Shares in Challenger Energy soar on Chevron deal

6th Mar 2024 11:53

(Sharecast News) - Shares in Challenger Energy Group soared on Wednesday, after the AIM minnow struck a deal with US oil major Chevron.

The Caribbean and Americas-focused energy firm said that its Uruguayan subsidiary - CEG Uruguay - had entered into a farm-out agreement with Chevron.

Under the terms of the deal, Chevron will acquire a 60% participating interest in the Area Off-1 block around 100km off the cost of Uruguay.

The oil major will assume ownership, while CEG Uruguay retains a 40% non-operating interest.

Chevron will pay $12.5m, which will be used to support the further development of the business, Challenger Energy noted.

As at 1245 GMT, shares in Challenger Energy had soared 60% to 0.2p.

Eytan Uliel, chief executive, said: "We firmly believe that Area Off-1 holds enormous potential and this farm-out is a strong validation of the high-quality technical work CEG has done to date.

"Our stated strategy was to introduce a larger industry player as operating partner, with a view to rapidly progressing the block via an accelerated 3D seismic campaign followed by, we hope, exploration well drilling."