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(Sharecast News) - Shares in Challenger Energy Group soared on Wednesday, after the AIM minnow struck a deal with US oil major Chevron.
The Caribbean and Americas-focused energy firm said that its Uruguayan subsidiary - CEG Uruguay - had entered into a farm-out agreement with Chevron.
Under the terms of the deal, Chevron will acquire a 60% participating interest in the Area Off-1 block around 100km off the cost of Uruguay.
The oil major will assume ownership, while CEG Uruguay retains a 40% non-operating interest.
Chevron will pay $12.5m, which will be used to support the further development of the business, Challenger Energy noted.
As at 1245 GMT, shares in Challenger Energy had soared 60% to 0.2p.
Eytan Uliel, chief executive, said: "We firmly believe that Area Off-1 holds enormous potential and this farm-out is a strong validation of the high-quality technical work CEG has done to date.
"Our stated strategy was to introduce a larger industry player as operating partner, with a view to rapidly progressing the block via an accelerated 3D seismic campaign followed by, we hope, exploration well drilling."
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