Page 14 - LatAmOil Week 35 2021

LatAmOil NEWS IN BRIEF LatAmOil

UPSTREAM Saffron-2, the Company has begun investigat- Stock Exchange and it is expected that admis-
ing options for a farm-out of the Saffron project, sion will take place on or around September 6,
Challenger Energy issues which, if achieved, would present a fundamen- 2021 at 08:00 a.m. Following admission of the
New Shares, BPC’s issued share capital will con-
tally different approach and risk profile for devel-
Saffron project update opment of the project than has been considered sist of 796,522,914 ordinary shares, with each
to-date. It has also begun investigating various ordinary share carrying the right to one vote.
AIM-listed Challenger Energy, the Caribbean Reserve Based Lending options, as a potential The Company does not hold any ordinary shares
and Atlantic margin-focused oil and gas com- debt component of any project funding plan. in treasury. This figure of 796,522,914 ordinary
pany, with production, appraisal, development The Company has previously advised of shares may therefore be used by shareholders in
and exploration assets across the region, has GBP3mn drawn under its Conditional Convert- the Company, as the denominator for the calcu-
provided an update in relation to the ongoing ible Note facility, of which GBP2.5mn was sub- lations by which they will determine if they are
clean-up of the Saffron-2 appraisal well, as well sequently converted to equity with GBP500,000 required to notify their interest in, or a change
as the timing and funding plans for the develop- outstanding (repayable in April 2023 if not con- in their interest in, the share capital of the Com-
ment of the field. verted prior). A further GBP2mn of Convertible pany under the FCA’s Disclosure Guidance and
The Saffron-2 well production off-take con- Notes became available to the Company on an Transparency Rules.
tinues to be optimised as the well cleans up over unconditional basis on June 14, 2021. Pending CEO Eytan Uliel commented: “On August
a range of reservoir zones. All production cur- the results of the Saffron-2 well the Company 25, 2021, Challenger Energy advised of initial
rently emanates solely from the Middle Cruse elected not to avail of this funding and has production test results at the Saffron-2 appraisal
reservoirs. The Company plans to continue managed working capital needs and reduced well in Trinidad’s South West Peninsula. Testing
clean-up operations and to perforate and pro- overhead costs materially so to avoid the costs is ongoing, but we have since received queries
duction test additional zones, so as to continue associated with draw-down under this facility as to the implication of the well results so far for
to develop the technical understanding of the (and given that, if drawn, funds would be sen- the project as a whole, in response to which I’d
field’s production capacity whilst at the same ior secured and thus would in any case need to make two general comments: one, Saffron-2 has
time maximising revenues and cashflow being be immediately repaid in the event of any other told us that a project at Saffron is likely viable,
generated by the Saffron-2 well. A further update funding being secured). In the absence of immi- but two, it will not look the same as the project
as to ongoing production rates will be provided nent Saffron development drilling, and in view we had envisaged pre-drill. Specifically, we now
in due course. of other funding alternatives currently being know that a project based solely on shallower,
With Saffron-2 having proved the presence considered, the Company does not at this time cheaper wells targeting just the Middle Cruse
of moveable hydrocarbons in the Lower Cruse expect to issue any further Convertible Notes can stand on its own, and we are working on
reservoirs, the Company considers that these under this facility, which otherwise expired in revising technical models and development
reservoirs can ultimately contribute toward pro- July 2021. plans accordingly. We also now know that there
duction, both at Saffron-2 and in future Saffron The Company further notes that it will are moveable hydrocarbons in the Lower Cruse,
wells (once engineering solutions to technical be issuing 2,270,522 new ordinary shares in although more work is needed to figure out how
issues encountered in drilling and producing aggregate (representing less than 0.025% of to get sustained production from those zones,
deeper Saffron-2 zones are implemented). As the total shares in issues), to certain advisors which has the potential to then expand the scope
noted, no production from the Lower Cruse is of the Company in settlement of fees owing as of any development over time. And finally, what
currently contributing to overall well production well as to some legacy creditors in Trinidad in we have learned from Saffron-2 will allow us
rates. full settlement of amounts owing, with 1.2mn to systematically revisit all available financing
Based on current production rates from Saff- unlisted warrants issued alongside, to subscribe options, plus there is a body of work to be done
fon-2, the Company considers a development of for new Ordinary Shares at GBP0.035 per share, in terms of updating relevant regulatory and
the Saffron field can be justified economically, valid for a period of 48 months. Application has planning requirements. The important point is
even without assuming production contribu- been made for the New Shares to be admitted that based on the results of Saffron-2 we believe
tion from the Lower Cruse (and noting that to trading on the AIM market of the London Saffron is a commercial project, and so we are
development wells targeting only the shallower doing the work needed to advance to a develop-
reservoirs will be more cost effective and quicker ment as soon as possible, until which time we
to drill than that experienced to date across the will continue to maximise cashflow from the
Saffron field). Saffron-2 well itself. We will keep shareholders
In this context, work is underway to incor- appraised of developments.’
porate the results of Saffron-2 into an updated Challenger Energy, September 2 2021
geological and reservoir model leading to a
revised forward development plan for the Saf-
fron field (and associated revised permitting and MIDSTREAM
approvals). Subject to approval of a revised field
development plan the Company is now target- Echo Energy announces
ing a development of Saffron to commence in
H1-2022. operational update
The Company and Arena Investors LP con-
tinue to discuss funding options for a Saffron Echo Energy, the Latin American focused
field development, with those discussions to be upstream oil and gas company, has provided
further advanced once the revised development an operational update regarding its Santa Cruz
plan for the Saffron field is finalised. Sur assets, onshore Argentina, for Q3-2021 until
In parallel, based on the outcomes of August 23, 2021.

P14 www. NEWSBASE .com Week 35 02•September•2021