Saffron-2 Drilling Update

14 June 2021

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Saffron-2 Drilling 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 at the Saffron-2 appraisal well, currently being drilled at the Saffron project in the South-West Peninsula of Trinidad. The well is 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.

Highlights

·    Drilling has advanced through the lower section of the Middle Cruse to a depth of 2,804ft; formations encountered in line with pre-drill expectations

·    Logging has been completed for this section of the Saffron-2 well; hydrocarbon zones defined

·    The entire middle section of the well has now been cased and cemented, with drilling of the final stage of the Saffron-2 well underway; objective in this final section of the well is to define the resource potential of the Lower Cruse, and thereafter production test these zones

Eytan Uliel, Chief Executive Officer, commented:

"I am pleased to provide a further interim update on the drilling of the Saffron-2 well, where the middle section of the well has now been successfully drilled, logged, cased and cemented. As with the first section of the well, drilling has progressed in-line with pre-drill expectations, albeit slightly overtime due to severe weather and COVID-19 constraints impacting access to site. Technically, the results thus far are in-line with pre-drill expectation, with hydrocarbons now defined in both well sections to-date, as prognosed, and with initial petrophysical analysis of the top two sections of the well indicating formation quality and thickness consistent with Saffron-1. Most significantly, in this stage of drilling the use of synthetic-based mud has worked as intended, enabling for faster and smoother drilling and protecting the well bore through mobile shale zones, thus representing a major advance in Challenger's technical understanding as compared to the water-based mud used for the Saffron-1 well. Overall, we have set ourselves up well for the final stage of drilling, which will tell us what the extent of the resource in the primary Lower Cruse target is, and pave the way for putting the well on production. I look forward to advising further on completion of drilling."

Saffron-2 Appraisal Well 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, with the well design comprising three sections:

·    the top section, to intersect and assess sands of the Upper Cruse and upper parts of the Middle Cruse (these being zones previously intersected and logged in the Saffron-1 well, and which since completion of the Saffron-1 well have been the source of consistent oil production from that well),

·    the middle section, to intersect and assess deeper Middle Cruse sands (these being zones previously intersected in the Saffron-1 well, encountering hydrocarbons, but which were not able to be logged and produced from the Saffron-1 well), and

·    the lower section, to intersect and assess the previously unproduced Lower Cruse sands (as with the middle section, these zones were intersected in the Saffron-1 well but were not able to be logged and produced from the Saffron-1 well).

The primary targets of interest are the Lower Cruse and deeper Middle Cruse sands. The budgeted total cost for the Saffron-2 well is $3 million, with an anticipated drill time in the range of 25-30 days.

The Saffron-2 well was spud at 7:30pm on 23 May (Trinidad time), and as advised by the Company on 2 June 2021, the top section of Saffron-2 was safely completed to a depth of 1,593ft (at 17 1/2"), and successfully logged, cased and cemented.

Since then, the middle section of the Saffron-2 well has been safely and successfully drilled (at 12 1/4") to a depth of 2,804ft, logged, cased and cemented. The well penetrated various Middle Cruse zones including hydrocarbons zones as prognosed pre-drill, and with drilling rates and impact on surrounding clays and mobile shales improved significantly from Saffron-1 owing to the use of synthetic-based muds, thus providing a robust technical validation for the use of these muds, and a solid foundation for drilling design in any future field development.

In aggregate, the Saffron-2 well is currently running approximately 6 days over time, owing to difficult work conditions occasioned by heavy rains and some limitations on personnel and equipment movements due to the prevailing COVID-19 restrictions. However, incremental costs from time delays are being made up through operational savings and efficiencies, and offset to some extent from a higher than anticipated rate-of-penetration.

Looking Forward

The final section of the Saffron-2 well (at 8 1/2") is currently being drilled out, to a final target depth of 4,557ft. This hole section will include the primary reservoir targets of interest in the Lower Cruse, which will be logged and (assuming positive results) sampled via MDT (a wireline formation testing tool). This process, which should be sufficient to provide an indication of the aggregate resource and production potential, is expected to be completed on or around 23^th June 2021, which timeline remains consistent with an overall 30 day expected drill.

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 could occur in around mid-July.

The Company expects to provide a further update at completion of drilling of the final section of the Saffron-2 well.

Regulatory Statements

In accordance with the AIM Note for Mining and Oil & Gas Companies, BPC 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.

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