Uruguay's government-owned oil company and regulator, Ancap, has approved Challenger Energy's farm-out of the AREA OFF-1 licence to US energy giant Chevron. 

In March 2024, Challenger announced that it had reached the agreement, pending approval from regulators. That has now been given. 

Chevron will take over as the block operator with a 60% participating interest, while CEG Uruguay will maintain a 40% non-operating stake. 

As part of the agreement, Chevron will compensate Challenger Energy with a payment of $12.5m once the transaction is finalised. 

Eytan Uliel, Challenger Energy’s CEO, said: " Since entering into the farmout agreement, we have been diligently working through various regulatory approval processes,” culminating in the “key” approval finally being granted.  

The next steps involve notifying the Uruguayan Ministry of Industry, Energy and Mining about the deal and registering the agreement with the Uruguayan Ministry of Economy and Finance. 

This final stage includes a 20-day notification period. 

Challenger's CEO, Eytan Uliel, informed investors via a statement that the company anticipates completing the transaction within four to eight weeks. 

He added that “we do not anticipate that remaining procedural processes will take long to complete”.  

This, he continued, will “enable Chevron, as incoming operator of the block, to move forward with 3D seismic acquisition on an accelerated basis, targeting commencement in early 2025”.  

Around 100km offshore Uruguay, AREA OFF-1 spans approximately 14,557km² and was granted to Challenger in June 2020. The first four-year exploration phase commenced on 25 August 2022, and Challenger had already met the minimum work requirement by 31 December 2023.