GCIChallenger Energy fully funded to execute 2022 work program
(CEG ) says it has “a significant inventory” of wells across its five producing fields and that it is fully funded to execute the Company’s work program throughout this year.
The Company outlined to investors that its focus in regards to its operations in Trinidad and Tobago is to deliver near-term production growth, sufficient to both offset natural reservoir decline and to reach around 550-600 bopd average production rate by the end of 2022.
The Caribbean and Atlantic-margin focused oil and gas firm says this outcome would enable the firm as a whole to operate on a cash flow positive basis, assuming prevailing oil prices.
In support of achieving this outcome, Challenger says its work program for 2022 will comprise a very specific, fully-funded range of activities across its Trinidadian asset portfolio. This will include the recompletions of 10-15 existing wells; the reactivation of 10-12 wells currently not in production; a continuous in-house swabbing program and a single pattern water injection enhanced oil recovery programme at the Goudron field which is planned for November 2022.
Additionally, the Company says ongoing investment is planned in essential equipment purchases, including a swabbing rig, vacuum tankers and other production-related items, as well as upgrades and refurbishments to equipment and facilities across the portfolio.
This investment is expected to improve operational efficiency, increase facilities uptime, reduce individual wells downtime and increase workover rigs productivity, resulting in production delivery / cash flow improvements and cost savings, it explained to investors.
Challenger acknowledged that the planned work programme for the balance of 2022 represents “a decision to undertake a diverse range of production-enhancing activities and gain associated information from those activities before moving to new well drilling.”
“This is because, as compared to new well drilling, the planned activities are lower-risk, spread risk across multiple wells and fields, are expected to provide a more rapid production response, and are in aggregate more cost effective than new well drilling,‘’ it explained today.
In support of a drilling program in 2023, the Company is evaluating up to nine potential new well opportunities across the Trinidadian asset portfolio, offering the possibility of significant production uplifts consistent with the Company’s longer-term production goal of 1,000 bopd.
During the balance of 2022 the Company will also be evaluating an appropriate funding strategy for new wells, with a view to reducing the capital burden and risk to the Company of drilling activities. This includes risk sharing opportunities with contractors and partners.
Meanwhile, the Company added that it has applied for an extension of the initial period for undertaking an extended well test in the Weg Naar Zee field in Suriname. Should its application be successful, it is expected that drilling will now occur during 2023.
Eytan Uliel, Chief Executive Officer of Challenger Energy, said: “Over the past six months, we have worked hard to redefine Challenger Energy’s operations around a simple strategic focus: to build cash flow from our production base in
Trinidad, and to reach a point where as a group we operate on a cash flow positive basis. In the process we have re-evaluated every single aspect of the Trinidad operations, to see how best we can clear legacy items, drive efficiencies, and deploy precious capital in the most effective, production-growth oriented manner. The work program for the balance of 2022 reflects the outcome of this work.”
In particular, across our five producing fields we have a significant inventory of wells, and the focus of the work planned for 2022 is on working that existing well stock, through a wide range of individual actions, as well as on upgrading production-critical field infrastructure.
We expect this work to deliver the near-term production growth we are targeting in the surest, lowest risk way possible and, if successful, provide a solid basis on which to approach the execution and funding of a drilling campaign in 2023. It will be a busy second half of 2022 for Challenger Energy. I look forward to updating on our progress as the year progresses.”
View from Vox
In support of achieving its outcome of near-term production growth (sufficient to both offset natural reservoir decline and to reach around 550-600 bopd average production rate), the firm’s work program will be targeting very specific activities across its Trinidadian portfolio.
Notably, Challenger Energy is fully funded for its 2022 work program, meaning the company will only need to evaluate an appropriate funding strategy for new wells - with a view to reducing the capital burden and risk to the business of drilling activities - for 2023 and beyond.
Since the Company’s existing five producing fields already has a significant inventory of wells, the focus of the work planned for 2022 will be on working that existing well stock, through a wide range of individual actions, as well as on upgrading production-critical field infrastructure.
Looking ahead, the Company says it expects this work to deliver the near-term production growth it is targeting “in the surest, lowest risk way possible and, if successful, provide a solid basis on which to approach the execution and funding of a drilling campaign in 2023.”
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