The Isle of Man-based Challenger Energy Group (LON:CEG) has an intensive programme of investor presentations over the next two weeks, which will inevitably generate fresh interest in the group and its various prospects.

Challenger Energy Group engages in the development, production, appraisal, and exploration of oil and gas properties.

It is a Caribbean and Atlantic-margin focused oil and gas company, with a range of oil production, development, appraisal and exploration assets and licences.

The company’s portfolio of opportunities represents a mix ranging from valuable production assets located onshore in Trinidad and Tobago, near-term appraisal and development projects in Trinidad and Tobago and Suriname, and high impact offshore exploration assets located in The Bahamas, Uruguay and Trinidad and Tobago.

The group’s-management team and staff base have a broad range of skills as well as deep technical and industry experience.

Its property portfolio consists of five producing fields and one dormant field in Trinidad and Tobago; a 100% working interest in AREA OFF-1 block in Uruguay; 100% interest in four exploration licenses in the Bahamas; and a 100% interest in Wag naar Zee Project, Suriname. 

I understand that its interest in Suriname and in the Bahamas are now considered ‘non-core’ and that a disposal programme is well underway, the funds from which will be easily reinvested.

The Namibia connection

The company considers that the conjugate margin super-discoveries in Namibia have also validated its early entry strategy in Uruguay.

Specifically, the company was the first operator to enter Uruguay in 2020, pre-dating the conjugate margin discoveries offshore Namibia.

Until the start of 2022, the Company was the only offshore acreage holder in Uruguay, having bid for the AREA OFF-1 licence on the basis of a modest, low-cost work programme.

However, since the discoveries offshore Namibia, five blocks offshore Uruguay have been awarded, all in 2022, to Shell, APA Corporation (formerly, Apache) and YPF (the Argentinian state-owned oil and gas company), such that now all but one available Uruguay offshore blocks is licenced, and the company is the only junior present.

Those blocks secured by the majors surround the Challenger Energy acreage, with those companies having already committed exploration work programs of over $230m.

The Uruguay asset is core to the business and is both highly marketable and highly prospective.

CEO Eytan Uliel stated that:

“In 2020, when no other parties were ready to commit, Challenger Energy was first-mover into offshore Uruguay, securing the AREA OFF-1 block on an uncontested basis and on highly advantageous work terms.

Since then, margin-opening discoveries offshore Namibia by TotalEnergies and Shell have made it possible to correlate what are now proven, oil producing source rocks directly across into the conjugate margin basins of Uruguay’s waters.

As a result, Uruguay has become a new global exploration hotspot, evidenced by the fact that in the last 12 months all but one of the available offshore blocks have been licenced by oil majors and NOCs, bidding sizeable work programs.

The results from the AREA OFF-1 work program have been extremely promising, in that the company now has a technically supported prospect inventory of between 1-2bn barrels in that globally attractive exploration hotspot.

The group’s next-step objective is to farm-out to an industry partner, so that it can fast-track a 3D seismic acquisition. The high-quality data set now compiled, and the intellectual property created, positions the company well, and it is shortly expected to initiate a formal farm-out process.

Significant Shareholders

The Aim-quoted company some 9,620,199,479 shares in issue.

Larger holders include Hargreaves Lansdown Asset Management (10.22%), Bizzell Capital Partners (Stephen Bizzell NED)(9.51%), Choice Investments (Dubbo)Pty (8.70%), Rookharp Capital Pty (5.49%), Jarvis Investment Management (4.35%), Merseyside Pension Fund (4.34%), GP (Jersey) (4.05%), RAB Capital (London) (3.80%), Interactive Investor (3.59%) and Maybank Kim Eng Securities (3.12%).

Private name holdings include Eytan Uliel (CEO) (5.67%), Baktash Manavi (3.51%) Simon Potter (NED)(0.74%) and MHCNZ Trustee (Mark Carnegie) (5.82%).

Analyst Opinions – looking positive

Brendan Long at WH Ireland, the group’s NOMAD and Joint Broker, has produced a lengthy evaluation of the company and is very expressive and positive about its Uruguay interests, describing the company as a ‘hot property’.

Lloyds shares are falling back to a key support level where buyers have previously stepped in.

The Lloyds share price has remained in a relatively tight range over the past year and the price has undulated between 45p-55p. On the face of it, this range looks like a trader’s dream. 

The 45p level has held on three occasions over the past year and on two of these occasions, Lloyds shares have subsequently rallied to 50p and 55p, before falling back.

With the stocks now approaching 45p once more, investors will be weighing an entry. If support levels hold at 45p, one could expect a move back up to 50p-55p. However, a significant break of this level would open the door to 40p, possibly lower.

There is of course no certainty the price will simply bounce off 45p and fundamentals must be taken into consideration.
Lloyds has two core elements driving their fundamentals from a macro perspective. 

Lloyds fundamentals

Firstly, UK inflation remains stubbornly high and the Bank of England will likely hikes rates again to control soaring prices.
Higher rates are good for Lloyds profitability and further rate hikes may lead to better than expected earnings later in the year.

However, the counterbalance to the upside scenario is the prospect of deteriorating UK economic health. If the UK’s economy is hit due to higher borrowing costs, Lloyds will have to set aside provisions for bad debts. This may offset higher net interest margins.

Nonetheless, investors confident of Lloyds earnings potential in the long term will be keenly watching LLoyds share price behaviour around the key 45p level.

Tekcapital’s MicroSalt has taken another substantive step in bolstering their distributive network, with an additional 400 stores now stocking MicroSalt products across the United States.

MicroSalt is a Tekcapital portfolio company and shares their objective of creating products that can help improve the lives of a significant number of people with patent-protected technology. MicroSalt’s products contain 50% less sodium than traditional table salt and can help individuals with cardiovascular diseases exacerbated by high sodium consumption.

MicroSalt’s products will now be stocked in stores including Brookshire Brothers, Pete’s Fresh Market, Heinen’s, Dick’s Fresh Market, Zerbos, Better Health Market, Tdych’s Marketplace and Associated Supermarkets.

“We are proud of our efforts thus far to build product distribution as it underscores the retail need for full flavor, low-sodium products. These efforts are working in parallel with our efforts to provide low-sodium products for private-labeled retail brands. Excess sodium consumption is one of the leading contributors to hypertension, and partnerships like this are the best way to provide consumers with great tasting products with less sodium,” said Rick Guiney, CEO of MicroSalt.

The Tekcapital portfolio company has previously announced products are stocked in thousands of Kroger stores, a major US supermarket chain.

MicroSalt appointed Zeus Capital as their NOMAD last year ahead of a proposed AIM IPO in 2023.

London’s leading index closed down as investors digested a raft of economic data from the United States and China.

The FTSE 100 closed down 0.3% at 7,750.

On Tuesday, markets were contending with Chinese and US economic data that suggested the world’s two largest economies are showing signs of slowing.

Overnight, Chinese industrial production, retail sales and fixed asset investment for April were all weaker than expected. The data added to disappointing economic readings in recent months and provided further evidence China’s bounce back from the end of stringent COVID restrictions was fading.

Equity markets were dealt a major blow on Tuesday afternoon when US retail sales rose less than expected, sparking a sell-off in global equities.

The FTSE 100 had been positive before the release, and the S&P 500 was 0.3% weaker at the time of writing.

Many economists have been predicting a US recession, and today’s data corroborates their forecasts. Retail sales rose 0.4% vs 0.7% estimates, following disappointing US manufacturing data released yesterday. The US Empire manufacturing index for May fell to -31.3.

FTSE 100 movers

DDC was the FTSE 100 top riser after releasing solid 2023 numbers. Operating profit grew 11.3% as revenue jumped 25%.

Vodafone was down heavily after a stark warning from the new CEO the telecoms company must improve performance.

“Our performance has not been good enough,” Vodafone CEO Della Valle said. Vodafone shares were down over 8% on Tuesday.

Vodafone’s free cash flow fell in 2023, and revenue was static.

“Lacklustre performance has been something markets have come to expect from Vodafone of late, and full-year results didn’t buck the trend. Higher energy costs and continued weakness in Germany meant underlying cash profit came in below the recently downgraded company guidance,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

Ocado finished 4% weaker after JP Morgan analysts cut Ocado’s price target to 450p yesterday.

The precious and base metals mining development and exploration group Greatland Gold (LON:GGP) has responded to an article in The Australian Financial Review’s Street Talk column, which was entitled ‘Greatland ramps up listing preparations, BofA nabs role’.

In today’s announcement answering the press mention, the group has not specifically confirmed that it has appointed Bank of America to assist with the ASX listing, nor the suggestion that it has been chosen to raise between A$50m and A$100m in the process.

As we highlighted earlier this month the group has appointed a new Non-Executive Director that could help speed the procedure in the ‘cross-listing’ for the £407m capitalised resources business.

The company has confirmed that it has held preliminary talks with various potential advisers, but no decisions have been made as yet.

The whole Australian gold mining scene has perked up over the last few days as the Newmont Corporation $17.5bn bid for Newcrest Mining has been recommended by the latter to its shareholders.

Newcrest Mining is a partner with Greatland Gold on the Havieron gold-copper project in Paterson Province in Western Australia.

Greatland Gold, whose shares have eased 11% today to 7.35p, has a number of exploration interest in WA, while it is expected that Havieron will be developed into a significant scale project.