TIDMCEG
RNS Number : 7845P
Challenger Energy Group PLC
14 February 2023
14 February 2023
Challenger Energy Group PLC
("Challenger Energy" or the "Company")
Sale of Caribbean Rex
Challenger Energy (AIM: CEG), the Caribbean and Americas focused
oil and gas company, with oil production, appraisal, development
and exploration assets across the region, is pleased to announce
that it has entered into and simultaneously completed a transaction
for the sale of its St Lucia domiciled subsidiary company,
Caribbean Rex Limited ("Caribbean Rex") .
Highlights
-- Sale of Caribbean Rex and associated assets and subsidiary
entities for for a value of US$1.5m:
o immediate cash payment of US$1 million, received
o subsequent payment of US$0.2 million due in mid-March 2023,
and
o US$0.3 million of third party liabilities have been assumed by
the buyer
-- In addition, a three well drilling obligation at the South
Erin field (at a potential cost of up to US$5 milion) will now pass
from the Company to the buyer, with the Company retaining an
18-month option to repurchase a 49% interest in the South Erin
field in the event of the buyer's drilling success
Key terms of the Transaction
-- The Company has sold Caribbean Rex, an indirectly
wholly-owned St Lucia incorporated subsidiary. Caribbean Rex in
turn holds various assets and subsidiary entities in St Lucia and
Trinidad. This includes (via interposed subsidiaries) CEG South
Erin Trinidad Limited ("CSETL"), a Trinidadian company that is
party to a farm-out agreement for, and is the operator of, the
South Erin field, onshore Trinidad. The buyer of Caribbean Rex is a
Trinidadian drilling and oil services company.
-- The transaction was entered into and completed
simultaneously, and is not subject to any condition precedent. The
agreed consideration is US$1.5 million, consisting of US$1.2
million payable in cash (of which US$1 million has been received by
the Company and US$0.2 million is payable by 15 March 2023), and
approximately US$0.3 million in third-party liabilities that have
been assumed by the buyer.
-- In addition, the buyer has committed to fulfil CSETL's 2023
drilling commitments at the South Erin field, thereby relieving the
Company of these commitments (3 new wells with an estimated cost of
up to US$5 million).
-- As part of the transaction, the Company has retained a
back-in option, granting the Company the right to repurchase a 49%
non-operating interest in the South Erin field. This back-in option
may be exercised at the Company's election, at any time in the next
18 months. Consideration payable if the Company exercises the
back-in option is a fixed cash amount of US$1 million, plus 49% of
all amounts spent by the buyer on South Erin field activities and
new well drilling.
-- The South Erin field currently produces approximately 35 bopd
(representing less than 10% of CEG's total Trinidadian production),
but new well drilling by the buyer could significantly increase
production through the course of 2023 - CEG will be able to
commercially assess the value of exercising the back-in option
against the outcomes of the drilling campaign and the level of
increased production.
-- For the year to 31 December 2021, CSETL made a loss of TT$3.5
million (or approximately US$0.5 million). As at 31 December 2021,
CSETL had negative net book value (net liability position) of
approximately TT$51.6 million (or approximately US$7.6 million) of
which approximately TT$48.1 million (or approximately US$7.1
million) is intra-group and will be written-off as at the
Completion Date. Cash received from the transaction will be used
for general working capital in the Company's operations.
Eytan Uliel, Chief Executive Officer of Challenger Energy,
said:
"Through the transaction announced today we get upfront cash, we
give up only a small percentage of overall production, we are
relieved of various liabilities as well as the cost of a committed
drilling campaign, and we retain optionality while someone else
drills those wells and funds that cost. This is consistent with the
structure we adopted for the previously announced transaction
relating to the Cory Moruga licence, and is, generally speaking,
the model for how we intend to take smaller, non-core assets in
Trinidad forward: through transactions that monetise the assets and
offset our operating and financial risks, yet retain upside
exposure in a success case."
--
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014, which forms part of United
Kingdom domestic law by virtue of the European Union (Withdrawal)
Act 2018 (as amended).
For further information, please contact:
Challenger Energy Group PLC Tel: +44 (0) 1624 647
Eytan Uliel, Chief Executive Officer 882
WH Ireland - Nomad and Joint Broker Tel: +44 (0) 20 7220
Antonio Bossi / Darshan Patel / Enzo 1666
Aliaj
Zeus Capital Limited - Joint Broker Tel: +44 (0) 20 7614
Simon Johnson 5900
CAMARCO Tel: +44 (0) 20 3757
Billy Clegg / Hugo Liddy / Sam Morris 4980
Notes to Editors
Challenger Energy is a Caribbean and Americas focused oil and
gas company, with a range of exploration, appraisal, development
and production assets and licences, located onshore in Trinidad and
Tobago, and Suriname, and offshore in the waters of Uruguay and The
Bahamas. In Trinidad and Tobago, Challenger Energy has five (5)
producing fields, two (2) appraisal / development projects and a
prospective exploration portfolio in the South West Peninsula. In
Suriname, Challenger Energy has on onshore appraisal / development
project. Challenger Energy's exploration licences in Uruguay, the
South West Peninsula of Trinidad, and The Bahamas offer high-impact
value exposure within the overall portfolio value.
Challenger Energy is quoted on the AIM market of the London
Stock Exchange.
https://www.cegplc.com
ENDS
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END
DISEAPADFEDDEFA
(END) Dow Jones Newswires
February 14, 2023 02:00 ET (07:00 GMT)
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