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Challenger Energy Ltd Investor Presentation

July 2013

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Disclaimer

This announcement contains “forward-looking statements”. Such forward-looking statements include, without limitation: estimates of future earnings, the sensitivity of earnings to oil & gas prices and foreign exchange rate

movements; estimates of future oil & gas production and sales; estimates of future cash flows, the sensitivity of cash flows to oil & gas prices and foreign exchange rate movements; statements regarding future debt repayments;

estimates of future capital expenditures; estimates of reserves and statements regarding future exploration results and the replacement of reserves; and where the Company expresses or implies an expectation or belief as to future

events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements.

Such risks include, but are not limited to oil and gas price volatility, currency fluctuations, increased production costs and variances in reserves or recovery rates from those assumed in the company’s plans, as well as political and

operational risks in the countries and states in which we operate or sell product to, and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s Annual Reports,

as well as the Company’s other filings. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this release, or to

reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

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Agenda

!! Company Overview

!! Cranemere Project

!! South Africa – context

!! Summary & Conclusions

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Company Overview !! Presently focused on world class shale play in the Karoo Basin, South Africa

!! Discovered gas !! Potentially transformational to the SA economy, highly motivated government

!! A company making opportunity - Challenger the only ASX small cap with exposure to SA shale gas

!! Permit award next major value catalyst !! First mover, awaiting award of exploration license for ~800,000 acres !! Balance of play fairway under application by Shell, Falcon (& Chevron via farm-in)

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!! New management team - on the cusp of dramatic growth

!! Robert Willes – MD (ex BP, Eureka) !! Bill Bloking – (ex BHPB, Exxon, Eureka) !! Management strongly aligned via equity !! Emerging strategy

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Financial Overview

Fully paid ordinary shares 311,482,540

Unlisted Options1 25,000,000

Share Price2 A$0.07

Market capitalisation2 A$21.8m

Cash3 A$0.28m

Shareholders 1011

Top 20 44.81%

1.! Option exercise prices range from $0.15-$0.35 with exercise dates of February 2014 to November 2016 2.! As at 26th July 2013 3.! As at 30th June 2013

!"#$%&'$()%&'%$*+$,#-)%&./!01&2345& 2#6(7#8&!7$9)79$%&

LQ Super Pty Ltd 12.89%

Pitt Street Absolute Return Pty Ltd and related entities

5.46%

Challenger Directors 2.46%

!(:-(;)#-7&!"#$%"+8<%$=&

Liquidity2

One Month $423,605

Six Months $2,417,607

One Year $13,424,318

Broker Value Buy Vol Sell Vol Traded %

Commonwealth $4,662,209 27,061,474 29,629,146 17.5 E-Trade $4,568,086 26,427,070 29,262,806 17.2 Morg Smith $4,563,497 46,085,137 13,921,770 17.1 Patersons $2,223,338 18,171,601 8,264,797 8.4 UBS $2,205,431 4,865,113 21,064,879 8.3 State One Stock $2,156,980 11,843,438 11,843,438 8.1 Bell Potter $1,408,152 7,010,000 10,976,250 5.3 AIEX $938,485 5,536,756 6,279,725 3.5 BBY $807,240 4,767,047 4,646,047 3.0 Pershing $616,433 695,000 8,003,173 2.3

Traded Market Share 1/7/12 – 30/6/13

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Board & Management Team Chairman

Michael Fry Managing Director

Robert Willes Adviser

Bill Bloking Technical Director

Paul Bilston Country Manager

Peter Price

Qualifications B.Com (UWA), F.Fin BA (Hons), MAICD BSc Mech Eng (Summa cum Laude), FAICD

B.Eng, PhD. MSc, Royal School of Mines, MSAIMM

International Experience

USA, Australia UK, Norway, Algeria, Belgium, Australia, Asia

USA, Australia, Asia, Europe, South America

Australia, Asia, USA, South Africa

South Africa, Zimbabwe, Zambia, UK, Belgium

Relevant Experience

!! Chairman Red Fork Energy Limited (RFE)

!! Chairman Norwest Energy NL (NEW)

!! Past Member ASX

!! Treasury management

!! CEO Eureka Energy Ltd

!! Head of Business Development, Asia Pacific – BP Australia & Indonesia

!! GM Browse & Greater Gorgon – BP Australia

!! GM North West Shelf – BP Australia

!! Project Manager M&A – BP London

!! Negotiator Gas Marketing - BP Gas & Power UK

!! MD Eureka Energy Ltd

!! President Australia/Asia Gas - BHP Billiton

!! COO - Esso Eastern Products Trading Co

!! Senior Adviser – Exxon Corp Strategic Planning

!! GM Gas – Esso Indonesia

!! Manager, Supply Operations Far East & Western Hemisphere – Exxon

!! Former MD Challenger Energy Ltd (CEL)

!! GM Lucas Energy

!! Manager, Operated Assets – AGL Energy Ltd

!! Client Program Manager – Agility

!! Group Manager, Oil & Gas - GHD

!! Country Manager – Molopo (MPO)

!! Independent consulting engineer

!! GM Mining - Babcock Industrial Contractors

!! MD, Ops Mgr,Consulting Engineer – Rand London Corp

!! Various roles – Anglovaal South Africa, Anglo American Zambia, Lonhro Rhodesia

Citizenship Australia UK/Australia US/Australia Australia UK

Industry Experience

7 yrs E&P (30 yrs Capital markets)

26 yrs 39 yrs 20 yrs 55 yrs

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World Scale Opportunity

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Proven Gas to Surface !! Permit of ~ 800,000 acres centred on only well

within the basin to flow significant gas to surface (Cranemere)

!! CEL first mover - Shell and Falcon/Chevron pursuing adjacent acreage

Basin Resource Potential (U.S. Energy Information Administration June 2013) !! Estimated 370 tcf technically recoverable !! Ranked #8 globally

Partner & Work Programme !! Black Economic Empowerment (BEE) Partners

in place !! Advanced discussions with farm-in partners

Key Events !! Moratorium lifted September 2012 !! Chevron announced AMI and farm-in with

Falcon Dec 2012 !! Awaiting award of Exploration Right –

anticipated early 2014

Challenger now the only small cap player with exposure to this play. F

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Investment Case

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Recent transactions demonstrate increasing market value of acreage as it progresses towards commercialisation. (CEL ~800,000 acres, market cap $21.8m1)

Key parameters for commercialisation are underpinned by supportive government. Infrastructure and supply chain will develop as resource scale becomes clear.

Recent transactions demonstrate increasing market value of acreage as it progresses towards

(CEL ~800,000 acres, market cap $21.8m

0 2000 4000 6000 8000

10000 12000 14000 16000 18000 20000

Trends Undeveloped Appraisal Production

$'000

$40 / acre • ConocoPhillips / New Standard Energy (AUS) Jul ‘11 • Mitsubishi /Buru Energy (AUS) Dec ’11 • BG Group / Drillsearch – (AUS)Jul ’11 • Total/Central Petroleum (AUS) Nov ‘12 • Statoil / Petrofrontier (AUS) Jun ‘12

$844 / acre • ExxonMobil / Americas Petrogas (ARG) Aug ’11 • Beach Energy / Adelaide Energy (AUS) Jan ‘12 • Chevron / Beach Energy (AUS) Feb ‘13

$4,009 / acre • Statoil / Chesapeake Energy (US) Nov ‘08 • KKR / Hilcorp Resources (US)Jun ’10 • Hess / Consol (US) Oct ’11 • Aurora Oil & Gas / Eureka (AUS) Aug 12

$18,489 / acre • Korea National Oil / Anadarko US Mar ’11 • Marathon / Hilcorp Resources US Jun ‘11 • Mitsui / SM Energy (US) Jun ‘12 • Osaka Gas / Cabot Oil (US) Jun ‘12

1 : Information current as at 26 July 2013.

Source: Company view

Source: Company presentations, Dolmen broker report Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Unconventional Play Service – Karoo Basin – Shale

Unconventional Play Service Analysis - November 2012 Page 10 of 15

Key Commercialisation Issues

Karoo Basin Commercialisation Index

Gas Market Fundamentals

Gas Price

Infrastructure

Supply Chain

Land Access

Environment/Regulation

Water

Fiscal Terms

Resource Upside

Technology Upside

Good Fair Poor

Source: Wood Mackenzie

Gas Market

In the near term, GTL and industrial customers will be the target market for gas from shales, but both require relatively small volumes. South Africa currently relies entirely on its massive coal resources for cheap and readily available power generation. Switching to gas for power generation cannot happen without strong political pressure to reduce South Africa’s carbon emissions. Government officials are delaying the reduction in coal usage, arguing that the cheap power promotes economic growth. Increased energy prices to the end user would be very unpopular, but the future of shale gas may come down to a long-term bet that South Africa will seek to reduce its dependency on coal for power generation, and invest in gas power plants. The government is supportive of gas developments as a means of improving energy security, and avoiding shortfalls in power supply as seen in 2008 and 2009. Achieving viable gas-prices will be key.

South African conventional gas supply is forecast to remain low. Around 240 mmcfd is produced from two offshore gas developments, Block 9 (E-M and F-A) and South Coast. Gas is also imported from Mozambique.

Existing GTL plant customers support relatively high prices (linked to Brent). South African company Sasol and Shell are leaders in GTL technology, and Sasol's integrated Mossel Bay project is well positioned to take future shale gas. Conventional gas production is in decline and Mossel Bay will need alternative sources to maintain production. The plant cannot operate below 144 mmcfd, and unless substantial volumes of gas can be supplied quickly, minimum operating volume may be permanently reduced, to 90 mmcfd for example. This could potentially reduce future gas demand. There are only two GTL plants in South Africa, and building a new plant would take a decade and require over US$10 billion of investment. Shale gas is a viable option to make up the short fall in supplies to Mossel Bay, but the distance between the plant and shale gas exploration areas (minimum 160 kilometres) will make transporting the gas difficult and expensive.

Heavy industry and petrochemical companies are also a potential market for shale gas. Inconveniently, most demand is located in the east near Johannesburg and Durban, and away from those areas with the highest shale gas potential. Infrastructure projects linking the source gas to the end user are likely to be challenging and very costly.

In the long-term, South Africa may look to export shale gas via pipeline to surrounding countries. The technical and commercial feasibility coupled with future competition from East Africa LNG makes the outlook for export gas highly uncertain though.

Good Fair Poor

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Building the Company Growth Platform – Cranmere

"! World class exploration asset with high WI

"! Re-rating anticipated on permit award "! Advanced farm-in discussions

"! BEE partners in place "! Future Legacy Asset - leverage high value position to grow the firm

1

Enhance Sustainability of Portfolio

Identify and add assets with potential for near term development

2

Build a long-term sustainable company with a quality unconventional portfolio

Identify and secure future high potential assets

Significant shifts in oil & gas landscape create opportunities to acquire assets and form alliances

3 !! Guiding principles

!! Quality assets in advanced exploration/early development phase

!! Manage risk profile through partnerships & farm-out

!! Value accretive to CEL whilst maintaining balanced risk profile

#"

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Agenda

!! Company Overview

!! Cranemere Project

!! South Africa – context

!! Summary & Conclusions

10

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Prime Acreage Position

!! Substantial foothold in some of best acreage, adjacent to Falcon/Chevron permit area

!! The application area contains the only well to flow substantial gas to surface (unstimulated, vertical well)

!! Easier terrain than that to the north

11

Source: Company presentation

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Discovered Gas

!! Three deep, down to economic basement wells drilled in the

late sixties by SOEKOR, the government corporation

charged with finding hydrocarbons in South Africa

!! Cranemere 1/68 ostensibly drilled to test the northern

pinchout of the pre-Karoo Bokkeveldt rocks

12

Vrede 1/66

Cranemere 1/68

Schietfontein 3/670 10 20kilometres

40

23°

24°

23.5

°

24.5

°

26.5

°

25°

25.5

°

26°

-31.5 °

-32 °

-33 °

-32.5 °

-33.5 °

NOOPOORTMerriman

STEYNSBURG

MOLTENORICHMONDMeltonwald MIDDELBURG

HOFMEYR

Nieu-Bethesda

Three Sisters VERNLEIGHMURRAYSBURG

TARKASTAD

NelspoortCRADOCK

GRAAF-REINETBEAUFORT WEST

ABERDEEN

PEARSTON

BEDFORDADELAIDE

SOMERSET EAST

RietbronJANSENVILLE

KLIPPLAAT

WILLOWMORE GRAHAMSTOWNAlicedale

STEYTLERVILLE

KIRKWOOD

Addo

Cape Fold Belt

Jura

ssic

Tria

ssic

Per

mo-

Car

boni

fero

usD

evon

ian

Neo

-Pro

tKa

roo

Stormberg Group

Beaufort Group

Ecca and DwykaGroups

Cape Supergroup

Undifferentiated

ThrustBloemfontein

Cape Town

Durban

Port Elizabeth

Mmabatho Pretoria

Cranemere

Source: After Simplified Geology of South Africa Council for Geoscience 2003

Bokkeveldt Group

Table Mountain Group

0.00 10.0

10.0 100000

SP

500

500

500

1000

1000

1000

1000

1500

1500

1500

1500

2000

2000

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4000

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700040

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750045

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2500 7500

2500 7500

2500 7500

5000

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8000

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850055

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0

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0

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0

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0

1000

0 7500

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0

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000

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0

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0

8000

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0

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0

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0 8000

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0

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0 8000

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0 8500

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Vrede 1/66

SC 3/67

Cranemere 1

Top Ecca

Fort Brown Shale86% Shale

Middle Ecca

Lower Ecca

Whitehill and Prince Albert Fmns. - 100% Shale

Dwyka Tillite

Base Ecca

Base Permo-Carboniferous

Gas to SurfaceDSTCored Interval

Beaufort Group - Sand Silt Shale

< C

ape

Sup

ergr

oup

>

CranemereSection Through Offsetting Wells

Flattened on Top Ecca

5000

- 60

00 ft

Sha

le S

ectio

n

?

?

C1 Desorbedppm?

Ditch GasC1%

Looking North

Basal Ecca high TOC black shale 360 - 485 ft

!! Gas to surface from fractures in the Ecca shales not

anticipated

!! CR 1/68 gas log clearly shows zones of high gas readings

(red above)

!! Uniform shale sections in all wells Source: CEL and Soekor

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Geological Setting

!! Fort Brown Upper and Middle Ecca shales are deep basin turbidites deposited in the foredeep of the rising

Cape Fold Belt and are have a vertical thickness of 1,500 – 1,800 metres (5,000 – 6,000 ft)

!! Basal Ecca Shales (Whitehill & Prince Albert formations) are high TOC marine and have vertical thickness of

110 – 150 metres (360 – 485 ft)

13

Ecca Shales

Beaufort

SC 3

/67

Bloemfontein

Cape Town

Durban

Port Elizabeth

Mmabatho Pretoria

Cape Fold Belt Cr 1

/68

Stormberg

Coal Measures

Sketch SectionThrough Karoo Basin

Vr 1

/66

Cape Supergroup

Middle Ecca S

ands

Dwyka T

illite

CELLands

Source: After Winter and Venter (1970)

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Cranemere 1/68 Discovery Well !! The well entered a gas zone at approximately

8150 ft MDRT which threatened to blow out, it

was controlled by closing BOP

!! Zone interpreted as fractured Ecca Group shales

!! DST 3B over the interval 8154’ – 8312’ produced

a strong gas flow to surface which was flared, it

flowed 1.83 MMscf over a 23.6 hour period

!! Extensive core collected from CR 1/68

!! Permit surrounds well

14

Source: CR 1/68 WCR

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Permit Summary !! Applicant – Bundu Gas and Oil Exploration (Pty) Ltd – 90% owned and controlled entity of Challenger

Energy Ltd. (CEL), 10% BEE partners

!! Area – ~1 million acres (4300 km2) applied for, expecting award ~800,000 acres to allow for game parks

!! Prospectivity – EIA study inferred total of ~32tcf GIP, >7 tcf risked recoverable (excluding Fort Brown)

!! Term – 3 Years with up to three renewals not exceeding two years each

!! Anticipated Work Programme – studies, seismic reprocessing, 1-2 core holes, drill & frac one well and

production test

!! Fiscal Terms – Corporate Tax 28%, Royalty 7%

15

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Timeline & Status

16

!! New regulatory framework being developed, to be governed by revised Mineral and Petroleum Resource

Development Act. Anticipated draft framework issued for industry comment in coming months.

!! Regulator (Petroleum Agency of South Africa – PASA) anticipates ministerial approval to re-commence

processing of applications once new regulatory framework in place. No firm date, but general

expectation is early 2014

2009 2010 2011 2012 2013 2014

Moratorium Introduced April 2011

2012

Moratorium Lifted

Sept 2012

2013

Regulatory Framework anticipated

4Q13

Expected award of Exploration

Right

Falcon/Chevron deal announced Dec 2012

CEL Revised (larger)

application for Exploration Right

Submitted May 2010

CEL Application for Exploration

Right Submitted October 2008

2008

Falcon Technical Co-operation

Permit granted Oct 2009

Falcon application for Exploration

Right Submitted August 2010

Shell application for Exploration

Rights Submitted Dec 2010

Falcon Technical Co-operation

Permit granted Oct 2009

Shell Technical Co-operation

Permit granted 2009

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Agenda

!! Company Overview

!! Cranemere Project

!! South Africa – context

!! Summary & Conclusions

17

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South Africa – Economy under Pressure

18

!! Largest economy in Africa; high levels of unemployment and inequality are the key economic problems facing the country.

!! Official unemployment 25%, unofficial estimates ~40%, youth unemployment ~53%.

!! A quarter of South Africans live on less than US $1.25 a day, with limited access to economic opportunities and basic services.

!! Per capita GDP growth mediocre, growth 1.6% a year from 1994 to 2009, 2.2% pa 2000–09. First quarter 2013 figures show an annualized rate of 0.9%.

!! Crisis in power availability – insufficient capacity in power infrastructure led to rolling blackouts in 2007. Margin between demand and capacity still low, leaving the country vulnerable to further blackouts.

!! Econometrix (SA’s largest independent macro-economic consultancy) Report March 2012 concluded;

!! A 50 tcf shale resource could add R200bn to GDP pa and create 700,000 sustainable jobs; and

!! Could provide a solution to power supply challenges and ensure South Africa’s energy security

The government is strongly motivated to pursue potential shale gas resources as a catalyst to transform the economy.

!

!

Desktop estimates predict that the shale gas

cubic feet, which would make it the fifth largest shale gas field in the world.

In the summary table above, the production chain

value added and employment levels over the life of the project at compared to projected national economy

values in the year 2035.

Total upstream value added in s

3.3 times the size of the SA Mining sectorí s value added during 2010.

value added of R2142bn, equating to 9.3 times the value of mining GDP in 2010.

downstream value added in scenario A is equivalent to 8

while scenario B, produces estimates of G

Africa during 2010. All modelled calculations are at constant 2010 prices.

Test scenario A indicates total production chain employment at an average annual rate of just over 290

jobs, with scenario B resulting in average employment of

added and employment figures assume that no ga

downstream value adding purposes. The figures include direct and indirect and induced value creation and

employment.

Recent experiences with electricity supply and pricing developments have broug

Africans the inseparable relationship between usable energy and economic performance. The economy

simply cannot grow at any reasonable sustained rate without using additional energy resources.

A common assertion in South Africa is th

but the Rand price of coal has kept pace with the Rand price of crude oil very closely over the past three

decades. Nobody asserts that oil is cheap.

!"#$%&#'()*&$+*,$-)'.(*+/'0$1&")#

"#$%&'()*+,-$%&'()!.+)/0-'1!

"#$%&'()*+,-$%&'()!.+)/0-'1!

2'.&33&.$4"3(&$"..&.$"0.$5673'86&0+$

94&)":&$900("3$;"3(&$9..&.$%<0

94&)":&$900("3$5673'86&0+$

!

!

Key Conclusions

Desktop estimates predict that the shale gas of the Southern Karoo area could be a reserve of 4

cubic feet, which would make it the fifth largest shale gas field in the world.

In the summary table above, the production chain includes all upstream and downstream activities. Mean

added and employment levels over the life of the project at compared to projected national economy

Total upstream value added in scenario A (R760bn) during the 25 year production life of the resource is

SA Mining sectorí s value added during 2010. Resource

value added of R2142bn, equating to 9.3 times the value of mining GDP in 2010.

n scenario A is equivalent to 83.3% of the GDP of So

, produces estimates of GDP contribution equivalent to 208% of the entire GDP of South

Africa during 2010. All modelled calculations are at constant 2010 prices.

Test scenario A indicates total production chain employment at an average annual rate of just over 290

jobs, with scenario B resulting in average employment of just over 700 000 jobs.

added and employment figures assume that no gas is exported, and that all the gas extracted is used for

downstream value adding purposes. The figures include direct and indirect and induced value creation and

Recent experiences with electricity supply and pricing developments have broug

Africans the inseparable relationship between usable energy and economic performance. The economy

simply cannot grow at any reasonable sustained rate without using additional energy resources.

A common assertion in South Africa is that the country possesses abundant cheap coal. Abundant, yes,

but the Rand price of coal has kept pace with the Rand price of crude oil very closely over the past three

decades. Nobody asserts that oil is cheap.

=*&0")/'$9 =*&0")/'$>

!"#$%&#'()*&$+*,$ ?@-)'.(*+/'0$1&")# ?A

234353

44625672

2'.&33&.$4"3(&$"..&.$"0.$5673'86&0+$=*&0")/'#

94&)":&$900("3$;"3(&$9..&.$%<0

94&)":&$900("3$5673'86&0+$

89':;%0<'!=;))(&>!

of the Southern Karoo area could be a reserve of 485 trillion

includes all upstream and downstream activities. Mean

added and employment levels over the life of the project at compared to projected national economy

(R760bn) during the 25 year production life of the resource is

Resource Scenario B has upstream

value added of R2142bn, equating to 9.3 times the value of mining GDP in 2010. Combined upstream and

% of the GDP of South Africa during 2010,

% of the entire GDP of South

Test scenario A indicates total production chain employment at an average annual rate of just over 290 000

000 jobs. These synoptic value

s is exported, and that all the gas extracted is used for

downstream value adding purposes. The figures include direct and indirect and induced value creation and

Recent experiences with electricity supply and pricing developments have brought home to most South

Africans the inseparable relationship between usable energy and economic performance. The economy

simply cannot grow at any reasonable sustained rate without using additional energy resources.

at the country possesses abundant cheap coal. Abundant, yes,

but the Rand price of coal has kept pace with the Rand price of crude oil very closely over the past three

=*&0")/'$>

A@?A

5?@@463@

@444A7B3A

2'.&33&.$4"3(&$"..&.$"0.$5673'86&0+$

Source: Econometrix Report March 2012 For

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South Africa – Power Issues !! Significantly increased demand since 1994, ageing fleet, ~90% dependent on

coal, mine locations remote to demand = line losses, cheap coal reserves running low.

!! Typical available capacity ~30GW vs peak demand of ~36GW

!! Integrated Resource Plan (IRP) established in 2010 to develop a sustainable electricity strategy for next 20 years seeks to more than double current generation capacity to 89 GW by 2030

!! Huge new build programme - nuclear, coal, gas and renewables !! New build coal more expensive than existing (largely depreciated)

!! Gas advantaged against new coal, and renewables on a capex per MW installed basis.

!! Eskom – state owned power utility, dependent on massive Govt support !! Credit support and direct funding to Eskom ~16.9% of 2010 GDP

!! Coal provides base load, planned renewables to provide additional power during daytime hours, diesel peaking plants make up shortfall.

!! Natural gas the only base load technology that can follow the SA load curve – morning and evening peaks, ramped down overnight.

!! LNG import now under active consideration to bridge the gap and address the shortfall in feedstock for PetroSA’s gas-to-liquids plant at Mossel Bay.

19

!

!

"#$%%!&'#()!*#+!,$%-)./!

and trains running on compressed natural gas, which could displ

synthetic fuels.!!!

2 . 7 W a t er Const r a int s

South Africaí s water resources have

socio- economic benefits that such growth may be able to offer

imaginary line drawn between Rustenburg (in the North W estern Province) and Middelb

Mpumalanga Province) represents a dividing line, north of which expansion of industrial activity will be

limited by water constraints. More than 40 years after setting out this theory, he has been proven largely

correct by history.

The single most basic reason for the scarcity of water relative to the potential demand for it for various

economic and social applications is that South Africa is a low

falls over the 1.22 million square kilometres of the

precipitation over the course of several years, while the wettest areas may rec

average within the space of single years.

The first implication for electrical power generation is that opp

extremely limited by the lack of perennial water flows. A second implication is that, under the somewhat

elderly power station complex in the country, each kilogram of coal that is burnt uses 1.33kg of water to

generate electricity14. Newer coal burning technologies which include carbon dioxide extraction can

produce substantial water saving

possibility for planned new coal fired generation facil

Appendix E . The table below provides a summarised overview of the age profile of the existing power

station complex in South Africa, and the historic lack of fixed capital formation since the 1980í s p

some insight into levels of technology employed in the existing power generation base.

A g e g r oup

O ver 40 years

35- 45 years

25- 35 years

U nder 25 years

Total

The advanced age profile of E skomí s coal fired power stations is a significant contributor to the average

efficiency of this form of power generation in the country. The energy efficiency of the coal fired network is

at a low 21%. The 9.6Gw additional capac

are significantly higher, estimated at 40%.

Researching and refining the comparison of water usage for individual primary energy products and their

conversion to end- user friendly products is a task

E nergy Technology Innovation Policy Research Group, working under the auspices of

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!14 D a t a f r o m s l i de i n u nda t ed p r es ent a t i o n ( c i r c a l a t e M a r c h 2 010) b y D r . A nt h o ny T u r t o n, a v a i l a b l e o n

w w w . env i r o nm ent c o ns er v a t i o n. o r g . z a

! 0%1234)1/3#(!!5!6$37#$8!91)$:8!;)+%<$.)+!31!&=>=

!

and trains running on compressed natural gas, which could displace some of the demand for coal

South Africaí s water resources have been recognised as a potential constraint to economic growth and the

economic benefits that such growth may be able to offer. David H obart- H oughton theorised that an

imaginary line drawn between Rustenburg (in the North W estern Province) and Middelb

Mpumalanga Province) represents a dividing line, north of which expansion of industrial activity will be

limited by water constraints. More than 40 years after setting out this theory, he has been proven largely

ost basic reason for the scarcity of water relative to the potential demand for it for various

economic and social applications is that South Africa is a low rainfall country ñ on average, 4

million square kilometres of the country. Arid areas may receive virtually zero

precipitation over the course of several years, while the wettest areas may rec

average within the space of single years.

The first implication for electrical power generation is that opportunities for hydro

of perennial water flows. A second implication is that, under the somewhat

elderly power station complex in the country, each kilogram of coal that is burnt uses 1.33kg of water to

. Newer coal burning technologies which include carbon dioxide extraction can

produce substantial water savings, but are not a practical proposition for retro fitting. These become a

possibility for planned new coal fired generation facilities, but not for the old - as

below provides a summarised overview of the age profile of the existing power

station complex in South Africa, and the historic lack of fixed capital formation since the 1980í s p

some insight into levels of technology employed in the existing power generation base.

T a b le 4 : A g e D ist r ib ut ion of E sk om G W ca p a cit y % sh a r e

3.5 10.0

9 25.7

21 60.0

1.5 4.3

35 100

The advanced age profile of E skomí s coal fired power stations is a significant contributor to the average

efficiency of this form of power generation in the country. The energy efficiency of the coal fired network is

low 21%. The 9.6Gw additional capacity currently being constructed at the Medupi and Kusile plants

are significantly higher, estimated at 40%.

Researching and refining the comparison of water usage for individual primary energy products and their

user friendly products is a task of considerable complexity, and has been left to

E nergy Technology Innovation Policy Research Group, working under the auspices of

D a t a f r o m s l i de i n u nda t ed p r es ent a t i o n ( c i r c a l a t e M a r c h 2 010) b y D r . A nt h o ny T u r t o n, a v a i l a b l e o n

6$37#$8!91)$:8!;)+%<$.)+!31!&=>=!

6#:)!?!@A!!!!!!

ace some of the demand for coal- based

been recognised as a potential constraint to economic growth and the

H oughton theorised that an

imaginary line drawn between Rustenburg (in the North W estern Province) and Middelburg (in the

Mpumalanga Province) represents a dividing line, north of which expansion of industrial activity will be

limited by water constraints. More than 40 years after setting out this theory, he has been proven largely

ost basic reason for the scarcity of water relative to the potential demand for it for various

on average, 400mm of rain

country. Arid areas may receive virtually zero

precipitation over the course of several years, while the wettest areas may receive many times the

ortunities for hydroelectric power are

of perennial water flows. A second implication is that, under the somewhat

elderly power station complex in the country, each kilogram of coal that is burnt uses 1.33kg of water to

. Newer coal burning technologies which include carbon dioxide extraction can

, but are not a practical proposition for retro fitting. These become a

as discussed more fully in

below provides a summarised overview of the age profile of the existing power

station complex in South Africa, and the historic lack of fixed capital formation since the 1980í s provides

some insight into levels of technology employed in the existing power generation base.

% sh a r e

The advanced age profile of E skomí s coal fired power stations is a significant contributor to the average

efficiency of this form of power generation in the country. The energy efficiency of the coal fired network is

at the Medupi and Kusile plants

Researching and refining the comparison of water usage for individual primary energy products and their

of considerable complexity, and has been left to the

E nergy Technology Innovation Policy Research Group, working under the auspices of the H arvard

D a t a f r o m s l i de i n u nda t ed p r es ent a t i o n ( c i r c a l a t e M a r c h 2 010) b y D r . A nt h o ny T u r t o n, a v a i l a b l e o n

!

!

"#$%%!&'#()!*#+!,$%-)./!

ì T h i s i s a b a l a nc ed p l a n t h a t s eek s t o r es p o ns i b l y u s e ener g y s o u r c es a v a i l a b l e t o u s , i nc l u di ng g a s ,

b i o m a s s , nu c l ea r , c o a l a nd i m p o r t s . î

ener g y , 2 3 % nu c l ea r a nd 15 % c o a l w a s exp ec t ed b y 2 03 0. î

F ocussing as it does on the energy resource component of the electricity supply side; the mix of the

resources appears achievable. Debates have ensued about timing within the IRP, and which resources

may be substituted for others if certain major developments are delayed (e.g. the nuclear power plant

perhaps not being on stream by 2019).

South Africaí s neighbour, Botswana, has begun development of coal fired power stations close to the

South African border, situated on r

200 years supply at expanding consumption rates. The economy of Botswana has very little requirement

for the massive additional capacity that these developments could make available

intention must be to export power to South Africa, and probably nearby Z imbabwe as well.

Chart 1 below reflects a synthesis of available information relating to energy supply and demand over the

decade between 2009 and 2019, which woul

gas in the Karoo Gas. It is drawn from a number of private studies undertaken in the recent past by

E conometrix for players on both the demand and supply side of the electrical energy in South

!S o u r c e: E c o no m et r i x P t y L t d

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!8 N o t e t h a t t h i s i s new c a p a c i t y , p r es u m a b l y t o b e i ns t a l l ed b et w een 2 011 a nd 2 03 0. T h e p l a nned o v er a l l c a p a c i t y b y 2 03 0

o f t h e IR P f o r el ec t r i c i t y , a s p er t h e O c t o b er 2 010 r el ea s e b y t h e D O E i s s et o u t i n t h e a r t i c l e m a k i ng u p a p p endi x D o f t h i s

r ep o r t , a nd i nc l u des 4 8% f r o m c o a l , 14 % f r o m nu c l ea r , 16 % f r o m r enew a b l e ener g y s o u r c es a nd 9% f r o m o p en c y c l e g a s

t u r b i nes .

-27

47

-32

49

-39

02

-27

47

-32

49

-39

02

1 1

- 2 8 1 8- 3 2 3 7

- 2 9 5 7

- 3 6 8 3

- 4 5 7 3

- 2 7 4 7- 3 2 4 9

- 3 9 0 2

- 2 5 3 7

- 10000

- 8000

- 6000

- 4000

- 2000

0

2000

4000

6000

2 0 0 9 2 0 1 0 2 0 1 1

MW

E xisting installed and approved

Shortfall @ 2.5% gr

! 0%1234)1/3#(!!5!6$37#$8!91)$:8!;)+%<$.)+!31!&=>=

!

ì T h i s i s a b a l a nc ed p l a n t h a t s eek s t o r es p o ns i b l y u s e ener g y s o u r c es a v a i l a b l e t o u s , i nc l u di ng g a s ,

b i o m a s s , nu c l ea r , c o a l a nd i m p o r t s . î In t er m s o f t h i s p l a n, 8î new g ener a t i o n c a p a c i t y o f 4 2

c o a l w a s exp ec t ed b y 2 03 0. î

F ocussing as it does on the energy resource component of the electricity supply side; the mix of the

resources appears achievable. Debates have ensued about timing within the IRP, and which resources

r others if certain major developments are delayed (e.g. the nuclear power plant

perhaps not being on stream by 2019).

South Africaí s neighbour, Botswana, has begun development of coal fired power stations close to the

South African border, situated on rich coal fields which are estimated to equal the South African reserve of

200 years supply at expanding consumption rates. The economy of Botswana has very little requirement

for the massive additional capacity that these developments could make available

intention must be to export power to South Africa, and probably nearby Z imbabwe as well.

reflects a synthesis of available information relating to energy supply and demand over the

decade between 2009 and 2019, which would roughly correspond with the period of exploration for

Karoo Gas. It is drawn from a number of private studies undertaken in the recent past by

E conometrix for players on both the demand and supply side of the electrical energy in South

Ch a r t 1 : E lect r icit y S h or t f a ll

N o t e t h a t t h i s i s new c a p a c i t y , p r es u m a b l y t o b e i ns t a l l ed b et w een 2 011 a nd 2 03 0. T h e p l a nned o v er a l l c a p a c i t y b y 2 03 0

o f t h e IR P f o r el ec t r i c i t y , a s p er t h e O c t o b er 2 010 r el ea s e b y t h e D O E i s s et o u t i n t h e a r t i c l e m a k i ng u p a p p endi x D o f t h i s

d i nc l u des 4 8% f r o m c o a l , 14 % f r o m nu c l ea r , 16 % f r o m r enew a b l e ener g y s o u r c es a nd 9% f r o m o p en c y c l e g a s

-52

78

-53

10

-53

84

-54

48

-62

78

-64

33

-66

37

-52

78

-53

10

-53

84

-47

28

-48

38

-34

48

1 0 1 0 1 1 0

- 4 3 6 7 - 4 1 4 0 - 3 9 4 1

- 2 9 9 9 - 2 8 0 7

- 6 2 0 2- 6 5 0 3

- 6 8 6 2- 6 5 0 9

- 6 9 3 9

- 5 8 8 9

- 5 2 7 8 - 5 3 1 0 - 5 3 8 4

- 4 7 2 8 - 4 8 3 8

- 1 1 0 1

- 3 4 4 8

2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7

E xisting installed and approved F orecast Build 3.0% New major power stations

Shortfall @ 3.5% gr Shortfall @ 3.0% gr

6$37#$8!91)$:8!;)+%<$.)+!31!&=>=!

6#:)!?!@A!!!!!!

ì T h i s i s a b a l a nc ed p l a n t h a t s eek s t o r es p o ns i b l y u s e ener g y s o u r c es a v a i l a b l e t o u s , i nc l u di ng g a s ,

î new g ener a t i o n c a p a c i t y o f 4 2 % r enew a b l e

F ocussing as it does on the energy resource component of the electricity supply side; the mix of the

resources appears achievable. Debates have ensued about timing within the IRP, and which resources

r others if certain major developments are delayed (e.g. the nuclear power plant

South Africaí s neighbour, Botswana, has begun development of coal fired power stations close to the

ich coal fields which are estimated to equal the South African reserve of

200 years supply at expanding consumption rates. The economy of Botswana has very little requirement

for the massive additional capacity that these developments could make available, and the obvious

intention must be to export power to South Africa, and probably nearby Z imbabwe as well.

reflects a synthesis of available information relating to energy supply and demand over the

d roughly correspond with the period of exploration for shale

Karoo Gas. It is drawn from a number of private studies undertaken in the recent past by

E conometrix for players on both the demand and supply side of the electrical energy in South Africa.

N o t e t h a t t h i s i s new c a p a c i t y , p r es u m a b l y t o b e i ns t a l l ed b et w een 2 011 a nd 2 03 0. T h e p l a nned o v er a l l c a p a c i t y b y 2 03 0

o f t h e IR P f o r el ec t r i c i t y , a s p er t h e O c t o b er 2 010 r el ea s e b y t h e D O E i s s et o u t i n t h e a r t i c l e m a k i ng u p a p p endi x D o f t h i s

d i nc l u des 4 8% f r o m c o a l , 14 % f r o m nu c l ea r , 16 % f r o m r enew a b l e ener g y s o u r c es a nd 9% f r o m o p en c y c l e g a s

-66

37

-68

90

-79

14

-13

87

-20

0

17

61

1 2 0

- 4 1 8 7

- 3 3 8 0

- 1 8 2 1

- 1 3 8 7

1 2 9 3

2 8 3 0

5 1 5 7

- 3 4 4 8

- 2 0 0

1 7 6 1

2 0 1 8 2 0 1 9

New major power stations

Shortfall @ 3.0% gr

!

!

"#$%%!&'#()!*#+!,$%-)./!

the future of South Africaí s coal industry depends on the development of the W aterberg deposits, which

extend into Botswana.

Statistics SA publishes monthly data reflecting indexed values of mining production of various mineral

commodities, as well as monthly rand values of that mining production. This data is summarised in annual

format in the chart below. By dividing the Rand value data by the index of physical production, a unit price

index for coal may be calculated; this price index is express

Monthly Brent crude oil price data is kept in a database by E conometrix, as is the monthly average Rand

per U S Dollar exchange rate. Multiplying these together creates a Rand Crude O il price time series. This

series as well as the coal price series are set to a common base of 1980= 100, and the two resulting time

series are plotted together in the

Although the two price indices do diverge from each other for short periods, the overall level of correlation

is remarkably high (r= 0.966). As both are competing global primary energy resources, this is not

unexpected. O bviously, once capacity has been created that relies on one particular primary energy

source, it cannot easily be switched to another, and competition between sou

energy conversion network, rather than swopping from one resource to another using existing capacity.

The high degree of correlation of long

appreciated by the general public in SA, where the common belief appears to be that Rand coal prices

move less rapidly than Rand oil prices over time.

Ch a r t 6 : I nd ices of R a nd Coa l P r od uct ion P r ices a nd R a nd B r ent Cr ud e O il

This implies that capital investments reliant on particular fuel have to stay with those fuels, no matter how

fuel prices change over time. Because domestic coal prices are usually quoted in Z AR, the correlation

between those and crude oil prices is not widely appreciated by

continually refer to South African coal as being ì cheapî while crude oil is being described as ì expensiveî .

A further implication of this discussion is that potential gas availability is more likely to be absorbed by

0

500

1000

1500

2000

2500

3000

Index

Index: 1980=100

! 0%1234)1/3#(!!5!6$37#$8!91)$:8!;)+%<$.)+!31!&=>=

!

the future of South Africaí s coal industry depends on the development of the W aterberg deposits, which

Statistics SA publishes monthly data reflecting indexed values of mining production of various mineral

as monthly rand values of that mining production. This data is summarised in annual

. By dividing the Rand value data by the index of physical production, a unit price

index for coal may be calculated; this price index is expressed in Rand terms.

Monthly Brent crude oil price data is kept in a database by E conometrix, as is the monthly average Rand

per U S Dollar exchange rate. Multiplying these together creates a Rand Crude O il price time series. This

l price series are set to a common base of 1980= 100, and the two resulting time

the chart below.

Although the two price indices do diverge from each other for short periods, the overall level of correlation

h (r= 0.966). As both are competing global primary energy resources, this is not

unexpected. O bviously, once capacity has been created that relies on one particular primary energy

source, it cannot easily be switched to another, and competition between sources relies on expanding the

energy conversion network, rather than swopping from one resource to another using existing capacity.

The high degree of correlation of long- term coal and crude oil price movements in Rand terms is not widely

general public in SA, where the common belief appears to be that Rand coal prices

move less rapidly than Rand oil prices over time.

of R a nd Coa l P r od uct ion P r ices a nd R a nd B r ent Cr ud e O il

ital investments reliant on particular fuel have to stay with those fuels, no matter how

fuel prices change over time. Because domestic coal prices are usually quoted in Z AR, the correlation

between those and crude oil prices is not widely appreciated by local analysts and commentators, who

continually refer to South African coal as being ì cheapî while crude oil is being described as ì expensiveî .

A further implication of this discussion is that potential gas availability is more likely to be absorbed by

Coal price index Brent price index

Index: 1980=100

6$37#$8!91)$:8!;)+%<$.)+!31!&=>=!

6#:)!?!@A!!!!!!

the future of South Africaí s coal industry depends on the development of the W aterberg deposits, which

Statistics SA publishes monthly data reflecting indexed values of mining production of various mineral

as monthly rand values of that mining production. This data is summarised in annual

. By dividing the Rand value data by the index of physical production, a unit price

Monthly Brent crude oil price data is kept in a database by E conometrix, as is the monthly average Rand

per U S Dollar exchange rate. Multiplying these together creates a Rand Crude O il price time series. This

l price series are set to a common base of 1980= 100, and the two resulting time

Although the two price indices do diverge from each other for short periods, the overall level of correlation

h (r= 0.966). As both are competing global primary energy resources, this is not

unexpected. O bviously, once capacity has been created that relies on one particular primary energy

rces relies on expanding the

energy conversion network, rather than swopping from one resource to another using existing capacity.

term coal and crude oil price movements in Rand terms is not widely

general public in SA, where the common belief appears to be that Rand coal prices

of R a nd Coa l P r od uct ion P r ices a nd R a nd B r ent Cr ud e O il

!ital investments reliant on particular fuel have to stay with those fuels, no matter how

fuel prices change over time. Because domestic coal prices are usually quoted in Z AR, the correlation

local analysts and commentators, who

continually refer to South African coal as being ì cheapî while crude oil is being described as ì expensiveî .

A further implication of this discussion is that potential gas availability is more likely to be absorbed by

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Growing International Interest

20

!! Recent events in SA offshore acreage. Existing participants include Shell, BHPB, Gazprom, Tullow, Forest, Cairn.

!! In addition to shale gas, other onshore activity includes CBM ie Sunbird, Kinetiko, Molopo.

20Upstream - Offshore BlocksKey points Increasing Offshore activity with significant global interest

5/6 7

1

11B/12B

Cairn India�PetroSA farm-in agreement for

offshore Block 1

Anadarko and PetroSA agreement

for Exploration Rights over blocks 5/6 and 7

Canadian Natural Resources conversion of licence in blocks 11B/12B. Regulatory requirements complete� drilling targeted:

a

–Q4/13 - Q1/14–Q4/14 - Q1/15

9

June 2012�� Total application for exploration rights South of block 9.

Project Ikhwezi: PetroSA first gas expected 3Q 2013

...Offshore timeframes may in many cases be quicker than shale gas

...We list the recentevents, with existingoffshore investors also including Shelland Forest Oil...

There is increasinginvestor interest andactivity regardingoffshore SouthAfrican acreage…

ExxonMobil application for exploration rights 6E of Sasol  

block  RIIVKRUH E Coast

ExxonMobil DFTXLVLWLRQ RI�75%�SOXV�RSHUDWRUVKLS RI Impact’s  Tugela  South  Exploration RighW

2A

Ibhubesi Gas Field�Sunbird acquiVLWLRQ�

RI 76% IURP�)RUUHVW; JV partner PetroSA holds 24%

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Shale Gas in South Africa !! Shale gas impact on US energy security and the economy widely acknowledged;

!! decreasing reliance on imports, revitalizing existing and creating new industries, stimulating growth, increasing employment and improving the balance of payments (IHS research US unconventional oil & gas supported 1.7 million jobs in 2012, forecast 3 million by 2020)

!! US Energy Information Administration (EIA) estimates shale gas potential ~370tcf risked technically recoverable (2013 update). !! Independent Econometrix Report analysis based on 25-50tcf economically recoverable - full extent will only be known post exploration, but

still transformational to SA’s energy balance at these levels.

!! Shale likely to play significant role in future iterations of the IRP with a drive to early gas fired power generation. !! Potential to spark a “Dash for Gas” such as that experienced by the UK which moved from gas fired power generation at 5% of installed

capacity in 1990 to 30% by 2002.

!! Existing synthetic fuels industry – coal and gas to liquids plants at Secunda and Mossel Bay. As conventional feedstock declines these could offer an export market for shale gas based on oil products rather than gas pricing.

21

Hypothetical Timeline for Shale and Market Development

!! Proposed LNG imports may further accelerate infrastructure development and act as a “bridge” to shale gas

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Well Head Power

Pipelines

GTL

CCGT Power

Upstream Exp & App Development & Production

Planning

Planning

Planning

Build

Build

Build

Build

Well Head Power Generation

Pipelines

CCGT Power Gen

GTL Feed

Source: Company view

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Shale Gas: Core to the National Debate

22

!"#$%&'"("%)"&*'+,!-.+/+,"0'$1!!"!#$%&'(!")*"!!!

-.+/+,$.&'"2+'03&4%'++&)5%("&6%)&#"7"(+2,"/0&.+8(#&9++)0&:;<&%/#&.'"%0"&58/#'"#)&+*&

05+8)%/#)&+*&=+9)&

!- !"#$%&'(%)*%$+,%-.%/01%,#$234$,5%678%$9*%:$;2<<2)=%9">29%*,,$?%#+4<,%;,#)";9,%9)"<5%455%@A''%>2<<2)=%$)%BCD%

4=="4<<E%4=5%9;,4$,%F''%'''%#"#$42=4><,%G)>#%%%

- H)"<5%I;)J25,%.1%K2$+%4%#)<"$2)=%$)%2$#%,<,9$;292$E%#"II<E%4=5%I;292=L%9+4<<,=L,#%%

- Development  of  gas  could  ensure  South  Africa’s  energy  s,9";2$E%%

%The  shale  gas  opportunity  in  the  Karoo  could  significantly  boost  South  Africa’s  economy  and  create  hundreds  of  thousands  of  jobs.    This  is  according  to  an  economic  report  released  by  Econometrix,  the  country’s  largest  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“The   possible   economic   impact   of   shale   gas   development   in   the   Karoo   is   undeniable,”   says   Tony   Twine,  director  and  research  team  leader  at  Econometrix.    “Developments,  downstream  and  induced  demand  from  0'.!+,&21.!7.,.%$0.-!M>!7$4!8+,-4!%./%.4.,0+,7!2,6>!DL!$,-!*)L!28!0'.!454/.&0.-!%.4.%B.!&256-!7.,.%$0.!massive  contributions  to  the  country’s  GDP  and  create  many  hundreds  of  thousands  of  jobs.”!

!

!

Future Energy Report Final February 2012

Report commissioned by Shell

9

Figure 3. Attitudes towards efforts to determine the presence of natural gas in the Karoo

If natural gas was proven to be present in the Karoo, the same proportion of people overall (73%)

would be in favour of gas extraction. However, the proportion of those who are strongly in favour

increases (from 39% to 45%), while the proportion of those in opposition decreases to 21%, with a

greater percentage now uncertain as to how they feel about the issue (6%).

Figure 4. Attitudes towards gas extraction in the Karoo if the presence of large quantities of gas is uncovered

!"#$

!%#$

&!#$

&%#$

'()*+,-.$/01*2)$ '*34560($/01*2)$'*34560($788*94$ '()*+,-.$788*94$

!"#$%&'()*#+,-#.//'012*#3+-##

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Agenda

!! Company Overview

!! Cranemere Project

!! South Africa – context

!! Summary & Conclusions

23

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Challenger has a Bright Future

24

Company making base asset in Cranemere

1

Near term value catalyst 2

Enhanced organisational capability

3

Emerging strategy 4

"! Unique small cap access to a proven gas to surface shale

play in a global Top Ten basin "! EIA inferred GIP 32tcf, >7 tcf risked recoverable with

upside for Fort Brown shales "! Balance of play fairway under application by Shell, Falcon/

Chevron "! Permit award anticipated in coming months "! Advanced farm-in discussions

"! New management team – motivated via equity alignment "! Tight share register

"! Transform Challenger via value accretive organic and

inorganic opportunities

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Contact

25

Robert Willes – MD Challenger Energy Limited Mobile: +61 410 479 032 Email: robert.willes@challengerenergy.com.au Web: www.challengerenergy.com.au

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