1 November 2022

Challenger Energy Group PLC

("Challenger Energy" or the "Company")

Trinidad Q3 2022 Update

Challenger Energy (AIM: CEG), the Caribbean and Atlantic-margin focused oil and gas company, with oil production, appraisal, development and exploration assets across the region, provides the following update on its Trinidad and Tobago business unit's operating results for Q3 2022 (1 July 2023 to 30 September 2023):

·      Total gross oil production for Q3 2022 was 32,370 barrels, representing an approximately 5% decline on Q2 2022. The decline reflects the impact of especially adverse weather conditions causing grid and field level electrical failures through the quarter (and continuing into the beginning of Q4 2022), and which resulted in between three to eight days of production downtime (varying by field), as well as the need to delay / reschedule much of the production enhancement work that had been planned for the quarter.

·      Despite the lower gross oil production, the Company was able to maintain oil sales at a comparatively constant level during Q3 2022, through release of inventory build-up in Q2 2022, with total oil sales in Q3 2022 amounting to 31,267 barrels (marginally higher than Q2 2022 oil sales, by 0.3%).

·      Gross realised average price per barrel sold in Q3 2022 was US$85.02, an approximately 13% decrease over Q2 2022. Revenue received by the Company from oil sales (being gross revenues less Government royalties and mandatory source deductions and adjustments applicable under the relevant licences)¹, amounted to approximately US$1.3 million in Q3 2022. This represents average net revenue to the Company of US$40.20 per barrel sold, an approximately 11% decrease on Q2 2022, largely as a consequence of a decline in oil price.

·      The Company's business in Trinidad and Tobago operated on a break-even pre-tax operating profit basis in Q3 2022 (Q2 2022: US$0.2 million). In aggregate during the first nine months of 2022 the business in Trinidad and Tobago has generated field operating profits of approximately US$1.6 million, and a pre-tax operating cash surplus of approximately US$0.6 million (stated after field operating costs, in-country G&A and other Trinidad expenses, but before corporation and other taxes including supplemental petroleum tax where applicable, and noting that, given the extent of carry-forward tax losses, the Company is currently largely shielded from corporation taxes).

Eytan Uliel, Chief Executive Officer of Challenger Energy, said:

"We plan for a certain level of disruption each year during the rainy season, but during the third quarter we experienced considerably more than expected, resulting in production downtime, and it also became necessary to delay much of the routine maintenance and production enhancement activities we had hoped to undertake. At the same time realised oil prices declined from the highs seen in Q2. Operationally, therefore, the third quarter of 2022 was challenging. Nonetheless, in aggregate the first nine months of 2022 continues to represent an improving overall financial performance for the Trinidad business, with positive field level operating profits (unaudited, before G&A) and a positive unaudited pre-tax operating profit. During the fourth quarter, as weather conditions improve, we expect less production disruption, so we will be able to begin clearing the backlog of delayed field activity, which should benefit production levels further."

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Note 1: Oil sales are predominantly made to Heritage Petroleum Company Limited, the Trinidadian national oil company, which then apply certain deductions and adjustments before payment of funds to the Company. These vary between various licences, and include deduction of Government royalties, Heritage overriding royalties, facilitation fees, escrow and mandatory contributions to the abandonment fund, oil impost, and in respect of Goudron and Inniss-Trinity only, deduction of agreed first tranche volume and addition of an agreed handling fee.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014, which forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).

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 Uruguay and The Bahamas. 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 licences in Uruguay, the South West Peninsula of Trinidad, and The Bahamas 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