Correction: Result of Placing

FOR IMMEDIATE RELEASE.

28 January 2022

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Correction: Result of Placing

This is a correction to the Results of Placing announcement published at 07:53 on 27 January 2022 (RNS Number: 8368Z) which contained an error in the ratio of Open Offer Shares. The original announcement erroneously stated that 2.51 Open Offer Shares for would be available for every 1 existing Ordinary Share held at the Record Date. This figure should have been 1.34.

All other details remain unchanged.

The full corrected announcement is provided below.

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW. THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL OR A SOLICITATION TO BUY SECURITIES IN ANY JURISDICTION, INCLUDING THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA AND NEW ZEALAND. NEITHER THIS ANNOUNCEMENT NOR ANYTHING CONTAINED HEREIN SHALL FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, ANY OFFER OR COMMITMENT WHATSOEVER IN ANY JURISDICTION. 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 2014/596/EU, AS AMENDED BY THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019. IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO THEM IN THE COMPANY'S ANNOUNCEMENT RELEASED AT 4:54 P.M. ON 26 JANUARY 2022.

FOR IMMEDIATE RELEASE.

27 January 2022

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Result of Placing 

Challenger Energy (AIM: CEG), the Caribbean and Atlantic margin focused oil and gas company, with exploration, production, appraisal and development assets across the region, announces that, further to the Company's announcement released at 4:54 p.m. on 26 January 2022 (the "Launch Announcement"), the Bookbuild has closed and the Company has raised gross proceeds of approximately £5.0 million through the successful firm and conditional placing, including a firm and conditional direct subscription, (the "Placing") of 5,019,100,000 new Ordinary Shares (the "Placing Shares") at a price of 0.10 pence per Ordinary Share (the "Placing Price").

Approximately £0.7 million has been raised as part of the Firm Placing pursuant to the Company's existing share issuance authorities in place, and approximately £4.3 million has been conditionally raised as part of the Placing ("Conditional Placing"). The Conditional Placing is subject to shareholder approval, which will be sought at an Extraordinary General Meeting of shareholders to be convened on or about 28 February 2022.

In addition to the Placing, and as set out in the Launch Announcement, the Company will also undertake an Open Offer to raise up to a further £2.0 million. Under the Open Offer, all Qualifying Shareholders will have the ability to subscribe for new Ordinary Shares in the capital of the Company (the "Open Offer Shares") at the Placing Price on the basis of 1.34 Open Offer Shares for every 1 existing Ordinary Share held at the Record Date. Qualifying Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through the Excess Application Facility. Details of the Open Offer and the action to be taken by Qualifying Shareholders to subscribe for Ordinary Shares under the Open Offer will be set out in the Notice of Extraordinary General Meeting and Open Offer Circular, which is expected to be sent to shareholders by or on 4 February 2022.

Key executives of the Company, namely Eytan Uliel (Chief Executive Officer), Iain McKendrick (Chairman designate), Tim Eastmond (Chief Financial Officer designate), and Gagan Khurana (Chief Commercial Officer designate) have participated in the Placing via directly applying for Ordinary Shares for an aggregate value of £275,000 at the Placing Price. This participation is equivalent to 5.5% of the Placing and 3.9% of the total Fundraising (assuming the Open Offer were to be taken up in full).

The net proceeds of the Fundraising will allow completion of the Company's Financial Restructuring as well as providing funds for a low-risk development work programme in Trinidad and Tobago and Suriname in 2022 and into 2023. The proposed development programme is focused on increasing production and cash flow. In particular, the intended use of the net proceeds of the Fundraising includes:

· making remaining agreed payments that are due during 2022 in order to complete the final elements of the Financial Restructuring, thereby reducing the total balance sheet creditor / liability / exposure position of the Company from approximately US$23 million to approximately US$2.5 million;

· funding a production growth focused work programme in Trinidad and Tobago over the course of 2022 and 2023 that will include low-risk well recompletions and workovers, drilling of new infill production wells and the implementation of enhanced oil recovery (waterflood and CO2 injection) techniques, with the objective of increasing production from the current level of approximately 400 bopd to more than 1,000 bopd by 2024, and thus driving cash flow growth;

· undertaking an extended well test on the Company's Weg Naar Zee asset in Suriname, with the objective of demonstrating commerciality and subsequently moving that project into the development stage and onto production to deliver additional near-term cash flow generation; and

· providing general working capital, additional capital for incremental work programmes, and, should appropriate opportunities arise, pursuing business development or other inorganic production growth opportunities;

In support of the Financial Restructuring and recapitalisation of the Company, a number of changes to the Board and management team will take effect, conditional on completion of the Fundraising, including:

· Iain McKendrick will join the Board as Non-Executive Chairman, and William Schrader (current Non-Executive Chairman) and James Smith (current non-executive Deputy Chairman) will step down from the Board. Further, Simon Potter has indicated that he will step down from the Board within three months of completion of the Fundraising, thus allowing sufficient time for a suitable replacement non-executive Director to be identified and brought on board; and

· Tim Eastmond will be appointed as Chief Financial Officer of the Company and will join the Board as an Executive Director, and Gagan Khurana, the Company's current Commercial Manager, will assume the role of Chief Commercial Officer, while certain members of the Company's current executive team (including the COO and Finance Director) have already or will shortly cease employment with the Company.

Related Party Opinion

The subscription for new Ordinary Shares by Eytan Uliel, the Company's CEO, for a value of £150,000 is considered a related party transaction for the purposes of the AIM Rules for Companies. The directors of the Company who are considered independent (being William Schrader, James Smith and Simon Potter) having consulted with Strand Hanson Limited, the Company's Nominated Adviser, consider the terms of the subscription to be fair and reasonable insofar as the Company's shareholders are concerned.

Commenting on the Fundraising, Eytan Uliel, CEO of Challenger Energy, said:

"As announced yesterday, 26 January 2022, Challenger Energy is undertaking a capital raising necessary to secure the funds needed to build for the future. This includes facilitating the Company completing its creditor settlement agreements, enabling the Company to pursue a production accretive work programme in 2022 / 2023, and putting the Company in a position where it can prioritise further production growth opportunities, whether organically generated or via acquisitions.

Through the first part of the exercise - a placing with institutional and other investors - we have been able to raise £5.0 million, 25% more than the £4 million we had targeted as the minimum needed to secure a future for the Company. We are, however, raising funds at a difficult time, both for the Company and the market more generally. As a result, the pricing offered to us will see existing shareholders - myself and directors included - substantially diluted. Nonetheless, in the absence of realistic alternatives, proceeding with this funding is necessary so as to allow the Company to meet its financial commitments, and continue operations.

I would also emphasise that the Company has decided to undertake an open offer to all existing shareholders, at the same price as the institutional placing. What this means is that if existing shareholders consider the price at which new shares are being issued under the placing to be compelling, they can choose to participate in the future of their Company, and subscribe for new shares, at that same price. Certainly, I intend to do so in respect of my current shareholding.

I very much hope that this fundraising, once completed, will draw a definitive line under the impact of operations from the past, and we can all begin to look to a new future. The entire Challenger Energy team is committed to delivering on the simple strategic objective we have set for the Company going forward: to grow production, to increase cash flow, to become profitable, and to restore shareholder value. We thank all shareholders, past and present, for their support through what has been a turbulent last 18 months, and I look forward to providing updates on our future progress."

Admission

Application has been made for the 691,401,490 Placing Shares pertaining to the Firm Placing to be admitted to trading on the AIM market ("AIM") of London Stock Exchange plc ("First Admission"). It is ‎expected that First Admission will take place at or around 8.00 a.m. (London time) on 31 January 2022 (or ‎such later date as may be agreed between the Company, Arden and Gneiss).

Subject to shareholder approval at the Extraordinary General Meeting, application will be made for the Placing Shares pertaining to the Conditional Placing to be admitted to trading on AIM ("Second Admission"). It is ‎expected that Second Admission will take place at or around 8.00 a.m. (London time) on 1 March 2022 (or ‎such later date as may be agreed between the Company, Arden and Gneiss).

Posting of Open Offer Circular

The Open Offer Circular will be included within the Notice of Extraordinary General Meeting, and the Company expects that the Notice of Extraordinary General Meeting and Open Offer Circular will be posted to shareholders by or on 4 February 2022. The Notice of Extraordinary General Meeting and Open Offer Circular will also be posted on the Company's website at the same time. Shareholders should read the full text of the resolutions contained in the Notice of Extraordinary General Meeting. Copies of the Notice of Extraordinary General Meeting and Open Offer Circular will be available for inspection at the Company's registered office.

The current directors of the Company consider the Placing and Open Offer to be in the best interests of the Company and its shareholders as a whole, and accordingly intend to unanimously recommend shareholders to vote in favour of the resolutions to be proposed at the Extraordinary General Meeting as they intend to do in respect of their beneficial holdings, representing in aggregate approximately 3.9% of the Ordinary Shares currently in issue.

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 production, development, appraisal and exploration 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 is quoted on the AIM market of the London Stock Exchange. 

https://www.cegplc.com 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 as amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019 ("MAR").

Forward-Looking Statements

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's business strategy, plans and objectives of management for future operations, or any statements proceeded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by applicable law or the AIM Rules.