Oil and gas company Challenger Energy said Monday it had submitted a bid for and expected to win the rights to the AREA OFF-3 license offshore Uruguay, the sole remaining available block offshore Uruguay.
All other offshore exploration licenses are held by energy majors Shell and Apache and YPF, the Argentinian national oil company.
"The AREA OFF-3 licence is 13,252 km2 and will increase [Challenger Energy's] total Uruguay acreage holdings to ~28,000 km2, making CEG the second largest offshore acreage holder in Uruguay behind Shell," Challenger Energy said.
According to the company AREA OFF-3 is located in relatively shallow water, with existing 2D and 3D seismic coverage.
The block has a current estimated resource potential of up to ~500 million barrels of oil equivalent ("mmboe") and up to ~9 trillion cubic feet gas ("TCF"), from multiple exploration plays, Challenger said.
Challenger CEG's AREA OFF-3 bid consisted of an initial 4-year exploration period, with a work program limited to reprocessing and reinterpretation of 1,000 kms of 2D seismic data.
ANCAP, Uruguay's state-owned company responsible for offshore licensing, said: "The committed exploratory work included in the offer presented by [Challenger Energy] consists of the geological modeling and prospective resources’ evaluation of the area, as well as the licensing and reprocessing of existing 2D seismic data. CEG has no obligation to acquire new seismic data or drill an exploratory well in the first 4-year exploratory period. [Challenger Energy] has already signed a hydrocarbon exploration an production contract offshore Uruguay corresponding to Area OFF-1, which was signed on May 25th, 2022, and in which CEG is fulfilling to satisfaction the committed exploratory work. With this new offer, there are no more areas available under the Open Uruguay Round."
Eytan Uliel, Chief Executive Officer of Challenger Energy, said:"We are delighted to advise that on 2 June 2023, ANCAP publicly announced the details of Challenger Energy's offer for the AREA OFF-3 licence, which is the precursor step for the formal award of the licence to CEG, and which we understand should occur in the next 3-4 weeks."
"AREA OFF-3 possesses identified prospects of material scale, and our immediate work focus will be a comprehensive technical reassessment of the block, applying modern 2D seismic re-imaging and our subsurface knowledge of the Uruguayan offshore margin, similar to the successful geotechnical de-risking approach we have applied on AREA OFF-1.
Strategically, the award of this licence will cement CEG's position as a significant participant in Uruguay, a country that has fast become one of the world's frontier exploration hotspots. At the same time, our bid for the AREA OFF-3 block demonstrated the same disciplined and opportunistic approach we have taken in the past: acting strategically and nimbly to secure large and promising acreage, yet with low-cost work obligations, discretionary expenditure phasing, and no new seismic acquisition or drilling commitments.
"We are especially appreciative of the confidence shown in CEG by the Uruguayan regulatory authority, ANCAP. Over the next four years we intend to further grow that confidence by applying our basin expertise and fully evaluating the licence's potential. We anticipate that we can create an opportunity of comparable value and industry interest to what we have thus far identified with AREA OFF-1, to the benefit of both Challenger and ANCAP."