Saffron-2 Update

24 June 2021

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Saffron-2 Update

Challenger Energy (AIM: CEG), the Caribbean and Atlantic margin focused oil and gas company, with production, appraisal, development and exploration assets across the region, is pleased to provide an update on progress of the Saffron-2 appraisal well as part of the Saffron Project.

Highlights

·    Drilling of Saffron-2 has reached a total depth of 4,126ft, with an intermediate casing string added to the well plan at 4,118ft so as to preserve and bank the lower Middle Cruse and upper reservoir units of the main Lower Cruse target horizon, and thus maximise capacity for production testing

·    Hydrocarbons were encountered in the most recently drilled section and initial petrophysical interpretation of logs to depth of 3,530ft have identified a further 42ft of net pay in the lower Middle Cruse, increasing the total of oil-bearing sands thus far identified in the Upper Cruse and Middle Cruse to over 200ft

·    Drilling is continuing to target depth of 4,557ft, at which both Lower Cruse sections - the primary reservoirs of interest - will be logged, and thereafter the well will be production tested; the inclusion of an intermediate casing string has extended the schedule for completion of drilling and logging by approximately 7 days to 30 June 2021, with production testing remaining on track for mid-July

Eytan Uliel, Chief Executive Officer, commented:

"Our last update on Saffron-2 highlighted to shareholders that we had encountered hydrocarbons and identified a very encouraging net pay of approximately 165ft of oil-bearing sands in secondary well targets. I am pleased to update that drilling has now reached a depth of 4,126ft, intersecting both a mobile shale zone and the first of the primary Lower Cruse target reservoirs, and at which depth based on drilling conditions we decided to set intermediate casing. This is so as to stabilise the mobile shale and protect the upper Lower Cruse reservoir sands, thus best assuring our ability to deliver Saffron-2's core objective: production. As with the first sections of the well, we have again encountered hydrocarbons in the most recently drilled section, and logging the balance of the Middle Cruse has indicated a further 42ft of net pay - meaning that we have now identified a total of over 200ft of oil-bearing sands in secondary reservoirs of interest. Drilling continues, to an anticipated TD of 4,557ft, at which point the primary reservoirs of interest will be logged. We will provide a further update once drilling is complete."

Saffron-2 Appraisal Well Drilling Update

The Saffron-2 well is currently being drilled in the South-West Peninsula of Trinidad, as a twin well to the Saffron-1 well (i.e., drilled from the same well pad). Challenger Energy has a 100% operating interest in the well and the broader Saffron project. The target total depth of the Saffron-2 well is 4,557ft. The well is primarily targeting the Middle and Lower Cruse reservoirs, with an expectation (based upon the Saffron-1 discovery well) of production rates in the range of 200 - 300 bopd. As previously advised (on 18 June 2021) the well had reached a total depth of 2,804ft, with approximately 165ft of oil-bearing sands logged in non-primary reservoir targets.

Since then, drilling has continued with a view to assessing the deeper Middle Cruse and Lower Cruse sands, and thereafter placing the well on production.

Prior to intersecting the first of the Lower Cruse reservoirs, at approximately 3,890ft, a mobile shale zone was encountered as prognosed, starting at a depth of 3,630ft and continuing to 3,770ft.  As compared to Saffron-1, the impact of this zone on drilling has been significantly mitigated by the use of synthetic oil-based mud. However, based on conditions encountered while drilling, the decision was taken to set intermediate casing at 4,118ft before drilling on to TD. This will serve to better secure the already drilled horizons of the Middle and upper Lower Cruse for production testing, whilst at the same time allowing unencumbered drilling of the remaining Lower Cruse reservoir sections.

Hydrocarbons were encountered in the most recently drilled sections, and preliminary interpretation of logs for the balance of the Middle Cruse has indicated a further 42ft of net pay, increasing the total oil-bearing sands indicated in the Upper and Middle Cruse sections to over 200ft - these being secondary reservoirs targets. Logging remains to be conducted on completion of drilling over both the Lower Cruse sections, these being the primary reservoirs of interest.

The impact of this decision to set additional casing (and associated additional logging runs) is expected to be an additional 7 days of rig time, and associated additional cost. Accordingly, drilling and logging of Saffron-2 is now expected to be completed on or around 30^th June 2021. Thereafter (and assuming positive results), the well will be lined and readied for production testing. It is expected that the process of preparing for production testing (including perforation) will take 2-3 weeks, such that initial production is still expected to occur in around mid-July.

The Company will provide a further update at completion of drilling.

Regulatory Statements

In accordance with the AIM Note for Mining and Oil & Gas Companies, Challenger Energy Group discloses that Mr Nathan Rayner, the Company's Chief Operating Officer, is the qualified person who has reviewed the technical information contained in this announcement. He is a qualified Petroleum Engineer, a member of the Society of Petroleum Engineers, and a member of the Institution of Engineers, Australia. He has over 20 years' experience in the oil and gas industry. Nathan Rayner consents to the inclusion of the information in the form and context in which it appears.

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 (Withdrawal) Act 2018.

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 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