Challenger Provides Uruguay Area-Off 1 Update

Source: 4/26/2023, Location: South America

Challenger Energy, the Caribbean and Americas focused oil and gas company, with a range of oil production, development, appraisal, and exploration assets, provides the following highlights from its technical assessment of the AREA OFF-1 block, offshore Uruguay.

• An initial prospect inventory of 1 to 2 billion barrels has been defined from CEG's 2D seismic reprocessing work

• Three sizeable prospects have thus far been identified, derived from a range of play types consistent with those de-risked by recent successful conjugate margin drilling in Namibia by TotalEnergies and Shell

• Prospects are seismically-derived, and supported / further de-risked by Amplitude Variation with Offset ("AVO") analysis

• Play robustness is corroborated by geochemical sampling and satellite seep analysis

• Conjugate margin success, competitive recent licensing rounds in Uruguay, and technical uplift from CEG's 2023 work will drive farm-out process, soon to be initiated

· The geotechnical assessment programme of the Company's AREA OFF-1 licence is on-track to be completed by Q3 2023. This accelerated work will satisfy the entire minimum work obligations for the block's initial four-year exploration period (i.e., to August 2026).

· Reprocessing of 2,100 kms of legacy 2D seismic (completed) and interpretation and mapping (ongoing) has confirmed considerable value uplift for the AREA OFF-1 licence, with at least three high potential prospects identified from two material play types to date.

· Technical de-risking has resulted from a range of workstreams, including AVO analysis, geochemistry seabed sampling, and satellite seep and slick imagery.

· Prospect details are:
o "Teru Teru" prospect - a Cretaceous turbidite play; analogous petroleum system and reservoir age to Namibian ultra-deepwater discoveries; 460 km2 in areal extent; Class II AVO supported; an estimated ultimate recoverable resource in excess of 700 MMboe; located in approximately 750 metres water depth; and with a reservoir depth of approximately 4,300 metres.

o "Anapero" prospect - a Cretaceous turbidite play; analogous petroleum system and reservoir age to Namibian ultra-deepwater discoveries; 500 km2 in areal extent; Class III AVO supported; an estimated ultimate recoverable resource in excess of 500MMboe; located in approximately 750 metres water depth; and with reservoir depth of approximately 3,800 metres.

o "Lenteja" prospect - an Early Cretaceous alluvial fan representing a large stratigraphic trap; analogous to proven legacy shelf discoveries in Namibia and South Africa; 425 km2 in areal extent; an estimated ultimate recoverable resource c. 500MMboe; located in approximately 85 meters water depth; and with a reservoir depth of approximately 5,000 metres.

· Continuing discretionary technical work will seek to define additional leads and prospects, further refine previous mapping of identified prospects, generate volumetrics of identified prospects, and seek to further constrain key technical risks.

· The Company has compiled a comprehensive data-room, which includes all new work completed, and following unsolicited interest from a number of industry counterparties a farm-out process is to be formally launched. Further announcements will be made as appropriate.

· The objective is for the Company to accelerate value realisation from the AREA OFF-1 licence in Uruguay by introducing a strategic partner(s) during 2023, to fast-track 3D seismic acquisition, potentially via a multi-client acquisition in early 2024, as a precursor to further value-creating field activity.

An update Uruguay AREA OFF-1 presentation is now also available on the Company's website at Additional details are also set out in the Appendix to this RNS.

Eytan Uliel, Chief Executive Officer of Challenger Energy, said:
"In 2020, when no other parties were ready to commit, Challenger Energy was first-mover into offshore Uruguay, securing the AREA OFF-1 block on an uncontested basis and on highly advantageous work terms. Since then, margin-opening discoveries offshore Namibia by TotalEnergies and Shell have made it possible to correlate what are now proven, oil producing source rocks directly across into the conjugate margin basins of Uruguay's waters.

As a result, Uruguay has become a new global exploration hotspot, evidenced by the fact that in the last 12 months all but one of the available offshore blocks have been licenced by oil majors and NOCs, bidding sizeable work programs.

In direct response to the exploration success in adjacent analogue basins and the emerging industry interest it generated, we committed to remaining ahead of the game, and in late 2022 opted to accelerated our AREA OFF-1 work program. The goal was to generate a newly derived, modern dataset supporting prospect definition. The resulting prospect inventory is now informed by reprocessed legacy 2D seismic, supported by AVO attribute analysis (hugely significant as this technique is widely used in the industry as a key indicator of potential hydrocarbons), and corroborated by additional geochemical and seep analysis studies.

The results from this work have been extremely promising, in that we are now able to announce a technically supported prospect inventory of between 1 to 2 billion barrels in this globally attractive exploration hotspot.

Our next-step objective is to farm-out to an industry partner(s), so we can fast-track a 3D seismic acquisition. The high-quality data set we have now compiled, and the intellectual property created, positions us well, and we will shortly be initiating a formal farm-out process.

The world for Challenger Energy is changing rapidly. I look forward to updating shareholders as the year progresses."

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