AIM-listed Challenger Energy, the Caribbean and Atlantic-margin focused oil and gas company, with oil production, appraisal, development and exploration assets across the region, has announced its Interim Results for the six months period to 30 June 2025.
Challenger Energy is an Atlantic-margin focused energy company, with a current high-impact position in Uruguay, where the Company holds two offshore exploration licences, totalling 19,000km2 (gross) and is partnered with Chevron on the AREA-OFF 1 block. Challenger Energy is quoted on the AIM market of the London Stock Exchange and the OTCQB in the United States.
CHIEF EXECUTIVE OFFICER'S REPORT
Dear fellow Shareholders,
I am pleased to report to you on your Company's activities during the first half of 2025.
Highlights during this period were the handover of operatorship of our AREA OFF-1 block in Uruguay to Chevron alongside preparatory work for 3D seismic acquisition on that block, substantially completing our initial technical work program for the AREA OFF-3 block ahead of commencing a farmout process, entry into an agreement for the sale of our entire business in Trinidad and Tobago, listing on the OTCQB in the USA, and continued strong financial discipline. Further details are provided below.
Uruguay
We made steady progress with both of our core assets in Uruguay - AREA OFF-1 and AREA OFF-3 - during the period under review.
For AREA OFF-1, the farm-out of a 60% working interest in that block to Chevron was completed in November 2024. As a result, the first half of 2025 saw handover of operatorship to Chevron, alongside various work streams necessary to prepare for 3D seismic acquisition. It is gratifying to report that the working relationship with Chevron through the period has been excellent, very much reaffirming our choice of Chevron as the right partner for us on this block. As at the date of this report, the expectation is that 3D seismic acquisition will commence in late Q4 2025, subject to ?nalisation of permitting by the Uruguayan Ministry of Environment, a process which is well advanced. The cost of this 3D seismic campaign will be fully carried by Chevron under the terms of the farmout agreement (up to a total program cost of $37.5 million, an amount we expect will be more than adequate to cover the cost of the desired acquisition to be completed). This activity, and subsequent well drilling, will be fundamental to realising the considerable value potential we see in this asset.
For AREA OFF-3, we made rapid progress on our planned technical work program, which was substantially completed in August 2025. The primary geotechnical work focused on the licencing, reprocessing and interpretation of a 1,250 km2 3D seismic data set; in conjunction, other subsurface studies addressed the geochemistry and further de-risked AREA OFF-3 exploration potential. Completion of our AREA OFF-3 technical work program has put us in a position to commence a formal farmout process for that block, which we began effective 1 September 2025. Our strategy for AREA OFF-3 is unchanged, which is to follow the same formula that produced a successful outcome for AREA OFF-1: that is, to undertake high quality technical work to establish the prospectivity of the block, and then, with the benefit of that technical work, seek to bring in a partner via a farmout process. We expect that the work we have done in terms of mapping of both 3D and 2D seismic along with the ancillary geophysical products will form a key part of the basis of any potential drilling decision on the block in the future.
Trinidad and Tobago
In February 2025, we entered into an agreement for the sale of all of our business, assets and operations in Trinidad and Tobago. During the first half of 2025 we continued to operate the business, pending receipt of necessary regulatory approvals for completion of the sale. Production was constant, costs were contained, and HSE&S performance continued to be exemplary. Subsequent to period end, required regulatory approvals were obtained and the sale transaction completed on 29 August 2025. The transaction represented a complete exit from Trinidad and Tobago, under which the purchaser acquired the entirety of the Trinidad and Tobago business, inclusive of all associated income, assets, liabilities, exposures and administrative cost. Consequently, we have no further operations in, or exposure to, Trinidad and Tobago. This means that going forward focus can be directed almost entirely to our assets in Uruguay, where we see opportunity for significant near-term value creation.
Corporate
In April 2025, Challenger Energy ordinary shares were approved to trade on the OTCQB Venture Market ("OTCQB") in the United States, under the ticker symbol "BHSPF". The benefit of this listing is enhanced access to trading for U.S. based investors, and potentially greater liquidity due to a broader geographic pool of potential investors. Thus far, we have seen growing interest in the Company from U.S. investors, and steadily increasing trading volumes through the OTCQB. It is also worth reiterating that trading on the OTCQB does not affect trading of the Company's ordinary shares on AIM, which continues as before under the ticker symbol "CEG".
Financial Review, Cash Position and Funding
The unaudited interim financial statements for the half year ended 30 June 2025 present details on the financial performance of the Company for the period. By way of added commentary:
(a) The nature of the Company's primary business - high impact hydrocarbon exploration activities - means that a key financial indicator we focus on, and which is not always readily discernible from the financial statements, is net cash spend (or "overhead run-rate" or "burn" as it is sometimes also referred to). In this regard, the Company's net cash spend in the first half of 2025 was in the order of $225,000 per month. This is marginally more than our stated objective of maintaining "burn" at around $200,000 per month (i.e., under $2.5m per annum), but reflects the fact that in the period we incurred several costs of a "one-off" nature, which are not expected to recur in the future.
(b) At balance sheet date the Company's cash position was very strong. We report approximately $6.6m of cash holdings - which does not include approximately $0.7m of cash on restricted deposit in support of work program guarantees for various licences, and approximately $1.75m of cash receipts that have been received and/or will flow from the sale of the Trinidad business. In an aggregate sense, therefore, our "true" cash position as at 30 June 2025 is approximately $9.0m. Against this, as noted, we have substantially completed (and paid for) our AREA OFF-3 work, we will be carried through the 3D seismic campaign on AREA OFF-1 by Chevron, and our corporate overhead is low. In totality, this means that we have sufficient funds to meet all planned activities for the remainder of 2025, 2026, and well into 2027, without the need for any additional capital.
(c) The entry into an agreement for the sale of the Company's business in Trinidad and Tobago meant that all income, assets and liabilities associated with that business were reclassified for accounting purposes as "assets held for sale". As a result, the financial statements for the period show no revenue, given that all previous revenues were attributable to the now reclassified Trinidad business, and all assets and liabilities associated with that business have been reported separately. Given that the sale transaction has now completed, these will be removed entirely from the financial statements going forward.
Strategic Direction
With the exit from Trinidad and Tobago completed, we have now addressed almost entirely the "clean-up" of various legacy items relevant to our Company - a process that has been ongoing for several years. In the process, we have dramatically simplified our business, thereby enabling us to focus almost entirely on Uruguay. At the same time, we have emerged from a period of rebuilding with a lean overhead, a great team, and a solid cash position that should carry us forward well into the foreseeable future.
Clear value-creation milestones lie on the horizon ahead of us, the most significant of which are (i) Chevron taking the AREA OFF-1 project forward, first with 3D seismic acquisition, leading to a decision on exploration well drilling, and (ii) the AREA OFF-3 farmout process, which we hope will pave the way for value adding technical work and exploration well drilling on that block too.
Thus, both as CEO and a major shareholder in the Company, I am incredibly excited about what our Company might achieve in the coming 12-24 months. The hard work of the past few years has put solid foundations in place, and the task now is to capitalise on the opportunity we've created so as to realise the value potential embedded in our assets. In our most recent Annual Report, I said I believed that the outlook for our Company over the coming period is as strong as it has ever been, and I continue to stand by this statement. I look forward to reporting back to you as to our progress in the coming year.
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Source: Challenger Energy
