Challenger Energy (AIM: CEG), the Caribbean and Atlantic-margin focused oil and gas company, with oil production, appraisal, development and exploration assets across the region, notes recent commentary on the recent Uruguay licensing round and in relation to its AREA OFF-1 petroleum licence offshore Uruguay, and provides the following context:

• On 23 June 2022 ANCAP, the Uruguayan state-owned petroleum company, advised publicly that three offshore blocks in Uruguay have been licenced following bids received in the most recent ANCAP 2022 Open Bidding Round.
• Two blocks have been awarded to Shell - the shallow offshore block immediately adjacent to Challenger's OFF-1 block (AREA OFF-2), and one deep-water block (AREA OFF-7). ANCAP has reported that the work Shell committed to undertake in relation to these blocks in the initial 4-year exploration period includes the acquisition of new 3D seismic.
• One deep-water block (AREA OFF-6) has been awarded to APA Corporation (formerly Apache). ANCAP has reported that the work APA Corporation committed to undertake in relation to this block in the initial 4-year exploration period includes the drilling of an exploration well.
• The award of these three blocks is in addition to the OFF-1 block previously awarded to Challenger. Of the three new blocks awarded, the OFF-2 block, which is directly adjacent to Challenger's OFF-1 block, was the only block which received competing bids, with both Shell and APA Corporation having submitted proposals.
• The aggregate value of work committed across blocks OFF-2, OFF-6 and OFF-7 by Shell and APA Corporation in the next 4 years, in respect of both technical and exploration activities including well drilling by APA Corporation, is stated by ANCAP to be approximately US$200 million.

Challenger Energy considers the entry into Uruguay of two well regarded international companies, and the commitment by both to undertake sizeable and meaningful work programs during an initial exploration period (including 3D seismic acquisition and new well drilling), to be a highly positive development, validating both the Company's decision to enter Uruguay in 2020 and underscoring the solid technical foundation and excellent value proposition represented by the OFF-1 block.

The Company's considers its OFF-1 licence area and the broader offshore Uruguay play system to be analogous to the recent prolific, conjugate margin discoveries made offshore Namibia by TotalEnergies (the Venus well) and Shell (the Graff well), where reported multi-billion-barrel Cretaceous turbidite reservoirs have been encountered. The AREA OFF-1 licence exhibits the same Aptian play source rock and petroleum systems being present.

As noted in previous Company releases, the OFF-1 block contains a management estimated resource potential exceeding 1.5 billion barrels of oil equivalent recoverable (BBOE), based on current mapping from multiple exploration plays and leads in relatively shallow waters, and with significant upside running room. This estimate is corroborated by formal resource estimates provided by ANCAP of 1.35 BBOE as a P50 expected ultimate recoverable resource.

It is noted that in addition to work that will now be undertaken by Shell and APA Corporation on their Uruguayan blocks, various public statements and news releases indicate that relevant additional work and drilling activities are currently underway or being planned by multiple parties for the balance of 2022 and 2023, including additional exploration and appraisal wells being drilled in Namibia, and 3D seismic acquisition in Northern Argentina. These activities are expected to further the technical understanding of the OFF-1 block.

KeyFacts Energy: Bahamas Petroleum Uruguay country profile