Oct. 10 at 1:01 AM
$SEUSF I view the challenger acquisition as slightly negative to Sintana (a 5% to 10% reduction in intrinsic value). This is my personal view and others will see the deal as more negative or more positive. The merger in effect gives up 25% of Sintana's existing assets in exchange for Challenger's OFF-1 and OFF-3 blocks in Uruguay (Challenger has a bit of cash and negligible other assets).
I evaluated investing in Challenger about a month ago and liked what a I saw but decided that Sintana had a better risk/reward. Challenger's blocks are very early stage but with significant potential. Block OFF-1 has seismic planned along with a follow-up well if the operator (Chevron) likes the results. OFF-3 has only preliminary analysis with a farmout process recently started. Assuming success, we are likely 5 to 8 years away from first oil.
Given the significant pullback, I increased my position by about 25% today.
Below is a link to a recent Challenger presentation: https://www.youtube.com/watch?v=RoHQGLXSAC8
