Challenger power update on Cory Moruga Sale

By Challenger Energy

* This statement has been translated by an automated system

Challenger Energy (AIM: CEG), the Caribbean and Americas-focused oil and gas company with oil production, appraisal, development and exploration assets across the region, is pleased to update that, as well as sign a binding term paper with Predator Oil & Gas Holdings Plc and the entities. Related Subsidiary (“Predator”) As announced on December 20, 2022 (the “Transaction”), Predator has now completed all confirmatory due diligence procedures and the Company and Predator have entered into a long-term form of complete legal documentation.

The terms remain unchanged from those previously announced on December 20, 2022, which are:

Predator will acquire 100% of the issued share capital of T-Rex Trinidad Limited (“T-Rex”), a wholly owned indirect subsidiary of the Company that holds an 83.8% stake in the Company and is the operator of the Cory Muruga License.

The Company will retain the option to buy back the Predator’s 25% interest in the T-Rex as agreed;

CEG and Predator have entered into a collaboration with respect to CO2-enhanced oil recovery (“EOR”) activities and projects. ₂ in other areas of Trinidad; And

The Company and Predator have agreed to mutually settle and release all disputes and claims relating to the CO Enhanced Oil Recovery Pilot Project. ₂ From Ennis Trinity.

The completion of the transaction is conditional on approval by the Trinidad Department of Energy and Energy Industries (“MEEI”) of the revised program of work for the Cory Moruga license proposed by Predator, as well as agreement by MEEI to review future fees for fees. Cory Moruga License and settlement/cancellation of previous fees claimed in connection with the Cory Moruga License. The transaction will be completed 7 days after this condition is met. The parties have agreed to work together to secure the required approvals and agreements with MEEI to achieve completion as soon as possible on or before May 30, 2023, with an extended deadline of August 31, 2023.

Subject to completion, the transaction will represent a total potential value proposition for Challenger Energy up to $9 million (at the discretion of the parties to the transaction), including:

$2.0 million payable to the Company by Predator in cash, in installments as follows: (i) $1 million upon completion of the Transaction, and (ii) an additional $1 million on the date six months after completion;

An additional $1 million conditional cash payment, to be paid once production from the Kore Muruga field reaches 100 barrels of oil per day for the first time;

The value of the option contained in the retained right of withdrawal;

remove all current financial obligations of the T-Rex and remove all liabilities associated with the T-Rex from Challenger Energy’s balance sheet, as well as remove all potential and potential liabilities associated with the Cory Moruga license, whether crystallized or not;

Settle any outstanding loan amounts in connection with the CO Enhanced Oil Recovery Pilot Project ₂ From Inniss-Trinity (acknowledging that in the absence of an agreement between the parties, such amounts will only be recoverable from additional production from the CO Enhanced Oil Recovery Pilot Project area. ₂ from Ennis Trinity); And

A complete and final mutual agreement with respect to all disputes and claims between the parties relating to the Enhanced Oil Recovery (CO) Experimental Pilot ₂ From Ennis Trinity.

The transaction, as well as the transaction involving Caribbean-Rex Limited as announced on February 14, 2023, is consistent with the Company’s strategy in Trinidad and Tobago to seek to monetize assets not located in its core area of ​​operations. Maximize cash and risk compensation and PAO, but at the same time maintain upward exposure.

Other announcements will be made as appropriate.