Challenger Energy (CEG ), oil and gas producer, delivered this morning its Trinidad and Tobago business unit's financials results for Q2 2022.
Q2 2022 Update
Total gross production for Q2 2022 was 375 barrels of oil per day (bopd), a 6% increase QoQ from Q1's 358 bopd. Total oil sales stood at 31,170 barrels, a 5% increase over Q1 at an average price per barrel of US$97.45, a 17% increase over Q1. Revenue from sales amounted to US$1.4 in Q2, representing an average net revenue of $US45.15 per barrel sold, a 15% increase over Q1.
Challenger's Trinidad operations generated an (unaudited) pre-tax operating cash surplus of c. US$0.4m in Q2, a 100% increase QoQ.
Challenger emphasised that the production increase was mainly the result of a focused effort to manage its Trinidad portfolio efficiently and prudently. The company is otherwise making significant investments into enhancing near-term production across its Trinidad portfolio, also known as its 2022 work programme. However, the impact of these investments is not yet reflected in quarterly numbers, hence significant potential for future upside exists.
Additionally, Challenger emphasised that, notwithstanding the increase in oil production in Q2, operations were severely affected by unusually severe torrential rains in the last two weeks of June 2022. This resulted in 800 barrels scheduled for delivery in June being delayed to Q3.
View from Vox
Challenger reported strong results today with production, sales, and cashflows up significantly QoQ. A 6% quarterly increase in production is impressive, considering the weather-related shipping delays, and not yet realised profits from Challenger's 2022 work programme.
The 2022 work programme comprises of significant production upgrades across Challenger's Trinidad portoflio. These include recompletions of 10-15 existing wells, reactivation of 10-12 wells currently not in production, a continuous in-house swabbing program, and a single pattern water injection enhanced oil recovery (EOR) programme at the Goudron field, planned to commence in November 2022.
These investments are expected to improve operational efficiency, increase facilities uptime, reduce individual wells downtime, and increase workover rigs productivity, resulting in cash flow improvements and cost savings. Overall, the 2022 work programme aims to achieve 550-600 bopd by the end of the year.
Further down the line, Challenger is eyeing up to nine potential new well opportunities across the Trinidadian asset portfolio, offering the possibility of significant production uplifts, consistent with the Company’s longer-term production goal of 1,000 bopd.
Challenger has been on track with its expansion strategy so far, supported by higher oil prices. Q1 results were encouraging as well and its 2022 work programme is fully funded. If the company stays the course, its near-term and long-term production goals are within reach.
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