Chevron Takes Over Uruguay Block in Area Deemed Conjugate of Orange Basin
Challenger Energy Group PLC said it has completed a transaction to sell a 60 percent stake in Uruguay’s offshore AREA OFF-1 block, located in an area deemed to have similar geophysical properties with the Orange Basin in Africa, to Chevron Corp. for $12.5 million in cash.
Castletown, Isle of Man-based Challenger, through CEG Uruguay SA, retains the remaining 40 percent. “Chevron has assumed operatorship of the block and going forward will carry 100 percent of the Company's [Challenger’s] share of the costs associated with a 3D seismic campaign on AREA OFF-1 (up to a maximum of US$15 million net to Challenger Energy)”, Challenger said in a statement.
“Thereafter, should Chevron decide to drill an initial exploration well on the AREA-OFF 1 block, Chevron will also carry 50 percent of the Company's share of costs associated with that well (up to a maximum of US$20 million net to Challenger Energy)”.
A 3D seismic campaign is set to launch in the first half of 2025, Challenger said.
"Completion of the AREA OFF-1 farmout is a game-changer for Challenger Energy”, Challenger chief executive Eytan Uliel said “… The cash received and farmout terms will ensure that our Company is fully funded for the foreseeable future.
“And, just as important, this farmout validates our capabilities in terms of securing early-access to promising exploration blocks, and progressing them rapidly via high-quality technical work.
“In the coming months we expect to communicate plans for 3D seismic acquisition on AREA OFF-1, and at the same time we will be fully engaged in a technical work program for our second Uruguay license, AREA OFF-3, applying the learnings from work on AREA OFF-1 - our objective is to be in a position to kick off a farm-out process for that block in mid-2025”.
The two licenses span 19,000 square kilometers (7,335.94 square miles). Challenger Energy says conjugate margin discoveries in Africa offer hope for similar potential in Uruguayan plays. “In particular, the data and enhanced technical understanding provided from recent discoveries offshore Namibia provides greater confidence that there might be potential for a new, prolific petroleum system in the Uruguay offshore, including CEG’s blocks”, it says on its website. “This has accelerated licensing, seismic acquisition and drilling across the region”.
Exploration success in the Orange Basin, bordered by four countries including Namibia and South Africa, may explain the foray into the South American conjugate of the basin, according to Rystad Energy. Discoveries on the Namibian side of the Orange Basin over the last two years have shown 2.1 billion barrels of oil equivalent in recoverable reserves, according to Rystad.
In Brazil’s Pelotas Basin, for which the country awarded 44 blocks last December including to Chevron, “[t]he rush by exploration and production companies to secure positions… can be explained by the possibility of replicating exploration success in the Orange Basin, the Pelotas Basin's conjugate in Africa”, the energy intelligence company said March 20.
In Argentina’s Norte Basin, Equinor ASA is “testing the South Atlantic conjugate margin opposite the Orange Basin in Namibia”, Rystad wrote separately on July 1.
Chevron is also a participant in the Namibian sector of the Orange Basin, where it holds an 80 percent operating stake in Petroleum Exploration License (PEL) 90.
Elsewhere offshore Namibia, Sintana Energy Inc. announced April 29 an agreement with partners and Chevron to transfer operatorship of PEL82 in the Walvis Basin to the United States energy giant.
To contact the author, email jov.onsat@rigzone.com
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