26 May 2022

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Uruguay Licence Signing

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 in relation to the AREA OFF-1 petroleum licence offshore Uruguay.

·    The AREA OFF-1 licence was awarded to the Company in May of 2020. Since that time there has been an extended period on non-activity, largely as a result of the Covid-19 pandemic, during which formal signature of the licence was pending.

·    Following final approvals being granted by decree of the President of Uruguay, the AREA OFF-1 licence was formally signed on 25 May 2022. Consequently, the first 4-year exploration period under the licence has commenced.

·    The Company's minimum work obligation during this initial period is to undertake relatively modest, low-cost reprocessing and reinterpretation of selected historical 2D seismic data. There is no drilling obligation in the initial phase. The Company's work program and budget for the balance of 2022 and into 2023 includes sufficient allocation of funds to progress the agree minimum work obligation on AREA OFF-1.

·    AREA OFF-1 contains a management estimated resource potential exceeding 1 billion barrels of oil equivalent recoverable (BBOE), based on current mapping from multiple exploration plays and leads in relatively shallow waters, and with significant upside running room. This estimate is corroborated by formal resource estimates provided by ANCAP (the Uruguayan national oil company) of 1.36 BBOE as a P50 expected ultimate recoverable resource.

·    The AREA OFF-1 play system is directly analogous to the recent prolific, conjugate margin discoveries made offshore Namibia by Total (the Venus well) and Shell (the Graff well), where reported multi-billion-barrel Cretaceous turbidite reservoirs have been encountered. The AREA OFF-1 licence exhibits the same Aptian play source rock and petroleum systems being present.

·    The Company has received multiple indications of interest in relation to potential partnerships for the AREA OFF-1 licence. The Company intends to explore such possibilities, with a view to potentially expediting a 3D seismic acquisition into the first licence exploration period. Further updates will be provided as and when appropriate.

Eytan Uliel, Chief Executive Officer of Challenger Energy, said:

"Two years ago, at the peak of a period of industry inactivity due to the pandemic, we identified a compelling opportunity to apply for the OFF-1 licence in Uruguay.  For very low cost we were able to secure an exploration licence of an extremely high quality, with a greater than 1-billion-barrel recoverable resource potential.

Since then, while waiting for formal approval of the licence, the world has changed in a way that makes this licence even more attractive. Globally significant developments are now underway along the South American Atlantic margin in Guyana and Suriname - basins with analogous technical characteristics. Even more significantly, very recent mega-discoveries from the South Atlantic conjugate margin to Uruguay, offshore Namibia, from two wells drilled by majors in the past few months, have calibrated and confirmed the play source rock and petroleum systems evident on seismic in OFF-1.

With the licence formally signed, we are now able to begin pushing ahead with our initial low-cost work program. At the same time, over the remainder of 2022 and into 2023 we will explore partnering options that could lead to an accelerated work program - the object being to quickly and fully evaluate the licence's potential, and to thereby create what we hope will be an opportunity of great value to shareholders."

A presentation in relation to OFF-1 will be placed on the Company's website - www.cegplc.com.

About AREA OFF-1

The AREA OFF-1 licence has a total area of approximately 15,000 km² and is situated in water depths from 20 to 1000 meters, approximately 100 kms off the Uruguayan coast.

There has been modest prior legacy activity on and adjacent to the AREA OFF-1 block, comprising historical 2D seismic (approximately 8,500 -kilometres acquired from the early 1970's to 2011 on block). Only two historic wells have been drilled to-date in the area (both in 1976 by Chevron), with no 3D coverage over AREA OFF-1. Current mapping reveals a diversity of exploration plays and leads in relatively shallow water and the slope margin, with a preliminary estimated resource potential of more than 1 billion barrels of oil equivalent (BBOE) recoverable. Given the successfully bid fiscal regime and the water depths of the identified prospects, Challenger Energy's preliminary analysis suggests that any of the individually mapped current prospects is likely to be economic, even if historically low oil prices are assumed.

During 2019, oil majors Shell, BP, Total and Equinor bid for and were awarded various licences offshore Argentina, adjacent to AREA OFF-1 proximal to the Argentina-Uruguay maritime border, and where the primary well targets in these Saladio Basin licences are likely to be the same as the Cretaceous syn rift and turbidite plays potentially present in AREA OFF-1.

In January 2022 both Total and Shell announced multi-billion-barrel discoveries from wells drilled in the Namibia offshore margin. The AREA OFF-1 exploration play is analogous to these recent Namibia conjugate margin discoveries, with the Namibian well results significantly de-risking the technical understanding of the analogous Uruguay South Atlantic margin.

AREA OFF-1 also has technical characteristics in common with the prolific Guyana - Suriname basin currently being successfully explored / developed by multiple oil companies, offshore north-eastern South America.

Uruguay is located in south-east South America, bordering Brazil and Argentina, and with a broad Atlantic Ocean coastline. The country has a relatively high income per-capita in the region, and represents an advantaged operating regime, frequently ranking first in Latin America in measures such as democracy, anti-corruption, and ease of doing business.

AREA OFF-1 Licence Terms

The following table provides a summary of the key AREA OFF-1 licence terms:

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014, which forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).

In accordance with the AIM Note for Mining and Oil & Gas Companies, CEG discloses that Mr. Randolph Hiscock the Company's New Business Director, is the qualified person who has reviewed the technical information contained in this document. He has a Masters in Science (Geology) and is a member of the AAPG.  He has over 40 years' experience in the oil and gas industry.  Randolph Hiscock consents to the inclusion of the information in the form and context in which it appears.

For further information, please contact:

Notes to Editors

Challenger Energy is a Caribbean and Atlantic margin focused oil and gas company, with a range of exploration, appraisal, development and production assets and licences, located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay. In Trinidad and Tobago, Challenger Energy has five (5) producing fields, two (2) appraisal / development projects and a prospective exploration portfolio in the South West Peninsula. In Suriname, Challenger Energy has on onshore appraisal / development project. Challenger Energy's exploration licences in Uruguay, the South West Peninsula of Trinidad, and The Bahamas offer high-impact value exposure within the overall portfolio value.

Challenger Energy is quoted on the AIM market of the London Stock Exchange. 

https://www.cegplc.com 

ENDS