Chevron has officially assumed its position as the operator of the AREA OFF-1 block offshore Uruguay after completing the farm out transaction with Challenger Energy.
Challenger Energy has transferred a 60% interest in the block to US-based Chevron’s subsidiary, Chevron Mexico Finance, Sucursal Uruguay for a cash consideration of $12.5m (514.93m pesos).
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Following the farm-out agreement, which was announced in March this year, Challenger Energy holds a 40% non-operating interest in the block.
The transition of operatorship to Chevron came with a commitment from the new operator to fully cover Challenger Energy’s share of costs for an upcoming 3D seismic campaign on AREA OFF-1, amounting to up to $15m.
Additionally, if Chevron decides to proceed with drilling an initial exploration well in the block, it will fund 50% of Challenger Energy’s costs for the well, capped at $20m.
The companies are also planning the 3D seismic campaign, which is due to begin in the first half of 2025.
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By GlobalDataChallenger Energy CEO Eytan Uliel said: “Completion of the AREA OFF-1 farmout is a game-changer for Challenger Energy. We have achieved an outcome that introduces Chevron, a recognised industry leader, as operator of the block, who will now commence with executing a considerable value-creating work programme.
“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 programme for our second Uruguay licence, 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.”
Earlier this month, Chevron Canada, an indirect subsidiary of Chevron, finalised a definitive agreement to sell its assets to Canadian Natural Resources for $6.5bn (C$8.86bn).
The deal includes a 20% non-operated interest in the Athabasca Oil Sands Project and a 70% operated stake in the Duvernay shale and associated assets.
