Challenger Energy shares were down 12.2% to 0.1p in late afternoon trading on Tuesday, after the group released its work update for its assets across Trinidad and Tobago and Suriname for the balance of 2022 and preparatory work for 2023.
The company said its main focus was to deliver near-term production growth in volumes sufficient to offset natural reservoir decline and to hit approximately 550 to 600 barrels of oil per day (bopd) for its average production rate by the end of 2022, which would enable the firm to operate on a cashflow positive basis assuming prevailing oil prices.
Challenger Energy announced a slate of specific projects for its work programme across its Trinidadian assets, including recompletions of 10 to 15 existing wells with work targeted for each of its Gourdron, Inniss-Trinity and Bonasse fields scheduled to be completed by October 2022, following its successful recompletion program from March to April 2022.
The company are also set to reactivate 10 to 12 wells currently not in production, and kick off a schedule of intensive, continuous swabbing across all company fields in a move to reduce significant levels of fluid in the wellbore which have prevented wells from flowing.
The energy group mentioned the purchase of essential equipment, including a swabbing rig, vacuum tankers and additional production-related items, alongside upgrades and refurbishments to equipment and facilities throughout its assets in an effort to increase operational efficiency and bring in production delivery, cashflow improvements and cost savings.
“Over the past six months, we have worked hard to redefine Challenger Energy’s operations around a simple strategic focus: to build cashflow from our production base in Trinidad, and to reach a point where as a group we operate on a cashflow positive basis,” said Challenger Energy CEO Eytan Uliel.
“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.”
2023 drilling program
Challenger Energy highlighted nine potential new well opportunities across its Trinidadian portfolio which it was eyeing in support of a 2023 drilling programme, with the aim of hitting its longer-term production target of 1,000 bopd.
The group mentioned it would also be considering an appropriate funding strategy for the wells, in a bid to reduce the capital burden and risk to the firm of drilling activities, including risk-sharing opportunities with contractors and partners.
Challenger Energy also noted its application for an extension of the initial period for undertaking an extended well test in the Weg Naar Zee field in Suriname, recognising delays linked to the Covid-19 pandemic, and is set to facilitate a technical reassessment of the drilling strategy for the project.
It is currently considering the applicability of horizontal drilling and a steam injection enhance oil recovery programme, in a bid to improve recoverability and enhance project economics.
If its application is successful, drilling is expected to occur in 2023. The company is also considering potential partnership opportunities for the licence.
Challenger Energy added that its work program for the balance of 2022 is set to include a single waterflood pattern at the Goudron field, a potential steam injection at the Weg Naar Zee project in Suriname, along with additional waterfloods at the Goudron field, which is under consideration for 2023, and a proposed C02 injection enhanced oil recovery programme for the Inniss-Trinity field, which is currently under technical review for a potential start in 2023.