Challenger Energy announces Uruguay offshore acreage farm-out deal

London-listed upstream player Challenger Energy has agreed to farm out a chunk of an offshore Uruguay exploration block to US major Chevron.

Under the US$12.5mn agreement, Chevron will acquire a 60% participating interest in area OFF-1 and assume an operator role.

Covering 14,557km2 in water depths of 80-1,000m, OFF-1 is one of seven put up for grabs and which have all received offers. Challenger’s local unit signed an OFF-1 contract in 2022. The company was also awarded area OFF-3 in 2023.

Chevron will carry 100% of Challenger’s share of the costs associated with a planned 3D seismic shoot, Challenger said in a statement.

“Following the 3D seismic campaign, should Chevron decide to drill an initial exploration well on the AREA-OFF 1 block, Chevron will carry 50% of CEG Uruguay's [Challenger’s Uruguayan subsidiary] share of costs associated with that well, up to a maximum of US$20mn net to CEG Uruguay,” it added.

Completion and financial close of the transaction is pending.

Offshore exploration in Uruguay gathered pace in 2016 with the drilling, by TotalEnergies, of the first well in around 40 years. Oil and gas shows have been reported, but no commercial discovery made.

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Norwegian firm Equinor’s Argentine unit has started exploration-phase work offshore Tierra del Fuego province, local media outlet EconoJournal reported. 

This follows completion of a seismic campaign offshore Buenos Aires province, in the Argentina Norte basin.

Equinor will shoot 3D seismic in Austral basin blocks AUS-105 and AUS-106 and Malvinas Oeste basin acreage MLO-121.

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