Challenger Energy (CEG ) said it is making “solid progress” against its goal to reset the business with its core strategic objective focused on growing production and cashflow. 

The Caribbean and Atlantic margin focused oil and gas company said it has already completed major elements of its ‘reset’ program which started in April 2021, including its name change, share consolidation, board and management transition, and capital raising. 

The Group said cost saving initiatives implemented across the business have thus far given rise to an overall saving of c.15% against recurring Group overhead on an annualised basis. 

As at 31 May 2021, Challenger had unrestricted cash and cash equivalent holdings of $10.7m. It said additional cost savings initiatives will continue to be implemented over the coming months with a view to achieving the stated savings target of 20% - 30%. 

Operationally, production and drilling operations have been maintained despite the ongoing COVID-19 related restrictions on the movement and availability of staff and contractors. 

For the 5 months (post the acquisition of Columbus Energy Resources) to 31 December 2020 aggregate gross production from the Company's five producing assets in Trinidad was reported at 64,088 barrels of oil (bbls), therefore generating gross revenues of $2.3 million.  

For the period January 2021 to May 2021, aggregate gross production from the Company's five producing assets in Trinidad was 64,319 bbls, generating gross revenues of $3.3m. 

Challenger said it expects to complete drilling and logging of the Saffron-2 well in Trinidad on or about 30 June 2021, and to commence a production test of the well in mid-July 2021. 

Meanwhile, the Company highlighted to investors that it has progressed ‘all major workstreams necessary’ to commence drilling an initial well at the Weg Naar Zee project in Suriname. Due to ongoing adverse COVID-19 circumstances in Suriname, the operational expectation is that commencement of drilling will be in late August / early September 2021.  

Challenger is now working on securing various further sources of funding, in particular debt and hybrid-debt facilities, in order to develop its assets and for working capital purposes. At the same time, the group is also evaluating various growth and transactional opportunities. 

“Operationally, we will shortly complete and production test the Saffron-2 well in Trinidad, we are looking toward commencing drilling in Suriname as soon as circumstances allow, and we are maintaining production from existing fields,” said Eytan Uliel, CEO of the Company. 

He added, “Corporately, we are tightly managing our finances, implementing cost reduction initiatives, and looking to define the future shape of the Company - including taking tangible steps towards introducing less dilutive debt funding sources into our overall funding mix.  

Much remains to be done, and the next six months will be a busy time for Challenger Energy. We will keep shareholders regularly informed as to our progress." 

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The Caribbean-focused oil-and-gas firm, formerly Bahamas Petroleum, says initial analysis for the top two sections of Saffron-2 in Trinidad has demonstrated its production potential.  

While these sections aren't the primary targets of the Saffron-2, drilling continues towards the primary Lower Cruse reservoir and the well remains on track for completion around June 23.  

Thereafter (and assuming positive results), the well will be lined and readied for production testing. It is expected that the process of preparing for production testing (including perforation) will take 2-3 weeks, such that initial production could occur in around mid-July.   

Shares in Challenger Energy ticked up by 0.72% in value this morning following the update. 

Reasons to Follow CEG

Challenger Energy is a Caribbean and Atlantic margin focused oil and gas firm with a full life cycle of exploration, appraisal, development and production assets and licences. It has assets onshore in Trinidad and Tobago, Suriname and offshore in The Bahamas and Uruguay.     

During 2020, Challenger successfully transitioned from a single purpose company into a broader, multi-faceted investment opportunity following its merger with Columbus Energy.  

The merger has enabled it to acquire and manage larger exploration licence targets across four key jurisdictions, while it also continues to advance its existing projects in the Bahamas.    

Trinidad and Tobago:  

  • Five producing fields    
  • Two appraisal / development projects    
  • A prospective exploration portfolio in the Southwest Peninsula    
  • Suriname    
  • Onshore appraisal / development project    

Challenger considers its exploration licences in Uruguay and The Bahamas as highly prospective and expects them to offer high-impact value exposure within its portfolio value. 

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