Challenger Energy (CEG) said it has completed the logging of the Saffron-2 well with around 1,400ft of reservoir sands intersected across the Upper, Middle and Lower Cruse formations.

Challenger Energy has a 100% operating interest in the well and the broader Saffron project.

After drilling its first well onshore Trinidad, the Caribbean and Atlantic margin focused oil and gas company said it has identified oil-bearing sands across all reservoir sections of interest, consistent with pre-drill estimates and those indicated from the Saffron-1 discovery well.

Initial results of the log interpretation have identified over 1,400ft of gross reservoir sands with the results also yielding in excess of 300ft of net oil-bearing reservoir sands (net pay). 

The Lower Cruse formation, which is the primary reservoir of interest based upon Saffron-1 and the final reservoir unit to be drilled out 63ft of net oil-bearing reservoir sands (net pay), has been measured with a further 70ft of potential net oil-bearing reservoir sands indicated.

Challenger said the drill rig has been released and well completion activities are underway, and perforation / production testing of the well is on track to commence on or around 23 July.

CEO, Eytan Uliel, said, “We now head toward production testing later this month, and once Saffron-2 is online and a degree of production history is established, we can then work with the authorities in Trinidad to plan how best to execute a broader development of the Saffron field.”

Saffron 2, onshore Trinidad, is a twin of the Saffron-1 well, and to date has encountered similar Upper, Middle and Lower Cruse reservoirs to Saffron-1. Based upon the Saffron-1 discovery, the prognosed production rate from Saffron-2 is in the range of 200 - 300 bopd.

The Company told investors that it has continued to make good progress on securing additional sources of funding, in particular in relation to a potential Saffron development.

Challenger signed a term sheet in June 2021 with Arena Investors, LP for a Convertible Loan Note funding of US$10m (and up to US$17.5m). If concluded, this will provide funding capacity for ongoing development of the firm’s projects, including in particular the drilling of a further three production wells as part of the initial phase of development of the Saffron project.

 “We are working to conclude a funding on mutually acceptable terms, with a view to having capital available once we have production data from the Saffron-2 well and have been able to assess development options and schedule for a broader Saffron development,” added Uliel.

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The initial phase of developing the Saffron field will involve drilling between five to nine production wells at an estimated capital cost of US$12 - US$20m. This initial program is projected to achieve an average daily production of 1,000 - 1,500 bopd which, based on a US$60/bbl oil price, could generate annualised net operating cash flows of up to US$12m.

Thereafter, the current anticipated full-field development for the Saffron project could ultimately comprise up to 30 wells in total, with a projected peak production of approximately 4,000 bopd, potentially generating annualised net operating cash flows of up to US$25 million.

Following a successful first phase of development of the Saffron project, Challenger expects that it will be able to fund the balance of the overall field development from ongoing cash flow generated from Saffron field production. Accordingly, the facility contemplated under the Term Sheet is expected to be sufficient to fund the first phase of development of the Saffron project.

In June, Challenger told investors that it was making “solid progress” against its goal to reset the business with its core strategic objective focused on growing production and cashflow. 

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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