Commencement of the Drilling of Saffron-2 Well

26 May 2021

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Commencement of the Drilling of Saffron-2 Well

·    Drilling of the Saffron-2 appraisal well in Trinidad and Tobago has commenced as scheduled

·    The Saffron-2 well has two primary objectives:

o  To provide immediate production and cash flow

§ A successful Saffron-2 could produce between 200 to 300 bopd, resulting in US$1.8 - US$2.6 million p.a. of net cash flow to the company

o  To inform the most efficient way to develop the Saffron field

§ Internal estimates are that in a success case the Saffron field is capable of producing 1,000 - 1,500 bopd by end 2021, providing a cash flow run rate of US$8 - US$12 million p.a.

§ A full field development could achieve peak production rates of up to 4,000 bopd and yield cash flow in excess of US$25 million p.a.

·    The Saffron-2 appraisal well is a follow up to the successful Saffron-1 exploration well drilled in March 2020 that resulted in discoveries in both the Middle Cruse and Lower Cruse reservoirs. Significant lessons were learnt during the drilling of Saffron-1 to inform the drill plan for Saffron-2

·    Saffron-2 is a low cost onshore well with a budget, inclusive of production completion, of approximately US$3 million, and expected to take between 25 and30 days to complete

Eytan Uliel, Chief Executive Officer designate, commented:

"Following completion of mandatory inspection and reporting processes in Trinidad, we can now advise that drilling of the Saffron-2 appraisal well has commenced, with the well having spud on 24 May (UK time, late 23 May local time). The well will be drilled over the next 25-30 days, to a total depth of approximately 4,500 feet.

The objectives of the Saffron-2 well are twofold. Firstly, to produce oil and generate cashflow in its own right, with a P₅₀ projected production rate of 200-300 bopd and, more importantly, to inform the appropriate development plan for the Saffron field as a whole. Based on the Saffron-1 well discovery and subsequent studies, we believe Saffron is a field capable of growing to production in the range of 1,000 - 1,500 bopd by the end of 2021, and which could ultimately achieve production rates of up to 4,000 bopd in a full field development scenario.

This is an exciting start for Challenger Energy Group, as we take the first step in our longer-term strategy of developing our existing portfolio to increase the Company's production and cash flow. I look forward to updating shareholders with results once the well has been completed."

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

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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 licence in each of Uruguay and The Bahamas are highly prospective, and 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