Chairman's Letter to the Shareholders

Dear shareholders,

I am pleased to report to you as chairman of your Company.

In my last report I discussed the transition that the company was undertaking on several fronts: moving on from legacy issues, refocusing the Trinidad business, and pivoting longer term exploration towards Uruguay. Over the last year, we have delivered on each of these.

In relation to legacy issues, nal settlements of historic liabilities were agreed at the start of 2022, which, in tandem with a capital raising in March of 2022, allowed the company to clear its balance sheet and refocus its resources. The Company remains in discussions with the Bahamian government regarding the status of its licences there, and our rights to benet from the substantial work undertaken and cost incurred. However, this project no longer forms part of our immediate business focus.

In Trinidad, we made substantial changes to our business, resetting the basic operating philosophy away from "maximising production" to "efficiency and prot". We strategically prioritised our main assets in south-east Trinidad, streamlined operations around those main assets, and began a process of divesting and monetising non-core assets. These measures have resulted in a more efficient and sustainable Trinidadian business.

In Uruguay, the Company has benetted from renewed global focus on energy security and exploration, following the Ukrainian invasion and loss of access to Russian production and reserves in Western energy markets. These developments, when coupled with recent exploration success in Namibia - the "other side" of the Atlantic conjugate margin on which our Uruguay assets sit - have seen Uruguay become a new hot zone in global exploration, as evidenced by the heavy presence of global majors in the country's recent licencing rounds.

Our AREA OFF-1 acreage has thus become more important for our Company. As Eytan describes more fully in his CEO report, in the past year we have rapidly advanced our AREA OFF-1 technical work program, to enhance the value we hope to realise when we farm-out the asset. The story has been further enhanced by the award of the OFF-3 licence to the Company, which grows our business in Uruguay even further.

In my last report, I noted my belief that oil will remain an important part of the energy mix for many years to come. The events of the last year, and the impact this has had on energy prices and the global energy industry, make these observations as relevant as ever. As the Western world searches for new and more secure sources of energy, we are well positioned to benet.

I would like to thank all our staff for their efforts over the course of the past year, the Board for their support in managing and guiding this process, and nally our shareholders for their continued support.

Iain McKendrick Chairman

28 June 2023

Chief Executive Officer's Report to the

Shareholders

Dear fellow Shareholders,

I am pleased to provide the following commentary on our business and operations during the period under review.

The 2022 nancial year (that is, from January to December 2022) was a time of considerable change and progress for our Company. In early 2022 we completed a comprehensive nancial and operational restructuring, along with a recapitalisation. Then, with the benet of legacy issues behind us, we were able to devote full attention to core operations: our production business in Trinidad and Tobago and developing a deeper insight as to the value of our exploration acreage in Uruguay. And, as the fundamentals and realities of our business and our assets shifted, we reshaped our strategies and priorities to match. The result is that both pillars of our business advanced such that we are now, in 2023, seeing results from the solid foundations laid in 2022.

Exploration Acreage in Uruguay

One of the key drivers of value for any junior E&P company is the ability to adapt rapidly to changes in circumstances. Nowhere was this more evident than in relation to Challenger Energy's Uruguayan business during 2022.

We were awarded the AREA OFF-1 licence block offshore Uruguay in 2020, but as at the start of 2022, Uruguay was not yet on the global industry's radar, and Challenger Energy was Uruguay's sole licence holder. Starting in early 2022, however, everything changed quite dramatically, and very quickly.

The catalyst for this was when two energy majors (TotalEnergies and Shell) each announced in February 2022 that they had made massive discoveries from independent wells drilled offshore Namibia. Those successful Namibian wells served to greatly de-risk the presence of a high-quality, oil-prone source rock and charge, not just in Namibia but on the other side of the South Atlantic conjugate margin - in particular Uruguay, which represents a geological "mirror" of the area where the new Namibian discoveries were made. And whilst in February 2022 the profound signicance of the Namibian discoveries for Uruguay may not have been immediately obvious to casual market observers, the industry knew exactly what it meant.

As a result, almost overnight we witnessed Uruguay become a global exploration "hotspot." Thus, in the rst Uruguayan bidding round after the Namibian discoveries (May 2022), three licences were bid on and awarded to majors Shell and APA (formerly Apache). Then, in November 2022, a further two licences were bid on and awarded, one to a consortium of Shell and APA, and the other to YPF, the Argentinian national oil company. Tellingly, the new entrants offered signicant work program to secure their licences (as compared to the very modest work program we had bid to secure AREA OFF-1), and a number of other energy majors also registered to bid in the two Uruguayan open rounds held in 2022, but were unsuccessful.

This step change in industry interest validated our rst-mover, low-cost entry into Uruguay, and conrmed that we had secured highly prospective frontier acreage with potential for considerable near-term value uplift. And once we saw industry interest escalate, we rapidly shifted our strategy to match, prioritising our Uruguay business around three clear workstreams:

•       First, we elected to accelerate our work program on the AREA OFF-1 block, with a view to generating proprietary intellectual property and upgrading technical knowledge of the area in light of the new conjugate margin discoveries, and in this way seek to increase the value of the AREA OFF-1 asset. The program of work undertaken included reprocessing of legacy 2D seismic data, advanced attribute variation with offset (AVO) analysis, seabed geochemical and satellite seep studies, full reinterpretation and remapping of all data, and an initial volumetric assessment. The result of this work, announced in early 2023, was the identication of three technically robust primary prospects on AREA OFF-1, that in aggregate represent a prospect inventory of approximately 2 billion barrels (Pmean) and up to 5 billion barrels (P10) - establishing that AREA OFF-1 is a world-class asset of scale

•       Second, we began preparing for a farm-out process. This is because taking AREA OFF-1 forward to 3D seismic acquisition and ultimately exploration well drilling, especially on an expedited basis, will be a technically demanding and costly undertaking, for which we ideally wish to have an industry and funding partner. Consequently, a formal farm-out process was launched in Q2 2023. The next step is to deliver a farm-out, which we are working diligently on.

•       And third, we sought to expand our presence in Uruguay, given our developing knowledge base and energy understanding, the excellent working relationship established with ANCAP, and the attractive conditions in that country for hydrocarbon industry activity. The rst tangible result of this work came in June 2023, when Challenger Energy was awarded the AREA OFF-3 block - the last available offshore acreage in Uruguay - on attractive terms, subject to licence signing. Once this licence has been signed, our Company will be the 2nd largest acreage holder in Uruguay, with a signicant prospect inventory, and two high- quality assets in what has fast become a global exploration focus area.

In summary, therefore, through the course of 2022 our early entry into Uruguay was transformed from apparently being little more than "option value" to being a near-term opportunity for substantial value-creation. We are condent that eventually the equity market will pay attention and reward the value we are creating.

Production Operations in Trinidad and Tobago

It was not only in relation to Uruguay that pragmatic adaptation was required during 2022 - our business in Trinidad demanded a similar strategic reassessment during 2022.

At the start of 2022 our Trinidad and Tobago business was focused on a drive for material organic growth in production from our existing elds. Our goal was to achieve production growth from applying efficient mature oileld management practices, eld improvements, Enhanced Oil Recovery (EOR) initiatives, and targeted production enhancement activities. Yet despite doing all this, production growth proved elusive. The undeniable reality is that our oil elds are mature, and having produced oil for many decades they have depressurised reservoirs, where the rate at which the remaining resource is produced cannot easily be increased. That noted, no matter what we did the production from our existing elds was remarkably constant and predictable. That is, the same eld maturity that mitigates against organic production increase also mitigates against unreliable production performance. And based on this simple observation, we undertook a reassessment of our Trinidad operations in mid-2022, which resulted in the following revised business objectives:

•        One - prioritise those areas where Challenger Energy has a competitive advantage.

In practical terms, this meant dividing our Trinidad portfolio into two parts: "core" - consisting of the Goudron and Inniss-Trinity assets in south-east Trinidad, and "non-core" - our assets in central and south-west Trinidad. The rationale for this division was simple: (i) our two assets in south-east Trinidad represent about 85% of our current production; (ii) almost all of our operations, staff and equipment are devoted to these two assets and we are one of the larger operators in that area of Trinidad; and (iii) operating conditions in south-east Trinidad are peculiar and difficult (remote locations, jungle, poor infrastructure, etc.), so we have unique local operational knowledge and capabilities that can be leveraged.

•        Two - for core business operations, focus on keeping production constant, drive efficiencies, and match the operational footprint and cost to the production we know can be achieved.

Once core assets had been prioritised, we were better able to schedule equipment movements and workovers in support of those assets alone, and we were able to reshape our staff base, operations, and other costs to better "t" the needs of those specic assets. We also switched many of the smaller producing wells over to continuous swabbing - an operational approach that meant we would no longer be chasing increased production from those smaller wells, but at the same time also meant we could run those wells at a fraction of the cost of continually working the wells over. In terms of outcomes, this new focus saw production through 2022 holding constant, total operating expenses and G&A reduced, and positive net operating cashow across 2022 (which represents a substantial improvement on 2021, where the Trinidad business had incurred a net operating cash decit).

•        Three - exit or monetise non-core operations.

We made substantial progress in relation to this objective, and in the later part of 2022 succeeded in selling (i) the non- producing Cory Moruga asset, with the buyer committing to a substantial future work program, including EOR and new well drilling (completion of that sale remains pending regulatory approval in Trinidad), and (ii) the South Erin asset, with that sale fully completed in early 2023, resulting in not only an up-front cash payment, but the assumption by the buyer of our obligation to drill three new wells. In both cases, we have retained future back-in rights, such that if the work undertaken by the new owners (at their sole cost and risk) proves successful, we retain the option to "re-acquire" part of the asset. We continue to work on similar exit options for the remaining non-core assets we hold.

•        Four - generate increased production from "new oil".

We continue to believe that the opportunity exists to create a protable and growing production business in Trinidad. But, as described previously, the key learning for us in 2022 was that growth in production will not come from our existing well stock. Rather, the path to growing production in Trinidad will be via accessing "new oil" - that is, either nding places within our existing elds that have not been drained effectively and drilling new wells, or by getting new licences. As such, we have been working diligently in the background to identify suitable "new oil" options, whether within our existing core operations, or in our broader geographic area of focus.

The rst tangible expression of this work become evident only recently, when in June 2023 we were nominated as the party invited to negotiate for the Guayaguayare block, located onshore in south-east Trinidad and thus strategically and operationally synergistic with our existing core assets (our bid was submitted in late 2022, following extensive due diligence and bid preparation through 2022). Guayaguayare is one of the largest onshore blocks in Trinidad, and amongst the largest remaining underexplored / undrained contiguous onshore areas, offering excellent upside. Additionally, the block contains over 60 historic wells, a few of which are active, but most of which are currently shut-in / suspended / abandoned, which can be cheaply reactivated and serviced from existing operations, thus offering the possibility of near-term production uplift.

In summary, insofar as our business in Trinidad is concerned, 2022 was a year where not everything worked out as we had initially hoped, but we learned from experience, rened our strategy accordingly, and built from there. As a result, we are now seeing positive outcomes - continuing improvements in nancial performance, wins on the business development front, and in overall context, progress toward our goal of building a protable and growing Trinidadian production business.

Corporate Restructuring & Recapitalisation

As I noted at the start of this report, at the beginning of 2022 we completed a comprehensive nancial and operational restructuring, along with a recapitalisation. This process had begun in mid-2021, and so I had opportunity to comment at length on it in the 2021 Annual Report. I will thus not repeat the details again here, other than to note that the successful conclusion of this process resulted in a signicantly reduced overhead cost, streamlined operations, a refreshed board and executive, and a cleaned up balance sheet that put the Company into a position where it was free of nancial debts and able to fund planned activities during 2022. Many people worked tirelessly in difficult circumstances to achieve this outcome, and on behalf of all shareholders I wish to express my gratitude.

Legacy Assets

Insofar as our "legacy" asset portfolio is concerned, through 2022 we continued to manage those with a view to retaining title in good order, ensuring minimal cost, and seeking means of ultimately monetising the assets. In relation to the Company's licences in The Bahamas we maintained ongoing dialogue with the Government of The Bahamas on two parallel options: (i) the renewal of the licences into a third exploration period, given that we still see considerable long-term exploration potential in those licences, or (ii) a joint initiative seeking to monetise those assets via an alternative approach based around carbon credits. Meanwhile in Suriname there was no eld activity during 2022 in relation to the WNZ block, but we were granted an initial 6-month extension of the licence, so that we could undertake a further review of the project, focussing on well design options and the long-term commerciality of the eld. This work has recently been completed, and we are now in discussion with the Surinamese regulator as to the future direction for this asset. I hope to be able to advise of progress in relation to both of these legacy assets in the not-too-distant future.

ESG

Finally, I would like to make a few comments in relation to the broad category of activities referred to nowadays generally as Environment, Social and Governance, or ESG. The fact that these comments come at the end of my report should not in any way be seen as diminishing the importance of this area, because it is absolutely central to everything we do. Not a day goes by at Challenger Energy where we do not devote a portion of our time to discussing, planning, and implementing a variety of programs and actions in support of a simple goal: to make sure that achieving our commercial objectives never comes at the expense of harm to people or the environment.

I am pleased to report that in 2022, our exemplary record in this all-important area was maintained. Across all our operations there were no incidents of note - whether personal injury, property damage or environmental, and all operations throughout 2022 took place without the occurrence of any Lost Time Incidents. Throughout the year we continued to invest in Company-wide training programs and ESG awareness activities, we continued to maintain productive and positive relationships with all relevant Governments and regulatory bodies, and we continued to make targeted social and welfare contributions in the communities where we operate.

Overall, shareholders should be pleased with the Company's ESG performance and track record in 2022, and we will continue to do our utmost to ensure this continues.

2023 Strategic Direction

Looking ahead, the 2023 focus for our business in Uruguay is unambiguously on securing a farm-out partner for the AREA OFF-1 block, such that we can expedite future technical work program on the block and in particular a 3D seismic acquisition - we see this as the path to signicant near-term value creation for shareholders. In Trinidad the 2023 focus will be to continue the work of the last two years: maintain current production, drive improved nancial performance, dispose of remaining non-core assets, and seek to strategically access "new oil" opportunities so as to expand the production base.

I would like to take this opportunity to thank our staff, whose hard work and dedication is at the heart of everything we do. And collectively, all of us who work at Challenger Energy wish to express our deep appreciation for the support we receive from our Board, stakeholders, regulators, suppliers, contractors and especially our shareholders. In 2023 and beyond, we will do everything we can to reward your condence in us.

Eytan Uliel

Chief Executive Officer

28 June 2023

Challenger Energy Overview

Challenger Energy is a Caribbean and Americas focused oil and gas company, with a range of onshore and offshore oil and gas assets in the region. The Company's primary focus is on its Uruguay exploration acreage and its Trinidad production business.

Uruguay

Challenger Energy is the holder of two offshore exploration licences in Uruguay - the AREA OFF-1 and AREA OFF-3 blocks. Together the two blocks represent a total of approximately 28,000 km2 - the second largest offshore acreage holding in Uruguay.

Source: ANCAP

Uruguay is located in South America, bordering Brazil and Argentina, and with a broad Atlantic Ocean coastline. The country has a relatively high income per-capita in the region, and represents an advantaged operating regime, frequently ranking rst in Latin America in measures such as democracy, anti-corruption, and ease of doing business.

Since 2022, and following on from successful exploration drilling in the conjugate margin offshore southwest Africa, the region has seen a signicant increase in licencing and operational activity, and has become an emerging industry "hot spot". All blocks offshore Uruguay have been licenced in the last 24 months, and with the exception of the two licences awarded to Challenger Energy, all have been awarded to international oil and gas majors. The collective work program of other Uruguay licence holders is estimated to be in excess of $230 million over the next four years. Licence holders in adjacent northern Argentina are also undertaking or expected to be undertaking technical work over the coming two years, including 3D seismic acquisition and deepwater drilling.

AREA OFF-1

The Group has a 100% working interest in and is the operator of, the 14,557 km2 AREA-OFF 1 block, offshore Uruguay.

AREA OFF-1 was awarded in June 2020, and formally signed on 25 May 2022. The licence has a 30-year tenure with the rst four- year exploration period having commenced on 25 August 2022. The Group's initial four-year exploration period work commitment (ending September 2026) is to licence and reprocess 2,000 kms of legacy 2D seismic, and undertake two G&G studies. Given the strong emerging interest in Uruguay, and to facilitate a farm-out, this work program has been expanded and accelerated, with the work largely complete as at the date of this report, and with the full program on schedule to be completed in Q3 2023.

As a result of this technical work program, three prospects have been identied from a range of play types. Prospects are seismically-derived, supported / further de-risked by AVO analysis, and their robustness corroborated by geochemical seabed sampling and satellite seep analysis. These are summarized as follows:

The overall AREA OFF-1 prospect inventory of approximately 2 billion barrels recoverable resource (Pmean, unrisked), and over

4.9 billion barrels in an upside case (P10, unrisked), is summarized as follows:

ESTIMATED OIL-IN-PLACE, AREA OFF-1, URUGUAY (MAY 2023)

ESTIMATED ULTIMATE RECOVERABLE (EUR), AREA OFF-1, URUGUAY (MAY 2023)

The Group's forward strategy for AREA OFF-1 is (i) to complete the low-cost minimum work obligations by the end of 2023, (ii) to introduce a partner by the end of 2023 - a formal adviser-led farm-out process initiated, and (iii) proceed to a 3D acquisition on the licence, expedited into the rst licence exploration period. The Company considers that conjugate margin exploration success, competitive recent licensing rounds in Uruguay, and technical uplift from CEG's 2023 work will drive a successful farm-out process.

AREA OFF-3

The Group was awarded the AREA OFF-3 licence, offshore Uruguay, in June 2023. The award of the licence is pending formal signing of the licence agreement (anticipated within 2023).

Once signed, the licence will provide for a 30-year tenure with the rst four-year exploration period commencing on signing. The Group's initial four-year exploration period work commitment will be to licence and reprocess 1,000 kms of legacy 2D seismic, and undertake two G&G studies. CEG will hold a 100% working interest in and will be the operator of the 13,252 km2 block.

There has been considerable prior seismic activity and interest on and adjacent to the OFF-3 block, comprising ~4,000 kms legacy 2D (various vintages) and ~7,000 kms legacy 3D (2012 proprietary acquisition). The block was previously held by BP, but was relinquished in 2016. There are no prior wells on the block.

Based on prior technical work, two material-sized prospects have previously been identied and mapped on AREA OFF-3, as follows:

•         Amalia: resource estimate (EUR mmbbl, gross): P10/50/90 (ANCAP) 2,189 / 980 / 392 - the Amalia prospect straddles the boundary with Shell's AREA OFF-2, with an estimated 25% of Amalia contained within AREA OFF-3; and

•         Morpheus: resource Estimate (EUR TCF, gross): P10/50/90 (ANCAP) - 8.96 / 2.69 / 0.84 - the Morpheus prospect is entirely contained with AREA OFF-3.

During the initial 4-year exploration period, CEG's technical focus will be on the re-evaluation of the existing 2D and 3D seismic data on the block, given the renewed interest in the types of plays present in Uruguay occasioned by the recent conjugate margin discoveries offshore south-west Africa. In particular, the data and enhanced technical understanding provided from recent activities in Namibia provides greater condence that the regional petroleum system charging Venus and Graff (offshore Namibia) is likely to be present offshore Uruguay. As a result, traps that exhibit effective sealing mechanisms, and which may previously have been overlooked or not considered viable, are now potential exploration targets.

Moreover, AREA OFF-3 has the advantage of having the majority of the block covered by relatively recent 3D (2012 vintage) that could be reassessed and subjected to advanced analysis techniques, both in terms of reviewing existing known prospects / plays and identifying potential new prospects / plays. In addition, with the Amalia prospect straddling the border with AREA OFF-2, it potentially facilitates a joint exploration assessment with Shell (since May 2022 the licence AREA OFF-2 licence holder).

Trinidad and Tobago

The Republic of Trinidad and Tobago is a Caribbean nation consisting of the two islands of Trinidad and Tobago, offshore from Venezuela. The nation has a long history of oil and gas activity, both onshore on the island of Trinidad, and offshore, with some of the world's oldest hydrocarbon producing elds located in the country.

The Group has four producing elds, all onshore Trinidad. Across these elds there are a total of approximately 250 wells, of which approximately 75 are in production at any given time. The Group also has a large exploration licence position in the South-West Peninsula of Trinidad (SWP).

The Company's strategy in Trinidad is to focus on its core operations, being the Goudron and Inniss-Trinity elds in the south-east of Trinidad, from which most of the Company's production is derived and where almost all equipment / resources are deployed.

Various options to expand activity in this core area are being considered, including new licence applications, M&A, and joint programs with neighbouring operators. In line with this strategy, in late 2022 the Company had submitted a bid for the Guayaguayare block under the Trinidadian 2022 Onshore Nearshore Competitive Bid Round. Guayaguayare is a large block covering a 306km2 area in the south-east of Trinidad and the Company's Goudron eld lies within the Guayaguayare block (see map further below). In June 2023 the Company was nominated as the party with whom the Trinidadian Ministry of Energy and Energy Industries ("MEEI") should negotiate the award of Guayaguayare, a precursor step to formal award of the licence.

In parallel, the Company is seeking to monetise non-core assets, so as to maximise cash and offset risk and work program commitments, but at the same time retain upside exposure. In line with this approach on 20 December 2022 the Company announced the conditional disposal of the Cory Moruga licence (presently pending MEEI consent), and, subsequent to the year- end, on 14 February 2023 completed the disposal of the South Erin licence (in both cases, with back-in rights retained). The disposal of these non-core assets represented less than 10% of then current production.

 Trinidad Asset Map

Production assets

Goudron

The Group owns and operates 100% of the Goudron eld by way of an enhanced production service contract ("EPSC") with Heritage Petroleum Company Limited ("Heritage"), the Trinidadian state-owned oil and gas company. The current term of the EPSC runs until 30 June 2030. Within the eld, regular well workover operations are undertaken on the existing production well stock, including well stimulation operations, reperforations, and repairs to shut-in wells, as and when appropriate. The Group has identied certain well recompletion opportunities (perforating potential oil-bearing zones previously not produced) and is undertaking a comprehensive well optimisation and swabbing programme with the objective of achieving production stability, growth and longevity, as well as reducing overall eld operating costs. The Group is awaiting approvals for a planned water injection enhanced oil recovery pilot project focused on repressuring reservoir units.

Inniss-Trinity

The Group owns and operates 100% of the Inniss-Trinity eld by way of an incremental production service contract ("IPSC") with Heritage. The IPSC has been extended to 30 June 2023 on an interim basis to allow for ministerial consent required for execution of a fresh EPSC effective 1 January 2022 and expiring on 30 September 2031. Within the eld, regular well workover operations are undertaken on the existing production well stock, including well stimulation operations, reperforations, and repairs to shut-in wells, as and when appropriate. As with the Goudron eld, the Group continues to undertake a comprehensive well optimisation and swabbing programme with the objective of achieving production stability, growth and longevity, and reduced eld operating costs.

Exploration assets

Guayaguayare

The Group, via its wholly owned subsidiary, CEG Goudron Trinidad Limited ("CGTL"), had submitted a bid for the Guayaguayare block onshore Trinidad under the 2022 Onshore and Nearshore Competitive Bid Round. On 12 June 2023, the Group was advised by MEEI that the Government of Trinidad has authorised MEEI to enter into negotiations with CGTL for the grant of an Exploration and Production (Public Petroleum Licence) for the Guayaguayare block (the "Licence"), following a successful bid for that Licence by CGTL. Formal grant of the Licence presently remains subject to negotiations and nalisation of Licence terms with MEEI.

The Guayaguayare block is located in South-East Trinidad. It is one of the largest onshore exploration and production blocks in Trinidad (approximately 306 km2), and is strategically and operationally synergistic with the Group's core Trinidadian production business, in that the Licence wholly encloses the Company's Goudron licence area, and is adjacent to the Company's Inniss-Trinity licence area.

The Group considers the Guayaguayare block to be highly prospective, being amongst the largest remaining underexplored / undrained contiguous onshore areas in Trinidad. Additionally, the block contains over 60 historic wells (1970s vintage and earlier), most of which are currently shut-in/suspended/abandoned, and some of which the Company believes can be reactivated and serviced from its existing operations, offering the opportunity for near-term production uplift at minimal incremental cost.

"Option" and non-core assets

Cory Moruga

The Group owns 83.8% of the Cory Moruga licence and is the operator, alongside its partner Touchstone Exploration Inc. which holds a 16.2% non-operated interest. The Cory Moruga eld is presently not in production. The Cory Moruga licence includes the Snowcap oil discovery, with oil having previously been produced on test from the Snowcap-1 and Snowcap-2ST wells (but rapidly declined when the wells were put on production).

On 20 December 2022, the Company announced entering into binding heads of terms in relation to the sale of T-Rex Resources Trinidad Limited ("T-Rex"), a subsidiary that holds the Group's interest in the Cory Moruga licence, to Predator Oil & Gas Holdings Limited ("Predator") for a cash consideration of US$2 million (US$1 million payable upfront and US$1 million in six months from completion) and a further US$1 million contingent consideration payable once 100 barrels per day production is achieved from the Cory Moruga eld. Further, the Company has the option to buy back 25% of Predator's share in T-Rex (and thus representing a 20.95% interest in the underlying Cory Moruga asset).

Subsequently, in March 2023, The Company and Predator completed fully termed legal documentation and jointly submitted a written request to MEEI to seek consent on the basis of a committed forward work programme and restructuring certain licence terms including the settlement of past dues and rebasing annual licence fees to an appropriate level. Discussions with MEEI are ongoing and the completion of sale of Cory Moruga presently remains subject to MEEI consent.

South Erin

The Group owned and operated 100% of the South Erin eld by way of a farm-out agreement with Heritage. The farm-out agreement had been renewed until 31 December 2023 and is extendable up to 30 September 2031 subject to completion of a work programme comprising drilling of 3 new wells by 31 December 2023. On 14 February 2023, the Group announced the sale of Caribbean Rex Limited, a subsidiary that held interest in the South Erin licence through interposed subsidiaries, for a consideration of US$1.5 million comprising US$1.2 million cash consideration (fully received by the Company) and US$0.3 million in the form of assumption of third-party liabilities. The Company has retained a back-in option, granting the Company the right to repurchase a 49% non-operating interest in the South Erin eld exercisable at the Company's election, at any time in 18 months from the transaction date for a xed cash amount of US$1 million, plus 49% of all amounts spent by the buyer on South Erin eld activities and new well drilling.

SWP

The SWP contains the Bonasse and Icacos producing oilelds, in which the Group holds a 100% operated interest via a number of private leases covering the Bonasse, Cedros and Icacos licence areas. Similar to other elds, regular well operations are undertaken on the existing production well stock and repairs to shut-in wells, as and when appropriate. The Saffron-1 and Saffron-2 wells were drilled in the Bonasse licence area during 2020 and 2021, respectively. Both wells primarily targeted the Lower Cruse reservoir horizons and while production could not be sustained from these Lower Cruse horizons, both wells yielded valuable data on the commercial viability of production from the shallower Upper Cruse and Middle Cruse horizons. Accordingly, the Group is presently evaluating the potential for a shallow eld development plan. In parallel, the Group is seeking to monetise SWP by way of either a sale or joint venture / farm-in with a view to retaining upside exposure as with the sale of the Cory Moruga and South Erin licences.

Legacy Assets

The Bahamas

The Group is the 100% holder of four conjoined exploration licences offshore The Bahamas. The Perseverance-1 exploration well was drilled in the licence area in early 2021, and did not result in a commercial discovery at the drill location. However, a number of other structures and drill targets remain prospective across the licence areas, and the technical ndings from Perseverance-1 indicate the potential of deeper Jurassic horizons. In March 2021, the Group notied the Government of The Bahamas of its intent to renew the licences into a third 3-year exploration period - this renewal remains pending, and the Group is engaging with the Government on the renewal process. At the same time, the Group is engaging with the Government and various third-party consultants on a joint initiative seeking to monetise the asset via an alternative approach based around carbon credits.

Suriname

During 2022, the Group held a 100% interest in a Production Sharing Contract ("PSC") with Staatsolie Maatschappij Suriname N.V, the Suriname state-owned petroleum company ("Staatsolie"), for an onshore appraisal / development project contained in the Weg naar Zee Block ("WNZ"). During 2022 the Group was granted an initial 6-month extension of the licence, during which time the group undertook a review of the project, focussing on well design options and the long-term commerciality of the eld. This work has recently been completed, and the Group is in discussion with the Surinamese regulator as to the future direction for this  asset.

People and Operations

The Group's registered office is in the Isle of Man. In addition, the Group maintains three operational offices, in London (United Kingdom), Montevideo (Uruguay) and San Fernando (Trinidad). Across its operations the business has a total staff of

approximately 75 employees, the majority being operating staff in Trinidad. In support of its active eld operations in Trinidad, the Group owns and operates two workover rigs, one swabbing rig, and assorted heavy eld equipment.

The Company's Board, management team and staff base have a broad range of skills as well as deep technical and industry experience. Company takes great pride in its exemplary HSE&S track record, and constantly aims to be an employer and partner of choice, making a valued contribution to the communities and nations in which it operates.

Governance

Set out below are details of Challenger Energy's approach to Environmental, Social and Corporate Governance ("ESG") ESG related activities and areas.

ESG Philosophy and Management

At Challenger Energy, we believe that pursuit of our commercial objectives should never be at the expense of harm to people, community, or the environment.

We believe that we have a responsibility for, and owe a duty of care to, the people who work for us, the contractors and suppliers that work alongside us in our operations, and the broader communities in which we live and work. We take all steps possible to safeguard the health, wellbeing and personal safety of all involved with us as we deliver our operational projects. Our objective is for zero lost time injuries or incidents.

At all times Challenger Energy seeks to conduct its business with integrity and high ethical standards, and foster a working environment of respect for all employees. We wish to see the personal and professional development of our people in the roles that they perform for us. We recognise the importance of diversity to our business, which may relate to gender, nationality, faith, personal background and other factors. We value how diversity benets our business and how the individual experiences of our people contribute to a positive environment in the Group.

Challenger Energy operates in a number of international locations, and we both depend on and impact the people and institutions in those places. Our business does not exist in a vacuum, and we are part of the societies we operate in. Our commitment is to be a responsible business and good corporate citizen, making a meaningful contribution to the places in which we live and work.

We are very conscious of the natural environment that we operate in, and we work hard to minimise our impact on that environment. The Group is always committed to the responsible stewardship of the environment and we seek to operate safely and responsibly. Our objective is for zero environmental incidents and zero spills or leaks.

Recognising ESG as a core business priority, the Group maintains a structured Health, Safety, Environment & Security (HSES) Management System. This comprises a documented set of policies, procedures and practices, which were substantially revised and updated in 2021, with Company-wide application, designed to promote and foster excellence in all relevant areas of HSES.

Corporate Governance

Challenger Energy operates in the energy sector, which is regulated by strict laws and rules imposed by host Governments and international regulators, as well as being subject to intense public scrutiny. Additionally, the Group's shares are traded on the AIM Market of the London Stock Exchange, and the Group is thus subject to various additional rules and regulations associated with being a publicly traded entity.

Accordingly, the Board is committed to maintaining the highest standards of corporate governance at all times.

QCA Code

Pursuant to applicable rules of the AIM Market of the London Stock Exchange, the Group is required to apply a recognised corporate governance code, and demonstrate how the Group complies with such corporate governance code and where it departs from it. Given that the Group is not subject to the requirements of the UK Corporate Governance Code, the Directors of the Group have decided to apply the QCA Corporate Governance Code (the "QCA Code") as the standard against which the Group chooses to measure itself.

Further information on the Group's application of the QCA Code is available on the Group website at www.cegplc.com.

The Board and its Committees

The Board of Directors

The Board meets regularly to discuss and consider all aspects of the Group's activities. A Charter of the Board has been approved and adopted which sets out the membership, roles and responsibilities of the Board. The Board is primarily responsible for formulating, reviewing and approving the Group's strategy, budgets, major items of capital expenditure and acquisitions and divestments. The Board currently consists of the Chairman (Iain McKendrick), the Chief Executive Officer (Eytan Uliel), and two Non-executive Directors (Stephen Bizzell and Simon Potter). Iain McKendrick (Chairman) was independent on appointment to the Board. All Directors have access to the Company Secretary and the Group's professional advisers.

Iain McKendrick has over 30 years of industry experience, holding Board positions across several listed companies. He was previously with NEO Energy, was Chief Executive Officer of Ithaca Energy, was Executive Chairman of Iona Energy, and spent several years with Total, including acting as Commercial Manager of Colombia. Iain is the Chairman of the Company's Remuneration and Nomination Committee and a member of the Company's Audit Committee.

Eytan Uliel assumed the position as Chief Executive Officer from 27 May 2021, having previously served as the Company's Commercial Director since 2014. Eytan is a nance executive with signicant oil and gas industry experience. He has signicant experience in mergers and acquisitions, capital raisings, general corporate advisory work, oil and gas industry-specic experience in public market takeovers and transactions, private treaty acquisitions and farm-in / farm-out transactions. He has held executive roles in various ASX and SGX listed companies. Prior to working with Challenger Energy, from 2009 - 2014 Eytan was Chief Financial Officer and Chief Commercial Officer of Dart Energy Limited, an ASX listed company that had unconventional gas assets (coal bed methane and shale gas) in Australia, Asia and Europe, and Chief Commercial Officer of its predecessor company, Arrow International Ltd, a Singapore based company that had unconventional gas asset primarily in Asia and Australia. He holds a Bachelor of Arts (Political Science) and Bachelor of Laws (LLB) degree from the University of New South Wales, and was admitted as a solicitor in the Supreme Court of New South Wales in 1997. Eytan is a member of the Company's Remuneration Committee, Nomination Committee and the Health, Safety, Environmental and Security Committee