Challenger puts itself on the block, forms committee

2009-02-06 03:44 ET - News Release

Mr. Dan MacDonald reports

CHALLENGER APPOINTS SPECIAL COMMITTEE TO EVALUATE STRATEGIC ALTERNATIVES

Challenger Energy Corp.'s board of directors has appointed a special committee of directors with a mandate to undertake a process to evaluate the various strategic alternatives available to the company. In this regard, the special committee has retained Peters & Co. Ltd. as its financial adviser to assist in the review process.

The special committee has been formed to examine all alternatives available to Challenger, including the sale of the company, in order to ensure that shareholder value is maximized and to address the company's $14-million bridge facility. Operations are nearly complete with respect to the initial exploration phase of block 5(c), offshore Trinidad and Tobago. Challenger is paying one-third of the costs of the initial exploration program on block 5(c) to earn a 25-per-cent interest in the production sharing contract covering block 5(c).

Challenger, along with its partners, Canadian Superior Energy Inc. and BG International Ltd., a wholly owned subsidiary of the BG Group PLC, are continuing preparations to conduct flow testing on the Endeavour well on block 5(c). As previously announced, the main targeted zone for this well has been encountered and has been evaluated with a full suite of electric wireline logs; and operations are proceeding to flow test the well.

All operations on the Endeavour well are estimated to be completed near the end of February, to be followed by the release of the drilling rig. The data received to date from the Endeavour well have enabled the partners to further enhance their understanding of not only this particular well and its related structure, but also the overall development potential of the entire block 5(c). Test information from the well is expected to confirm productive characteristics of the reservoir tested and the net pay encountered in the well.

In 2008, Challenger announced two separate natural gas discoveries on block 5(c); in the Victory well, announced in Stockwatch on Jan. 14, 2008, and in the Bounty well, announced in Stockwatch on Aug. 13, 2008. The information from the three exploration wells drilled on block 5(c), along with the extensive 3-D seismic coverage of block 5(c) and nearby fields, encourages moving forward with the further appraisal of resources discovered and development planning.

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