Uruguay is located along the Southern Atlantic coast of South America, sharing its northern border with Brazil and its southern and western borders with Argentina. In 2024, the country was ranked as 15^th globally on the Democracy Index, and ranked first in Latin America for democracy, anti-corruption efforts, and ease of doing business. Uruguay is also a leader in providing reliable, sustainable, and affordable energy, supported by a strong policy framework that encourages exploration and production, with an emphasis on promoting responsible development of the nation's energy mix.

Conjugate margin discoveries offshore Southwest Africa have led to considerable interest in the exploration potential offshore Uruguay. The data and improved technical understanding provided from recent discoveries in the Orange Basin, offshore Namibia, have accelerated licencing, seismic acquisition, and drilling across the region of Uruguay, northern Argentina and southern Brazil. Notably, the discoveries and activities offshore Namibia have significantly enhanced confidence in the presence of a potentially prolific new petroleum system offshore Uruguay, including Challenger Energy's blocks.

As of the date of this report, the entire available offshore acreage in Uruguay has been licenced. Aside from the two blocks in which the Company holds an interest, all other offshore Uruguayan blocks and proximate blocks in southern Brazil and northern Argentina are held by supermajors, national oil companies and much larger industry participants. This highlights the growing strategic interest in the region, with sizeable collective work programmes planned over the next few years.

AREA OFF-1

AREA OFF-1 is a large block covering approximately 14,557 km² and located approximately 100 - 150 kms offshore Uruguay in relatively shallow water depth (50 to 800 metres). Challenger Energy was the first company to bid in the new Uruguay Open Round in May 2020, and in June 2020, the Company was awarded AREA OFF-1. The licence contract was signed in May 2022, with the initial four-year exploration period commencing on 25^th August 2022. In late 2022, in view of growing industry interest in Uruguay's offshore, the Company made a decision to accelerate and expand the work required to be completed on AREA OFF-1 during the first four-year exploration period. In doing so, three material prospects with significant resource potential were identified and delineated. These prospects were named Teru Teru, Anapero and Lenteja, and are summarised as follows:

On 6^th March 2024, following a formal process, the Company entered into a farmout agreement with a subsidiary of Chevron for the AREA OFF-1 block. On 29^th October 2024, following obtaining of the required approvals from the Uruguayan regulatory authorities, the farmout took legal effect. The key terms of the farmout agreement are (i) Chevron acquired a 60% participating interest in the AREA OFF-1 block, and assumed operatorship, (ii) Challenger Energy retained a 40% non-operating interest in the block, (iii) upon completion, Challenger Energy received a cash payment of $12.5 million from Chevron as an entry fee, with these funds available to support the further development of the Company's business, (iv) Chevron will carry 100% of Challenger Energy's share of the costs associated with the 3D seismic campaign on the AREA OFF-1 block, up to a maximum total programme cost of

$37.5 million (up to $15 million value net to Challenger Energy), and (v) following the 3D seismic campaign, should Chevron decide to drill an initial exploration well on AREA OFF-1, Chevron will carry 50% of Challenger Energy's share of costs associated with that well, up to a maximum total well cost of $100 million (up to $20 million value net to Challenger Energy).

As at the date of this report, The Uruguayan Ministry of Environment is holding public consultations regarding the issuance of the prerequisite environmental permits for the proposed 3D seismic acquisition campaign over AREA OFF-1, as well as over other offshore areas in Uruguay under contract to other industry participants. The Company expects the necessary permits will be issued to allow for seismic acquisition on AREA OFF-1 to start in early Q4 2025. In anticipation of permits being issued, various operators are already in discussions with seismic companies for planned surveys across the Uruguay offshore region. The goal is to sequence the 3D seismic programme timing based on weather, acquisition parameters and integrated operations seeking incident free and efficient acquisition campaigns. The parties associated with AREA OFF-1 (operator Chevron, Challenger Energy) are working collaboratively in this process along with ANCAP.

AREA OFF-3

AREA OFF-3 is a large block covering an area of 13,252 km² and located approximately 75 to 150 kms offshore Uruguay in relatively shallow water depths (25 to 1,000 metres). Challenger Energy bid for the block in May 2023 and was awarded the licence in June 2023. Subsequently, the licence contract was signed on 7^th March 2024, with the initial four-year exploration period commencing on 7^th June 2024. Challenger Energy hold a 100% working interest in and is the operator of the block.

The licence for AREA OFF-3 provides for a modest work commitment in the initial four-year exploration period, comprising of reprocessing 1,250km² of legacy 3D seismic data and undertaking two geotechnical studies. There is no drilling obligation in the initial four-year exploration period. However, similar to AREA OFF-1, Challenger Energy's plan during the initial four-year exploration period is to accelerate and expand the technical work programme. As at the date of this report, the Company is in the midst of its technical work programme for AREA OFF-3, which it expects will be completed during Q3 2025. As with AREA OFF-1, the Company is also planning to pursue an early partnering strategy in the form of a formal farmout process in the second half of 2025, with the objective of securing cash and a carry in an accelerated work programme.

Other Assets

Trinidad and Tobago: Challenger Energy holds a 100% interest in, and is the operator of, three producing fields, all onshore Trinidad. Across these fields, there are a total of approximately 250 wells, of which approximately 60 are in production at any given time. On 18^th February 2025, the Company entered into a transaction for the sale of all of the Company's assets, business and operations in Trinidad and Tobago. As at the date of this report, completion of that transaction is pending regulatory approvals in Trinidad and Tobago - the Company expects the transaction to complete on or before 30 June 2025.

The Bahamas: Challenger Energy holds four exploration licences offshore The Bahamas. In early 2021, the Perserverance-1 exploration well was drilled in this licence area. In March 2021, the Company applied to the Government of The Bahamas to renew the licences for a third three-year exploration period. As at the date of this report, this renewal is still pending. The Company is pursuing various other options for achieving value from these assets.

People and Operations

The Company's registered office is in the Isle of Man. Additionally, the Company has operational offices in London (United Kingdom), Montevideo (Uruguay), and San Fernando (Trinidad). The business employs approximately 75 staff.

The Company's Board, management team, and staff possess a wide range of skills and extensive technical and industry experience - profiles of Board members and senior executive members can be found on the Company's website, www.cegplc.com.

Environmental, Social & Governance Statement

ESG Philosophy and Management

ESG considerations are central to Challenger Energy's business strategy. We believe that the pursuit of commercial objectives must never come at the expense of the health, safety, or wellbeing of individuals, communities, or the environment. We acknowledge our responsibility and our duty of care to our employees, contractors, suppliers, and the broader communities in which we operate. Our objective is to eliminate lost time injuries and incidents, through rigorous preventative measures and continuous improvement. The Company takes great pride in its exemplary Health, Safety, Environment, and Security ("HSE&S") track record and strives to be an employer and partner of choice, and to make a valued contribution to the communities and nations in which it operates.

The Company is committed to conducting business with integrity, transparency, and in accordance with the highest ethical standards. Challenger Energy fosters a professional, respectful, and inclusive working environment, and actively supports the personal and professional development of its employees. We value how diversity - including in gender, nationality, faith and personal background - benefits our business and how the unique experiences of our employees contribute to a positive environment within Challenger Energy.

Operating in various international locations, we both rely on and impact the people and institutions in these areas. Challenger Energy is part of the societies in which we operate, and we are committed to being a responsible corporate citizen, and to making enduring and meaningful contributions to the communities around us.

We are acutely aware of our environmental responsibilities, and we strive to minimize our ecological impact. Challenger Energy is dedicated to responsible environmental stewardship and aims for zero environmental incidents.

Challenger Energy maintains a robust and structured HSE&S Management System, comprising a comprehensive set of policies, procedures, and practices. This system is consistently applied across the organisation and is subject to regular review and updates to ensure continued excellence in all relevant HSE&S areas.

Governance

Challenger Energy operates in the energy sector, which is governed by stringent laws and regulations imposed by host Governments and international regulators, as well as often being the subject of intense public scrutiny. Additionally, as Challenger Energy's shares are traded on the AIM Market of the London Stock Exchange and the OTCQB Ventures Market in the United States, the Company is subject to various additional rules and regulations associated with being a publicly traded entity. Consequently, the Board is dedicated to upholding the highest standards of corporate governance at all times.

QCA Code

In accordance with the rules of the AIM Market of the London Stock Exchange, Challenger Energy is required to apply a recognised corporate governance code and demonstrate its compliance with that code, including any deviations. Since Challenger Energy is not obligated to follow the UK Corporate Governance Code, the Directors have chosen to apply the QCA Corporate Governance Code (the "QCA Code") as their standard of measurement.

In accordance with the AIM Rules for Companies, Challenger Energy departs from the QCA Code in relation to Principle 7 - "Evaluate board performance based on clear and relevant objectives, seeking continuous improvement." Challenger Energy's Board is small and extremely focused on implementing the Company's strategy. However, given the size and nature of the Company, the Board does not consider it appropriate to have a formal performance evaluation procedure in place, as described and recommended in Principle 7 of the QCA Code. The Board will closely monitor the situation as and when the Company grows.

The Board and its Committees

The Board meets regularly to discuss and review all aspects of Challenger Energy's activities. A Board Charter has been approved and adopted, outlining the membership, roles, and responsibilities of the Board. The Board is primarily responsible for formulating, reviewing, and approving Challenger Energy's strategy, budgets, major capital expenditures, acquisitions, and divestments. The Board currently consists of the Non-executive Chairman (Iain McKendrick), the Managing Director and CEO (Eytan Uliel), and three Non-executive Directors (Stephen Bizzell, Simon Potter and Robert Bose). Iain McKendrick (Non-executive Chairman) was independent on appointment to the Board. In addition, Stephen Bizzell, Simon Potter and Robert Bose (all Non- executive Directors) are deemed independent by the Board. All Directors have access to management, the Company Secretary, and Challenger Energy's professional advisers. Overall, the Board is responsible for the long-term success of the Company and providing leadership to the business including culture, values and ethics, and ensuring effective corporate governance and succession planning. The Board operates in an accountable, open and transparent environment where the views of all Directors and the actions of Executive Directors and management can be challenged. The Board is satisfied it has the appropriate balance of skills and experience on the one hand, and, independence and knowledge on the other, to enable it to discharge its respective duties and responsibilities effectively, and that all Directors have adequate time to fulfil their roles.

Iain McKendrick has over 30 years of industry experience, including having held Board positions with 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 TotalEnergies, including acting as Commercial Manager of Colombia. Iain is the Chair of the Company's Health, Safety, Environmental and Security Committee and is a member of the Company's Remuneration and Nomination Committee.

Eytan Uliel assumed the position of Chief Executive Officer from 27^th May 2021, having previously served as the Company's Commercial Director since 2014. Eytan is a finance executive with significant oil and gas industry experience. He has extensive experience in mergers and acquisitions, capital raisings, general corporate advisory work, oil and gas industry-specific experience in public market takeovers and transactions, private treaty acquisitions, and farmin / farmout 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 and Nomination Committee and the Company's Health, Safety, Environmental and Security Committee.

Simon Potter was previously the Chief Executive Officer of the Company for nearly 10 years and oversaw the safe drilling of the Perseverance-1 well in The Bahamas. Simon assumed the role of a Non-Executive Director in May 2021. Simon qualified as a geologist with an M.Sc. in Management Science and has over 30 years oil and gas industry and mining sector experience. From the Zambian Copperbelt to a 20-year career with BP he has held executive roles in companies managing oil and gas exploration, development and production; gas processing, sales and transport; and LNG manufacture, marketing and contracting, in Europe, Russia, America, Africa and Australasia. On leaving BP, having helped create TNK-BP, he took up the role of CEO at Hardman Resources where he oversaw growth of the dual AIM and ASX listed company into an oil producer with considerable exploration success ahead of executing a corporate sale to Tullow Oil. Simon is Chair of the Company's Remuneration and Nomination Committee and a member of the Company's Health, Safety, Environmental and Security Committee.

Stephen Bizzell has over 25 years' corporate finance and public company management experience in the resources sector in Australia and Canada with various public companies. He is the Chairman of boutique corporate advisory and funds management group Bizzell Capital Partners Pty Ltd., a firm which over the last 15 years has raised more than A$1.5 billion in equity capital for its associated entities. He is also the Chair of ASX listed MAAS Group Holdings Ltd, Chair of ASX listed Savannah Golfields Ltd, and a Non-executive Director of ASX listed Strike Energy Limited and Renascor Resources Limited. He was an Executive Director of ASX listed Arrow Energy Ltd from 1999 until its acquisition in 2010 by Shell and PetroChina for A$3.5 billion. Stephen qualified as a Chartered Accountant and early in his career was employed in the Corporate Finance division of Ernst & Young and the Corporate Tax division of Coopers & Lybrand. He has had considerable experience and success in the fields of corporate restructuring, debt and equity financing, and mergers and acquisitions. Stephen is Chair of the Company's Audit Committee.

Robert Bose is the Managing Member of Charlestown Energy Partners, a private investment company associated with a New York- based family office that has been making investments globally in upstream E&P businesses since 2016. Robert is also the Chief Executive Officer and a member of the Board of Directors of Sintana Energy, Inc., a Toronto Venture Exchange listed oil and gas exploration company with a portfolio of licences in Namibia. Robert is also a non-executive director of New Zealand Energy Corp., also a Toronto Venture Exchange listed company providing gas, gas storage and liquids solutions to support the domestic energy economy in New Zealand and is also on the Board of Managers of Black Bayou Energy Hub, a private company developing a gas storage opportunity on the Gulf Coast of the U.S. Prior to joining Charlestown, Robert spent 17 years in the Investment Banking Group at Scotiabank, most recently as Managing Director and Industry Head, Global Power & Utilities. Robert is a member of the Company's Audit Committee.

Audit Committee

The Audit Committee of the Board consists of Stephen Bizzell (Chair) and Robert Bose, with input from the Finance Director as needed. The Audit Committee is primarily responsible for ensuring Challenger Energy's financial performance is accurately reported and monitored, reviewing the scope and results of the audit, evaluating its cost-effectiveness, and maintaining the independence and objectivity of the auditor. Additionally, the Audit Committee oversees public reporting and the Company's internal controls. A Charter of the Audit Committee, which defines its membership, roles, and responsibilities, has been approved and adopted. All members of the Audit Committee have access to the Company Secretary and the Company's professional advisers, including direct access to the Company's auditor. The Audit Committee meets regularly and convened twice in 2024, with all members present at both meetings. Effective 1 July 2024, Robert Bose replaced Iain McKendrick on the Audit Committee.

Renumeration and Nomination Committee

The Remuneration and Nomination Committee consists of Simon Potter (Chair), Iain McKendrick, and Eytan Uliel. This committee is responsible for recommending executive and senior management remuneration packages, including bonus awards and share options, to the Board of Directors. It also assists the Board in identifying and evaluating potential new Directors, ensuring that the size, composition, and performance of the Board are suitable for the Company's activities. Shareholders of Challenger Energy ultimately have the responsibility for determining Board representation. The Remuneration & Nomination Committee meets as needed and convened once in 2024, with all members present.

Health, Safety, Environmental and Security Committee

The Board has a Health, Safety, Environmental, and Security Committee, which consists of Iain McKendrick (Chair), Simon Potter, and Eytan Uliel. The HSE&S Committee's purpose is to assist the Directors in establishing ESG strategy, reviewing, reporting, and managing Challenger Energy's performance, assessing compliance with applicable regulations, internal policies, and goals, and contributing to the Company's risk management processes. In 2024, the HSE&S Committee met five times, with all members present at each meeting.

Record of Board Meetings

There were three formal meetings of the Board of Challenger Energy in the period 1 January 2024 to 31 December 2024. In addition, there were a number of other ad-hoc gatherings of the Board through the period.

Internal Control

The Directors acknowledge their responsibility for Challenger Energy's system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage the risk of failure to achieve the Company's strategic objectives. It cannot totally eliminate the risk of failure but will provide reasonable, although not absolute, assurance against material misstatement or loss.

Going Concern

These financial statements have been prepared on a going concern basis, which assumes that Challenger Energy will continue in operation for the foreseeable future.

On 6^th March 2024, Challenger Energy entered into a farmout agreement with Chevron, a leading global energy company, in relation to the AREA OFF-1 licence offshore Uruguay. Pursuant to the farmout agreement, Challenger Energy received a $12.5 million upfront cash payment at completion (29^th October 2024) along with Chevron agreeing to carry the Company's share of certain future work programme costs. In addition, the Company was entitled to an adjustment payment of approximately $0.2 million related to AREA OFF-1 costs incurred in the period between signing of the farmout agreement and completion of the transaction (received on 29^th October 2024), as well as the release of $0.3 million of restricted cash held at balance sheet date to secure performance of AREA OFF-1 work obligation commitments (which release was finalised on 12^th May 2025).

The Challenger Energy group of companies incurred a consolidated operating loss of $1.9 million for the financial year ended

31 December 2024, however current assets exceed current liabilities by approximately $4.9 million as of 31 December 2024, which includes approximately $5.9m in respect of current payables owing in Trinidad and Tobago that Challenger Energy expects to exit completely following the completion of the announced sale of all of the Company's business and operations in Trinidad and Tobago (completion of this transaction, as at the date of this report, is pending regulatory approval). In addition, completion of the sale of the Company's business and operations in Trinidad and Tobago is expected to see the Company receive approximately

$0.5m in cash and approximately $0.75 million in saleable listed securities over the course of 2025. At 31 December 2024, the Company had approximately $8.4 million in unrestricted cash holdings and approximately $1.3 million in restricted cash holdings (restricted cash is cash that is held in Company bank accounts but which is pledged in support of work programme obligations and to which access is restricted - once relevant work programme obligations are met that restricted cash will in due course becomes unrestricted and thus freely available for use by the Company).

Given the foregoing, the Directors have prepared these financial statements on a going concern basis: based on current cash holdings and cash flow forecasts, Challenger Energy expects to have adequate financial resources to support its operations for the next 12 months (and well into the foreseeable future beyond that). In addition, the Directors note that the Company is a publicly listed company on a recognised stock exchange, thus affording the Company the ability to raise equity capital, debt and/or hybrid financing alternatives as and when the need arises. The Company has a robust track record in this regard, having raised in excess of $100 million in equity and alternative financing in the past.

Anti-bribery and Corruption ('ABC')

Challenger Energy enforces a zero-tolerance policy for bribery, corruption, or unethical conduct in our business. Our policies mandate compliance with applicable anti-bribery and corruption ("ABC") laws, particularly the UK Bribery Act 2010, as well as all relevant laws in the jurisdictions where we operate. We have implemented a documented system of ABC policies and procedures that provide a consistent framework across the Company and all its operations, ensuring our employees are aware of potential threats and maintaining appropriate governance of ABC matters. In 2024, all employees were required to attend mandatory ABC training.

Anti-Money Laundering ('AML')

Challenger is acutely aware of the risks posed by money laundering and terrorist financing. These criminal activities not only threaten society but also impact the Company, its partners, shareholders, and staff. The Company exercises the highest level of vigilance in all its operations to combat these threats. This vigilance also applies to third-party associates involved with the Company. Annual AML training is mandatory for all Challenger Energy staff.

Taxation

Depending on the jurisdiction of operation, Challenger Energy is subject to various taxes, including corporate income tax, supplemental petroleum taxes, royalties, other fiscal deductions, value-added taxes, and payroll taxes. As a responsible operator and corporate citizen, the Company is committed to complying with all relevant tax laws in every jurisdiction where it operates. Adhering to tax laws and regulations is fundamental to our license to operate, and we take this obligation seriously.

Risk Management

Understanding the principal risks that Challenger Energy faces, and ensuring that we then have appropriate controls in place to manage those risks, is critical to our business operations. Managing business risks and opportunities is a key consideration in determining and then delivering against the Company's strategy. The Company's approach to risk management is not intended to eliminate risk entirely, but provides the means to identify, prioritise and manage risks and opportunities. This, in turn, enables the Company to effectively deliver on its strategic objectives in line with its appetite for risk.

The Board's Responsibility for Risk Management

The Board has overall responsibility for ensuring Challenger Energy's risk management and internal control frameworks are appropriate and are embedded at all levels throughout the organisation. Principal risks are reviewed by the Board and are specifically discussed in relation to setting the Company's strategy, developing the business plan to deliver that strategy, and agreeing annual work programmes and budgets.

Principal risks and uncertainties

The principal risks facing Challenger Energy, together with a description of our assessment of the potential impacts of those risks eventuating, the appetite / tolerance for the risk, and mitigation strategies and measures, are presented below. Identified risks are segregated between those that we can influence and those which are outside our control. Where we can influence risks, we have more control over outcomes. Where risks are external to the business, we focus on how we control the consequences of those risks materialising.

KEY RISKS THAT WE CAN INFLUENCE

1.     Risks related to health, safety, environment and security ('HSE&S')

Description of the risk

Oil and gas exploration, development and production activities can be complex and are physical in nature. HSE&S risks cover many

areas including major accidents, personal health and safety, compliance with regulations and potential environmental harm.

Potential impact if the risk materialises:                  High

Probability of the risk materialising:                          Low

Risk Appetite

Challenger Energy has a very low appetite for risks associated with HSE&S - it is a central tenet of our business that achievement of our commercial objectives should not come at the expense of harm to people, community or the environment.

Mitigation

At all times Challenger Energy strives to ensure the safety of its employees, contractors and visitors, and we strive for a zero- incident rate. We are very conscious of the natural environment that we operate in and seek to minimise our environmental impact and footprint. This mitigation effort is reflected in various ongoing activities, including training, safety awareness activities, adoption and implementation of policies and procedures, and rigorous HSE&S controls and monitoring.

 2.   Risks related to exploration, appraisal, development and production of hydrocarbons

Description of the risk

The ultimate success of Challenger Energy is based on its ability to create value through exploration activity across the existing

portfolio, to maintain and grow production from existing assets, and to undertake selective activity to grow the asset portfolio. Failure to do so may adversely impact on the Company's business.

Potential impact if the risk materialises:                  High

Probability of the risk materialising:                          Moderate

Risk Appetite

Challenger Energy has some tolerance for this risk given that it is central to the business proposition for any hydrocarbon exploration and production company, but acknowledges the need to have effective controls in place in this area to mitigate the risk to the greatest extent possible.

Mitigation

The Company's team of employees are very experienced in the industry and in the operation of oil and gas assets at various stages of their life cycle - from identification and securing of assets through to exploration, appraisal, development and production. In addition, Challenger Energy has built a trusted network of service providers who are similarly familiar with the assets / business.

 3.        Risks relating to geology, including reserves and resources

Description of the risk

The evaluation of geology, including the estimation of oil and gas reserves and resources, typically involves a high level of

subjective judgment based on available geological, technical and economic information.

Potential impact if the risk materialises:                   Medium

Probability of the risk materialising:                               Low

Risk appetite

Challenger Energy tolerates some risk related to the estimation of reserves and resources given that it is central to the business proposition for any hydrocarbon exploration and production company.

Mitigation

The Company has a strong focus on subsurface analysis, and our business activities are typically technically led. We employ industry technical specialists and qualified reservoir engineers and geologists who work closely with our team to ensure integrity in evaluation of assets and optimal asset performance.

 4.        Risks arising from a concentrated portfolio

Description of the risk

Challenger Energy's assets are concentrated in three locations in the western Atlantic margin (Uruguay, Trinidad and Tobago, and

The Bahamas), with a disproportionate share of the Company's current overall value being concentrated in only one location: Uruguay. This exposes Challenger Energy disproportionately to adverse events / developments occurring in those locations.

Potential impact if the risk materialises:                   Medium

Probability of the risk materialising:                               High

Risk appetite

Challenger Energy has a moderate appetite for this risk, recognising that it is an inevitable feature of the Company's business model.

Mitigation

The Company seeks to maintain active understanding and involvement in the countries / communities in which it operates, so as to be aware of emerging risks and prepared as to how best to respond. Additionally, the Company is continuously seeking to selectively add new assets in new locations, so as to spread the portfolio concentration risk more broadly.

 5.        Financing risk

Description of the risk

Oil and gas exploration, development and production activities are capital intensive. The Company relies on investment capital to

operate its business. Failure to be able to access investment capital when required could adversely impact the Company's business.

Potential impact if the risk materialises:                           High

Probability of the risk materialising:                               Moderate

Risk appetite

Challenger Energy has a low appetite for financing risk, because the inability to fund financial commitments, including licence obligations, could significantly delay the development of the Company's assets and erode value creation. Moreover, financial or operational commitments are often a pre-condition to the grant of a licence, and the Company's inability to satisfy these could result in financial penalties and/or termination of licences, which would negate the entire premise of the Company's business.

Mitigation

Challenger Energy has a strong track record over many years of successfully raising finance to fund its activities as and when required. The Company's Board and senior management have deep experience and a strong track record in sourcing investment capital for hydrocarbon exploration and production businesses. Additionally, the Company has various specialist advisers to assist in this area.

 6.        Key personnel risk

Description of the risk

The Company has a relatively small group of key people responsible for the Company's activities and operations. The Company is

thus exposed to the risk that arises if one or more of those key people were no longer available to provide services.

Potential impact if the risk materialises:                       Moderate

Probability of the risk materialising:                               Moderate

Risk appetite

Challenger Energy has a moderate appetite for this risk, recognising that it is an inevitable feature of the Company's size and business model.

Mitigation

The Company, wherever possible, seeks to ensure that "back-up" capability exists for all key tasks and responsibilities. The Company maintains procedures and policies to enable continuing operations in various contingency situations, including the loss of key personnel. The Company also has various retention and incentive arrangements in place, designed to secure ongoing service of key personnel.

 7.        Risks associated with bribery and corruption

Description of the risk

There is a risk that third parties or staff could be encouraged to become involved in corrupt or questionable practices. This risk is

especially pronounced given that some of the jurisdictions in which the Company operates are considered "developing", and thus may lack some of the regulatory controls typically associated with more developed economies.

Potential impact if the risk materialises:                             High

Probability of the risk materialising:                               Low-moderate

Risk appetite

Challenger Energy has a zero-tolerance policy regarding bribery and corruption. This is because any involvement in, or even mere association with bribery and corruption exposes the Company and the people who work in the Company's businesses to potential civil and criminal liability, as well as significantly eroding the Company's reputation and "social licence to operate", on which the Company's viability depends.

Mitigation

Challenger Energy, its Board and management have an established anti-bribery and corruption ("ABC") policy, which is strictly enforced, and which is also reinforced through frequent mandatory training and awareness programs for all staff. The Company also requires and ensures that third-party contractors and advisers follow its procedures and policies related to ABC.

KEY RISKS BEYOND OUR INFLUENCE

8.        Fiscal and political risks

Description of the risk

The Company operates in multiple jurisdictions, including the Isle of Man, the United Kingdom, Uruguay, Trinidad and Tobago, and The Bahamas. The Company is therefore exposed to in-country fiscal and political risk in each jurisdiction in which it operates. In particular, several of these jurisdictions are considered to be "emerging" or "developing" markets, where the fiscal and political risk - real or perceived - may be higher than that typically encountered in more developed markets.

Potential impact if the risk materialises:                         High

Probability of the risk materialising:                               Moderate

Risk appetite

Challenger Energy accepts a modest amount of fiscal and political risk, as a natural feature of its business model.

Mitigation

The Company closely monitors the fiscal and political situation in the jurisdictions it operates in with a view to identifying and minimising the downside risk presented by changes in fiscal and political circumstances, and considers the current structure and operation of the respective governments in each of the jurisdictions of its operations to present low risk to the Company. Further, the Company seeks to interact regularly and proactively with relevant Governments, Government Ministries and Agencies, and the state-owned oil and gas companies in the jurisdictions in which it operates. Challenger Energy has no exposure to Russian oil production, and enacted sanctions have had no impact on the Company's business or operations. Challenger Energy has no US- based operations, and does not rely on US-sourced equipment or supplies, and thus recent developments in relation to tariffs in the United States are not expected to have any material impact on the Company's business.

 9.        Risks related to general market and economic conditions

Description of the risk

The Company operates in an industry that is globally significant, and where industry activity and sentiment is highly sensitive to

changes in macro-economic and general market conditions.

Potential impact if the risk materialises:                            Moderate

Probability of the risk materialising:                                   Moderate

Risk appetite

Challenger Energy has a moderate appetite for this risk.

Mitigation

The Company closely monitors the general economic and market conditions in the jurisdictions it operates in with a view to identifying and minimising the downside risk presented by changes in those conditions.

 10.      Foreign exchange risk

Description of the risk

The Company's principal reporting and operating currency is United States dollars, but it conducts operations in various

jurisdictions, and has expenses denominated in various other currencies, including in UK Pounds Sterling, Uruguayan pesos, Bahamian dollars, and Trinidad and Tobago dollars. As such, the Company is exposed to the risk of adverse movements in the exchange rate between various currencies.

Potential impact if the risk materialises:                           Moderate

Probability of the risk materialising:                                   Moderate

Risk appetite

Challenger Energy has a low-to-moderate appetite for this risk.

Mitigation

The Company maintains deposits in various currencies, especially USD and GBP, typically in sufficient amount to cover all forecast expenses in that currency for the next 6-12 months, such that the Company is naturally hedged against short-term adverse currency movements. While the Company has not hedged its currency exposure in the past, the Company closely monitors currency fluctuations with a view to assessing potential downside risk vis-à-vis foreign currency requirements (and the timing thereof) so as to determine the efficacy of any potential hedge.

 11.      Risks related to oil sales

Description of the risk

All of the Company's current production is derived from its assets in Trinidad and Tobago and sold to a single customer, Heritage

Petroleum Company Limited, the Trinidad and Tobago state-owned national oil and gas company. The Company is thus exposed to the risk of having only a single customer, as well as exposed to commodity price risk in relation to sales of crude oil. Demand can be negatively affected by economic conditions in Trinidad and Tobago, and globally.

Potential impact if the risk materialises:                             High

Probability of the risk materialising:                                   Moderate

Risk appetite

Challenger Energy accepts demand risk related to its crude oil production. The Company has a low-to-moderate appetite for commodity price risk, in that a decline in oil prices could adversely affect the profitability, cash flow and financial position of the Company's business in Trinidad and Tobago.

Mitigation

All of the Company's production in Trinidad is sold to Heritage Petroleum Company Limited under the terms of the respective production licences / production sharing agreements, under which the Company is fully exposed to adverse commodity price fluctuation (and also conversely benefits from favourable commodity price movement). There is no history of Heritage Petroleum Company Limited refusing delivery of crude produced by the Company, and the Company accepts this potential risk. The Company does not use hedging instruments to mitigate oil price risk as the volumes are relatively small and significant volatility observed in crude prices in the recent years coupled with oil futures curve backwardation make it difficult to assess effectiveness of

a hedge.

Directors' Report

The Directors present their report and the audited financial statements of Challenger Energy Group PLC ("Challenger Energy" or "the Company") and the consolidated group consisting of the Company and the entities it controlled (the "Group") at the end of, or during, the financial year ended 31 December 2024.

Directors

The following persons were Directors of the Company for the whole of the financial year under review:

Iain McKendrick (Non-Executive Chairman) Stephen Bizzell (Non-Executive Director) Simon Potter (Non-Executive Director)

Eytan Uliel (Chief Executive Officer and Managing Director)

Mr. Robert Bose (Non-Executive Director) joined the Board of Directors of the Company on 20 May 2024.

Principal Activity

The principal activity of the Group during the financial year under review consisted of oil and gas exploration, appraisal, development and production in Uruguay, Trinidad and Tobago and The Bahamas.

Results and dividends

The results of the Group for the year are set out on page 25 and show a loss for the year ended 31 December 2024 of $1,050,000 (2023: loss of $13,421,000). The total comprehensive loss for the year of $1,319,000 (2023: loss of $10,986,000) has been transferred to the retained deficit. The results include an impairment charge of intangible and tangible assets in Trinidad and Tobago totalling $4,723,000 (2023: $12,957,000, this prior year amount including a full write down of goodwill of $4,610,000).

The Directors do not recommend payment of a dividend (2023: nil).

Significant Shareholders

The following tables represent shareholdings of 3% or more notified to the Company as at 31 December 2024:

^(*)Charlestown Energy held a convertible note in the Company, which was converted on 8 November 2024 into 20 million shares, which in aggregate represented an interest of approximately 8.17% in the Company. On issuance those shares were allocated between Charlestown Energy and various investment partners of Charlestown Energy, such that Charlestown Energy's holding was 9 million shares, and the holding of other parties represents the balance of 11 million shares.

The table above is updated regularly by the Company to reflect movements in shareholdings as notified to the Company from time to time. For the most up-to-date listing, shareholders should refer to the Company's website: www.cegplc.com/investor- relations/major-shareholders.

Directors' Shareholding and Options

The interests in the Company at balance sheet date of all Directors who hold or held office on the Board of the Company at the year-end and subsequent to year-end are stated below.

During the period there were also a number of ad-hoc and informal gatherings of the Board to discuss various items.

Statement of Directors' Responsibilities in respect of the financial statements

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable Isle of Man law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. The Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Accounting Standards as adopted by the IASB ("IFRSs"). The financial statements are required by law to give a true and fair view of the assets, liabilities and financial position of the Group and the Company and of the profit or loss of the Group and Company for that period.

In preparing the financial statements, the Directors are required to:

•         select suitable accounting policies and then apply them consistently;

•         state whether IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements;

•         make judgements and accounting estimates that are reasonable and prudent; and

•         prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and to enable them to ensure that the financial statements comply with the Isle of Man Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the Isle of Man governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

On behalf of the Board

Eytan Uliel Director

12 June 2025

Independent auditor's report to the members of Challenger Energy Group PLC

Opinion

We have audited the financial statements of Challenger Energy Group PLC ("Company") and its subsidiaries (the "Group''), which comprise the Consolidated Statement of Comprehensive Income, Consolidated and Company Statements of Financial Position, Consolidated and Company Statements of Cash Flows and Consolidated and Company Statements of Changes in Equity for the year ended 31 December 2024, and the related notes to the financial statements, including material accounting policy information.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Accounting Standards as adopted by IASB (IFRS).

In our opinion, Challenger Energy Group PLC's consolidated and company financial statements:

•      give a true and fair view in accordance with IFRS of the assets, liabilities and financial position of the Group and the Company as at 31 December 2024, and of the Group and Company's financial performance and cash flows for the year then ended; and

•      have been properly prepared in accordance with the requirements of the Isle of Man Companies Acts of 1931 to 2004.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ('ISAs (UK)') and applicable law. Our responsibilities under those standards are further described in the 'Responsibilities of the auditor for the audit of the financial statements' section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the Isle of Man, including the FRC's Ethical Standard and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances for the entity. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the validity of the directors' assessment of the Group and Company's ability to continue to adopt the going concern basis of accounting included:

•      gaining an understanding of the business and the management's process for developing a going concern assessment;

•      evaluating management's future cash flow forecasts prepared up to December 2026 and the process by why they were prepared, verifying the mathematical accuracy of calculations, and agreeing the opening and subsequent period cash positions;

•      assessing management's underlying cash flow projections and evaluating and challenging the assumptions such as corporate and administrative expenses. In doing so, we compared forecast costs with historical expenditure trends, post year end management accounts and to other external and internal sources, where appropriate;

•      assessing and validating the impact of the expected post year end cash inflow sources including the proceeds from sale of the Group's business, assets and operations in Trinidad and Tobago and refund of performance guarantee;

•      making inquiries with management and reviewing the board minutes in order to understand the future plans and to identify potential contradictory information; and

•      assessing the completeness and appropriateness of management's going concern disclosures in the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and Company's ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current financial period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and the directing of efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and therefore we do not provide a separate opinion on these matters.

Overall audit strategy

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluating whether there was any evidence of potential bias that could result in a risk of material misstatement due to fraud.

Based on our considerations as set out below, our areas of focus included:

•      Valuation of the Group's intangible exploration and evaluation assets; and

•      Valuation of the Group's tangible oil and gas assets.

How we tailored the audit scope

Challenger Energy Group Plc is the holder of several oil & gas exploration and production licences located in Uruguay, Trinidad & Tobago and The Bahamas.

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement.

We performed an audit of the financial information of four components and performed specified audit procedures for a further six components. The remaining components of the Group were considered non-significant and these components were subject to analytical procedures.

Components represent business units across the Group considered for audit scoping purposes.

Materiality and audit approach

The scope of our audit is influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, such as our understanding of the entity and its environment, the history of misstatements, the complexity of the Group and the reliability of the control environment, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the Group and Company at 0.75% of total assets at 31 December 2024. We have applied this benchmark because the main objective of the Group is to utilise its existing oil and gas assets and exploration and evaluation assets to provide investors with returns on their investments.

We have set performance materiality for the Group and Company at 65% of materiality, having considered business risks and fraud risks associated with the entity and its control environment. This is to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole.

We agreed with the audit committee and directors that we would report to them misstatements identified during our audit above 2.5% of Group and Company materiality, as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Significant matters identified

The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are set out below as significant matters together with an explanation of how we tailored our audit to address these specific areas in order to provide an opinion on the financial statements as a whole. This is not a complete list of all risks identified by our audit.