Challenger Energy (CEG ) says the turnaround of its Trinidad and Tobago business unit is proceeding “according to plan” with reported good results seen thus far from its field work.
To date, the Caribbean and Atlantic-margin focused oil and gas company has undertaken four recompletions from underperforming and non-producing wells from its well stock in Trinidad. It told investors that these have now been completed “ahead of schedule and below budget.”
This near-term programme of recompletions of underperforming and non-producing wells follows the completion of the Company’s restructuring and recapitalisation in March 2022. It detailed that this near-term programme will be primarily focused on production enhancement.
Addressing shareholders today, the company said this work is already benefiting from the restructuredChallenger Energy team, including a greater level of in-country presence of its leadership team which has been constrained to date by international travel restrictions.
The aggregate incremental production from Challenger’s four recompletions has been in the range of 40 to 60 bopd - in line with pre-work expectations as previously advised - it noted.
In aggregate, this represents a production increase of approximately 10%-15%, with gross production across the Company’s fields now consistently averaging approximately 400 bopd.
The Company highlighted that near-term production enhancement activities are now being prepared, with a target to increase production by a further 10% over the coming months.
In addition to this activity, repairs to access roads, upgrades to utilities, and facilities integrity work continues as planned, with this work due to be completed before the end of 2Q22.
The Company detailed that improved access will bring additional well stock into the ongoing review process for potential future recompletions while the facilities/ infrastructure-based activity is designed to maintain baseline production on a consistent basis, it told investors.
Commenting on this morning’s news Eytan Uliel, Chief Executive Officer of Challenger Energy, told investors:“The turnaround of our Trinidad and Tobago business unit is proceeding according to plan, with good results seen thus far from the field work underway since the completion of the Company’s restructuring and recapitalisation in March 2022.”
He highlighted that the focus at Challenger Energy remains “on getting the basics right” such including, inter alia, “maintaining stable baseline production, achieving incremental production growth from the existing fields, maximising sales revenues and cash flow, and continuing to evaluate opportunities to grow production through value accretive M&A opportunities.”
Shares in Challenger Energy were trading 12.82% higher this morning at 0.11p.
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With Challenger’s restructuring and recapitalisation process now complete, its full attention is now on growing the core business, through building production and generating cash flow.
In recent weeks, the company said it would be moving forward some ‘low-hanging fruit’ operational items due to the higher oil price environment which it believes creates an ever greater imperative to increase production as well as to maximise “every barrel of oil sold.”
By the end of March 2022, the Company said it had benefited from more favourable oil prices compared to 2021, having realised an average crude sales price of US$76.50 per barrel. This sales price is significantly higher than the US$60.00 per barrel reported for the full year 2021.
Should the WTI benchmark continue to range between $100.00 and $120.00 per barrel, Challenger expects to see realised prices in the range of $90.00 and $105.00 per barrel.
Today, crude oil prices have fallen 5% as a result of a selloff in global commodity markets after the InternationalMonetary Fund lowered its world growth forecasts for 2022 and 2023.
Despite oil prices settling down, Brent, the London-traded global benchmark for crude still remains at $107.25 per barrel while WTI, the benchmark for US crude, remains at $102.56.
If realised prices stay within this range, Challenger expects that its business in Trinidad will generate free-cash from operations for FY22 based on current production levels, it reported.
The Company’s programme of well recompletions at five identified wells was approved last month by the Board.
This programme will be complemented by targeted workovers at other identified offline and / or underperforming wells across the Company’s producing fields.
To date, Challenger said the necessary government permits for all of the planned works have been obtained, and it is expected that this work will be completed by the end of May 2022.
It is targeting a 10% or more increase in aggregate total production, with any incremental production able to be monetised immediately and thereby benefit from current oil prices.
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