Challenger Energy Group (CEG) has entered into a farm-out agreement with Chevron Uruguay Exploration (a wholly-owned subsidiary of Chevron) for a 60% interest in the AREA OFF-1 block in Uruguay in a US$12.5m deal. Under the terms of the agreement, Chevron will acquire a 60% participating interest in the AREA OFF-1 block and its operatorship in exchange for US$12.5m cash on completion of the transaction, with CEG retaining a 40% of non-operating interest. The purpose for the farm-out agreement is to facilitate and fund an accelerated 3D seismic acquisition (and associated interpretation work), with the intention of processing it during the initial four-year exploration period. The transaction is still subject to customary third-party approvals from the Uruguayan regulatory authorities.
The AREA OFF-1 block is a large offshore block covering approximately 14,557 km2 and located at about 100 km offshore Uruguay in water depths of up to 1,000 meters. CEG was awarded the offshore license in June 2020 under the Open Uruguay Round process. Uruguay does not currently produce oil or gas, nor has hydrocarbon reserves. The country imports all of its oil consumption