,” explained Challenger.

During the initial exploration period, the Company's minimum work obligations on the Area 3 block are relatively modest, comprising licensing and reprocessing of 1,000km of legacy 2D seismic data and undertaking two geotechnical studies.

“The company intends to follow a similar strategy to that successfully adopted for the Area 1 licence (the farm-out of which to Chevron was announced on 6th March 2024), specifically to accelerate its technical work programme including additional discretionary work,” Challenger added.

Strong position

Eytan Uliel, Chief Executive of Challenger, said that the signing of the Area 3 licence cements the company’s position as a significant industry participant in Uruguay's offshore.

“It 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,” explained Uliel.

“We believe that Area 3 has strong technical merit and offers an exciting value-creation opportunity,” the CEO stated.

Challenger noted that to the east is the Brazilian maritime border, an area that was subject to considerable licensing in December 2023, with 13 nearby Brazilian blocks licenced variously to Chevron, Shell, China National Offshore Oil Corp. and Brazil’s Petrobras.

To the south, the block is adjacent to two deepwater Uruguayan blocks, Area 6, held by Houston, Texas-based APA Corp. and Area 7, which is held by Shell.