Challenger Energy Regulatory News (CEG)

4 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.

As previously advised, the objectives of the Saffron-2 well are twofold: to achieve profitable immediate production and cashflow, and to enable the Company to define an appropriate development plan for the Saffron field as a whole. 

The primary targets of interest for the Saffron-2 well are the Lower Cruse and lower Middle Cruse sands and from which, based on the outcomes of the Saffron-1 well, the Company's has a P50 expectation of Saffron-1 production rates in the range of 200 - 300 bopd.

Highlights

· Drilling of the top section of Saffron-2, though the Upper Cruse and upper parts of the Middle Cruse, has now been completed to a depth of 1,593ft, on time and on budget, with formations encountered in line with pre-drill expectations

· Logging has been completed for the top section of the Saffron-2 well; logs are as prognosed and are consistent with comparable logs from Saffron-1

· Casing is being run and cemented deeper than the equivalent casing point for Saffron-1, providing a better foundation for drilling the deeper, primary targets

· The next stage of the Saffron-2 well will evaluate the deeper Middle Cruse, and the final stage of the well will evaluate the Lower Cruse

Eytan Uliel, Chief Executive Officer, commented:

"Last week, on assuming the role of CEO of Challenger Energy, I indicated that I would seek to actively engage with our shareholders, including providing regular updates, and, given the centrality of Saffron-2 to our immediate forward strategy, I know that many shareholders are acutely interested in the progress of this well.

"I am thus pleased to advise that Saffron-2 is proceeding as planned, with the first section of the well successfully completed and logged, on time and on budget. Thus far, everything is as we would have hoped it would be, both geologically and operationally. This creates a good foundation for the next two stages of the well, which will evaluate the primary targets of interest. A further update on progress will be provided in due course."

Saffron-2 Appraisal Well Update

The Saffron-2 well is currently being drilled in the South-West Peninsula of Trinidad. Challenger Energy has a 100% operating interest in the well and the broader Saffron project. The target depth of the Saffron-2 well is approximately 4,550ft, 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 Lower Cruse sands (as with the middle section, 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).

The primary targets of interest are the Lower Cruse and deeper Middle Cruse sands (that is, those to be assessed by the lower and middle sections of the Saffron-2 well). The budgeted total cost for the Saffron-2 well is $3 million, and the anticipated drill time in in the range of 25-30 days. The well was spud at 7:30pm on 23 May (Trinidad time), as per schedule, and the Company is able to advise that:

· drilling of the top section of the Saffron-2 well has been safely completed to a depth of 1,593ft (at 17 1/2"), and successfully logged in accordance with schedule and budget, with casing being run and cemented in this section. Notably, the casing point for this section of the Saffron-2 well is approximate 1,120ft deeper than the equivalent casing point in the Saffron-1 well, providing a better foundation for drilling to the deeper targets, and

· the results of logs in this section (i.e., of the Upper Cruse and upper parts of the Middle Cruse) are consistent with the results of comparable logging from Saffron-1 from these zones. For reference, notwithstanding technical issues with the drilling and design of the Saffron-1 well, that well has consistently produced since completion, with all Saffron-1 production sourced from the sands of the Upper Cruse / upper Middle Cruse.

Looking Forward

· The next (middle) section of the Saffron-2 well (at 12 1/4") will be drilled to a target depth of approximately 2,800ft, and thereafter logged and cased.

· In this next section of the Saffron-2 well the Company expects to encounter hydrocarbons as identified in the Saffron-1 well in the deeper Middle Cruse, but as distinct from the Saffron-1 well also expects to be able to acquire open hole wireline logs where they were not previously able to be run.

· Thereafter, the drill plan is for the Saffron-2 well to be drilled to a final target depth of approximately 4,550ft, logged, sampled and cased as a future producer. As with the middle section of the well, in the final lower section of the Saffron-2 well the Company expects to be able to assess and produce hydrocarbons that were identified in the Saffron-1 well in the Lower Cruse but were unable to be logged and tested in that well.

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

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