Challenger Energy (AIM: CEG), the Caribbean and Atlantic-margin focused oil and gas company, with oil production, appraisal, development and exploration assets across the region, provides the following update on its Trinidad and Tobago business unit's operating results for Q2 2022:
· Total gross oil production for Q2 2022 was 34,159 barrels equating to approximately 375 barrels of oil per day (bopd), representing an approximately 6% increase over Q1 2022 (358 bopd).
The increase in average daily gross production is principally attributable to a focused effort on maintaining baseline production. It is noted that the Company's 2022 work program, which is focused on near-term production enhancement activities (as announced in RNS dated 7 June 2022) is to be executed in phases over the coming months, and thus the expected impact of this work on production is not yet reflected in the production rates achieved during Q2 2022.
It is further noted that notwithstanding the increase in total oil production, the quarterly result was adversely impacted by especially severe torrential rains in the last two weeks of June 2022, which caused several days of downtime due to electrical failures and safety-related total field shut downs.
· Total oil sales in Q2 2022 amounted to 31,170 barrels, representing approximately a 5% increase over Q1 2022, with a gross realised average price per barrel sold of US$97.45, representing approximately a 17% increase over Q1 2022.
As noted above, especially severe weather conditions were experienced in the last two weeks of June 2022, and resulted in the Company being unable to deliver approximately 800 barrels of oil for sale prior to the close of the second quarter. However, this unsold inventory will be realised early during Q3 2022.
· Revenue received by the Company from oil sales (being gross revenues less Government royalties and mandatory source deductions and adjustments applicable under the relevant licences)1, amounted to approximately US$1.4 million in Q2 2022. This represents average net revenue to the Company of US$45.15 per barrel sold, an approximately 15% increase over Q1 2022.
· In total, the Company's operations in Trinidad and Tobago generated an (unaudited) pre-tax operating cash surplus in Q2 2022 of approximately US$0.4 million (Q1 2022: US$0.2 million). This surplus is stated after field operating costs, in-country G&A and other Trinidad expenses, but before corporation and other taxes (including supplemental petroleum tax, where applicable). It is noted however that, given the extent of carry-forward tax losses in Trinidad and Tobago, the Company is currently largely shielded from corporation taxes.
Eytan Uliel, Chief Executive Officer of Challenger Energy, said:
"Everyone in the Challenger Energy team continues to work on driving our production business in Trinidad and Tobago forward, and the results of the second quarter of 2022 represent steady improvements across the board - as compared to the first quarter production was up, oil sales were up, and cash flows being generated in-country have increased. It is also important to note that these results are due to a dedicated focus on managing the Trinidadian asset portfolio prudently and efficiently, and do not yet reflect any of the additional production we hope to realise from our planned 2022 work programme, which as advised in June will be rolled out across the second half of 2022. I therefore look forward to reporting further progress in the coming months, as we begin executing our planned work for the remainder of the year."