TIDMCEG
RNS Number : 7232K
Challenger Energy Group PLC
03 September 2021
3 September 2021
The following amendments have been made to Challenger Energy's
announcement "Saffron Project Update, Funding Update & Share
Issuance" released on 2 September 2021 at 07:00 a.m. under RNS No.
4496K, as follows:
The Company has noticed that in the penultimate paragraph, the
figure of ' 2,270,522' was a typographical error, and should have
read '7,270,522'. However, the figure given in the announcement as
being the total voting rights following Admission, being
796,522,914 Ordinary Shares, is correct. In addition, the defined
term 'BPC' should have been 'CEG'. The intended date for Admission
of the New Shares is now 8 September 2021.
All other details remain unchanged. The full amended
announcement is shown below.
Challenger Energy Group PLC
("Challenger Energy" or the "Company")
Saffron Project Update, Funding Update & Share Issuance -
Replacement
Challenger Energy (AIM: CEG), the Caribbean and Atlantic margin
focused oil and gas company, with production, appraisal,
development and exploration assets across the region, is pleased to
provide the following update in relation to the ongoing clean-up of
the Saffron-2 appraisal well, as well as the timing and funding
plans for the development of the field.
-- The Saffron-2 well production offtake continues to be
optimised as the well cleans up over a range of reservoir zones.
All production currently emanates solely from the Middle Cruse
reservoirs. The Company plans to continue clean-up operations and
to perforate and production test additional zones, so as to
continue to develop the technical understanding of the field's
production capacity whilst at the same time maximising revenues and
cashflow being generated by the Saffron-2 well. A further update as
to ongoing production rates will be provided in due course.
-- With Saffron-2 having proved the presence of moveable
hydrocarbons in the Lower Cruse reservoirs, the Company considers
that these reservoirs can ultimately contribute toward production,
both at Saffron-2 and in future Saffron wells (once engineering
solutions to technical issues encountered in drilling and producing
deeper Saffron-2 zones are implemented). As noted, no production
from the Lower Cruse is currently contributing to overall well
production rates.
-- Based on current production rates from Safffon-2, the Company
considers a development of the Saffron field can be justified
economically - even without assuming production contribution from
the Lower Cruse (and noting that development wells targeting only
the shallower reservoirs will be more cost effective and quicker to
drill than that experienced to date across the Saffron field).
-- In this context, work is underway to incorporate the results
of Saffron-2 into an updated geological and reservoir model leading
to a revised forward development plan for the Saffron field (and
associated revised permitting and approvals). Subject to approval
of a revised field development plan the Company is now targeting a
development of Saffron to commence in H1 2022.
-- The Company and Arena Investors LP continue to discuss
funding options for a Saffron field development, with those
discussions to be further advanced once the revised development
plan for the Saffron field is finalised.
-- In parallel, based on the outcomes of Saffron-2, the Company
has begun investigating options for a farm-out of the Saffron
project, which, if achieved, would present a fundamentally
different approach and risk profile for development of the project
than has been considered to-date. The Company has also begun
investigating various Reserve Based Lending options, as a potential
debt component of any project funding plan.
-- The Company has previously advised of GBP3 million drawn
under its Conditional Convertible Note facility, of which GBP2.5
million was subsequently converted to equity with GBP0.5 million
outstanding (repayable in April 2023 if not converted prior). A
further GBP2 million of Convertible Notes became available to the
Company on an unconditional basis on 14 June 2021. Pending the
results of the Saffron-2 well the Company elected not to avail of
this funding and has managed working capital needs and reduced
overhead costs materially so to avoid the costs associated with
draw-down under this facility (and given that, if drawn, funds
would be senior secured and thus would in any case need to be
immediately repaid in the event of any other funding being
secured). In the absence of imminent Saffron development drilling,
and in view of other funding alternatives currently being
considered, the Company does not at this time expect to issue any
further Convertible Notes under this facility, which otherwise
expired in July 2021.
The Company further notes that it will be issuing 7,270,522 new
ordinary shares in aggregate (representing less than 0.025% of the
total shares in issues), to certain advisors of the Company in
settlement of fees owing as well as to some legacy creditors in
Trinidad in full settlement of amounts owing (the "New Shares"),
with 1.2 million unlisted warrants issued alongside, to subscribe
for new Ordinary Shares at the 3.5 pence per share, valid for a
period of 48 months . Application has been made for the New Shares
to be admitted to trading on the AIM market of the London Stock
Exchange and it is expected that admission will take place on or
around 8 September 2021 at 08:00 a.m. Following admission of the
New Shares , CEG's issued share capital will consist of 796,522,914
ordinary shares, with each ordinary share carrying the right to one
vote. The Company does not hold any ordinary shares in treasury.
This figure of 796,522,914 ordinary shares may therefore be used by
shareholders in the Company, as the denominator for the
calculations by which they will determine if they are required to
notify their interest in, or a change in their interest in, the
share capital of the Company under the FCA's Disclosure Guidance
and Transparency Rules.
Eytan Uliel, Chief Executive Officer, commented:
" On 25 August 2021, Challenger Energy advised of initial
production test results at the Saffron-2 appraisal well in
Trinidad's South West Peninsula. Testing is ongoing, but we have
since received queries as to the implication of the well results so
far for the project as a whole, in response to which I'd make two
general comments: one, Saffron-2 has told us that a project at
Saffron is likely viable, but two, it will not look the same as the
project we had envisaged pre-drill. Specifically, we now know that
a project based solely on shallower, cheaper wells targeting just
the Middle Cruse can stand on its own, and we are working on
revising technical models and development plans accordingly. We
also now know that there are moveable hydrocarbons in the Lower
Cruse, although more work is needed to figure out how to get
sustained production from those zones, which has the potential to
then expand the scope of any development over time. And finally,
what we have learned from Saffron-2 will allow us to systematically
revisit all available financing options, plus there is a body of
work to be done in terms of updating relevant regulatory and
planning requirements. The important point is that based on the
results of Saffron-2 we believe Saffron is a commercial project,
and so we are doing the work needed to advance to a development as
soon as possible, until which time we will continue to maximise
cashflow from the
Saffron-2 well itself. We will keep shareholders appraised of developments. "
For further information, please contact:
Challenger Energy Group PLC Tel: +44 (0) 1624
Eytan Uliel, Chief Executive Officer 647 882
Strand Hanson Limited - Nomad Tel: +44 (0) 20 7409
Rory Murphy/James Spinney/Rob Patrick 3494
Shore Capital Stockbrokers Limited Tel: +44 (0) 207
- J oint Broker 408 4090
Jerry Keen/Toby Gibbs
Investec Bank Plc - J oint Broker Tel: +4 4 (0) 207
Chris Sim/Jarrett Silver 597 5970
Gneiss Energy Limited - Financial Tel: +44 (0) 20 3983
Adviser 9263
Jon Fitzpatrick/Paul Weidman/Doug
Rycroft
CAMARCO Tel: +44 (0) 020 3757
Billy Clegg/James Crothers/Hugo Liddy 4980
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 (Withdrawal) Act
2018.
Notes to Editors
Challenger Energy is a Caribbean and Atlantic margin 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
The Bahamas and Uruguay. 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 licence in
each of Uruguay and The Bahamas are highly prospective, and offer
high-impact value exposure within the overall portfolio value.
Challenger Energy is quoted on the AIM market of the London
Stock Exchange.
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END
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