Trinidad 2H 2022 Work Program Update

7 June 2022

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Trinidad 2H 2022 Work Program Update

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 work program for its assets in Trinidad and Tobago and Suriname for the balance of 2022, and preparatory work for 2023.

·    The Company's focus in regards to its operations in Trinidad and Tobago is to deliver near-term production growth, sufficient to both offset natural reservoir decline and to reach approximately 550-600 bopd average production rate by the end of 2022. This outcome would enable the Company as a whole to operate on a cashflow positive basis (assuming prevailing oil prices).

·    In support of achieving this outcome, the Company's work program for the balance of 2022 will comprise a very specific, fully-funded range of activities across its Trinidadian asset portfolio, including:

·    recompletions of 10-15 existing wells, to open up different reservoir units, halt or reduce water production, and/or to inhibit sand influx, and thereby increasing oil production from those recompleted wells. Recompletions are planned in each of the Goudron, Inniss-Trinity and Bonasse fields, with work expected to be completed by October 2022. This expanded program of recompletions follows on from the successful recompletion program undertaken by the Company in March/ April 2022;

·    the reactivation of 10-12 wells currently not on production, in both the Goudron and Inniss-Trinity fields. This program of work is also expected to be completed by October 2022;

·    an extensive, continuous in-house swabbing program, across all of the Company's fields. A considerable number of wells across all fields have seen fluid levels rise in the wellbore to the extent these wells no longer flow, with swabbing being a low cost means of reducing/removing these fluid levels, thus allowing the well to produce again; and

·    a single pattern water injection enhanced oil recovery (EOR) programme at the Goudron field, which is planned to commence in November 2022.

·     Additionally, ongoing investment is planned in essential equipment purchases, including a swabbing rig, vacuum tankers and other production-related items, as well as upgrades and refurbishments to equipment and facilities across the portfolio. This investment is expected to improve operational efficiency, increase facilities uptime, reduce individual wells downtime and increase workover rigs productivity, resulting in production delivery / cashflow improvements and cost savings.

·    Mr Sohan Ojah-Maharaj, as both Trinidad Country Manager and an experienced petroleum engineer, led a comprehensive review of the well stock, reservoir performance and models, and field management structure in formulating the work program, and will now lead delivery of that work program for the balance of 2022 and into 2023.

·    The Company notes the planned work programme for the balance of 2022 represents a decision to undertake a diverse range of production-enhancing activities and gain associated information from those activities before moving to new well drilling. This is because, as compared to new well drilling, the planned activities are lower-risk, spread risk across multiple wells and fields, are expected to provide a more rapid production response, and are in aggregate more cost effective than new well drilling.

·    In support of a drilling program in 2023, the Company is evaluating up to nine potential new well opportunities across the Trinidadian asset portfolio, offering the possibility of significant production uplifts consistent with the Company's longer-term production goal of 1,000 bopd. During the balance of 2022 the Company will also be evaluating an appropriate funding strategy for new wells, with a view to reducing the capital burden and risk to the Company of drilling activities. This includes risk sharing opportunities with contractors and partners.

·    The Company has applied for an extension of the initial period for undertaking an extended well test in the Weg Naar Zee field, Suriname. This extension request recognises delays arising from the pandemic, and will facilitate a technical reassessment of the drilling strategy for that project, and in particular to consider the applicability of horizontal drilling as well as steam injection enhance oil recovery programme, both as a means of improving recoverability and enhancing project economics. On successful application, it is expected that drilling will now occur during 2023. In parallel, the Company is also considering potential partnership opportunities for this licence.

·    In relation to enhanced oil recovery programmes generally, and as noted above, the work program for the balance of 2022 includes a single waterflood pattern at the Goudron field, and steam injection is being considered for the Weg Naar Zee project in Suriname. Further waterfloods at the Goudron field will be considered for 2023, based on the technical outcomes of the initial work in 2022. A proposed CO₂ injection enhanced oil recovery programme for the Inniss-Trinity field is undergoing a detailed technical review for potential execution in 2023.

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

"Over the past six months, we have worked hard to redefine Challenger Energy's operations around a simple strategic focus: to build cashflow from our production base in Trinidad, and to reach a point where as a group we operate on a cashflow positive basis. In the process we have re-evaluated every single aspect of the Trinidad operations, to see how best we can clear legacy items, drive efficiencies, and deploy precious capital in the most effective, production-growth oriented manner. The work program for the balance of 2022 reflects the outcome of this work.

In particular, across our five producing fields we have a significant inventory of wells, and the focus of the work planned for 2022 is on working that existing well stock, through a wide range of individual actions, as well as on upgrading production-critical field infrastructure. We expect this work to deliver the near-term production growth we are targeting in the surest, lowest risk way possible and, if successful, provide a solid basis on which to approach the execution and funding of a drilling campaign in 2023. It will be a busy second half of 2022 for Challenger Energy. I look forward to updating on our progress as the year progresses."

All programme details and timings are subject to appropriate approvals and permitting from the Ministry of Energy and Energy Industries, and Heritage Petroleum Company Limited.

An updated corporate presentation reflecting the revised work programme has been included on the Company's website at - www.cegplc.com.

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).

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 Uruguay and The Bahamas. 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.

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

https://www.cegplc.com 

ENDS