Challenger Energy (CEG ), a Caribbean and Americas-focused oil and gas producer, announced the sale of its St Lucia-domiciled subsidiary, Caribbean Rex Limited, for US$1.5m.
Challenger has received an immediate payment of US$1m, with a subsequent US$0.2m due in mid-March 2023. A further US$0.3m of 3rd party liabilities have been assumed by the buyer.
Additionally, a three-well drilling obligation at the South Erin field will pass to the buyer, with Challenger retaining an 18-month option to repurchase a 49% interest in the South Erin field in the event of the buyer's drilling success.
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Overall, the sale of Caribbean Rex to an undisclosed Trinidadian buyer is a win for Challenger. As well as receiving US$1.2m in cash, plus US$0.3m in 3rd party liabilities assumed by the buyer, it will retain a significant percentage of production and will be relieved of liabilities.
Furthermore, Challenger will be freed from capex associated with a drilling programme at South Erin field, a potential cost of up to US$5m, yet retain the option to repurchase a 49% stake in the field. The South Erin field currently produces c. 35 bopd, representing less than 10% of Challenger's total Trinidadian production. However, new drilling by the buyer could significantly increase production through 2023.
Today's deal follows Challenger's Cory Moruga sale to Predator, announced in December, which proved beneficial to both companies as explained in our coverage of the deal. Both deals are in keeping with Challenger's strategy in Trinidad to monetise its small/non-core assets and offset operating and financial risks while retaining upside exposure in a success case.
Looking ahead, Challenger is eyeing up to nine potential new well opportunities across its Trinidadian portfolio, offering the possibility of significant production uplifts, consistent with the company’s long-term production goal of 1,000 bopd.
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