CHALLENGER GOLD LIMITED — AGM Information 2011

Oct 20, 2011

CHALLENGER ENERGY LIMITED

ACN 123 591 382

NOTICE OF 2011 ANNUAL GENERAL MEETING

Notice is given that the 2011 Annual General Meeting of Challenger Energy Limited ( “ the Company ” or " Challenger ") will be held at Rendezvous Hotel Melbourne in Rendezvous Room #8 on Wednesday 23[rd] November 2011 at 10.30am.

Further details in respect of each of the resolutions proposed in this Notice of Annual General Meeting are set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting. The details of the resolutions contained in the Explanatory Memorandum should be read together with, and form part of, this Notice of Annual General Meeting.

BUSINESS

2011 Annual Financial Statements

To lay before the Meeting and consider the 2011 Annual Financial Statements of the Company in respect of the year ended 30 June 2011 and comprising the Annual Financial Report, the Directors ’ Report and the Auditor ’ s Report.

Resolution 1: Non-binding resolution to adopt Remuneration Report

To consider and, if thought fit, to pass the following as a non-binding ordinary resolution:

"That the Company approve the adoption of the Remuneration Report, included in the Directors' Report, for the year ended 30 June 2011".

Voting Note:

Any undirected proxies held by the Chairman of the meeting, other directors or other key management personnel or any of their closely related parties will not be voted on this Resolution. Please refer to the Proxy and Voting Instructions on Page 3 of this Notice of Annual General Meeting. The Corporations Act provides votes must not be cast on this Resolution by directors or other key management personnel or any of their closely related parties themselves (whether directly or by appointing a proxy).

Resolution 2: Re-Election of Mr Michael Fry as a Director

To consider and, if thought fit, pass the following as an ordinary resolution:

"That Mr Michael Fry who retires by rotation in accordance with the Company's Constitution and, being eligible, offers himself for re-election, be re-elected as a Director of the Company."

Resolution 3: Election of Mr Michael Much as a Director

To consider and, if thought fit, pass the following as an ordinary resolution:

"That Mr Michael Much, a Director appointed to fill a casual vacancy and being eligible for election, be elected as a Director of the Company."

Resolution 4: Approval to Issue Options to Southern Cross LLC

To consider and, if thought fit, pass the following as an ordinary resolution:

"That for the purposes of ASX Listing Rule 10.11, shareholders approve the issue of:

• (a) 2,000,000 options each to acquire one fully paid ordinary share in the Company with an exercise price calculated as 125% of the Company's closing share price on the trading day before the meeting and expiring on 20 November 2014; and

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• (b) 2,000,000 options each to acquire one fully paid ordinary share in the Company with an exercise price calculated as 150% of the Company's closing share price on the trading day before the meeting and expiring on 20 November 2014,

to Southern Cross LLC (or its nominee/s), a director related entity of Mr Michal Much, as described in the Explanatory Memorandum which accompanied and formed part of this Notice of Annual General Meeting."

Voting Exclusion Statement:

The Company will disregard any votes cast on Resolution 4 by Mr Michael Much or any of his associates, however, the Company need not disregard a vote on Resolution 4 if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form;

• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 5: Approval to Issue Options to Director - Mr Paul Bilston

To consider and, if thought fit, pass the following as an ordinary resolution:

• "That for the purposes of ASX Listing Rule 10.11, shareholders approve the issue of:

• (a) 7,500,000 options each to acquire one fully paid ordinary share in the Company and each having an exercise price of a 125% premium to 5 day VWAP up to and including the trading day before the meeting and an expiry date being three years from the date of issue; and

• (b) 7,500,000 options each to acquire one fully paid ordinary share in the Company and each having an exercise price of a 150% premium to 5 day VWAP up to and including the trading day before the meeting and an expiry date being five years from the date of issue,

to Mr Paul Bilston (or his nominee/s), a director of the Company, as described in the Explanatory Memorandum which accompanied and formed part of this Notice of Annual General Meeting."

Voting Exclusion Statement:

The Company will disregard any votes cast on Resolution 5 by Mr Paul Bilston or any of his associates, however, the Company need not disregard a vote on Resolution 5 if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form;

• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

OTHER BUSINESS

To consider any other business that may be brought before the Meeting in accordance with the Constitution of the Company and the Corporations Act.

Dated: 20 October 2011

By the order of the Board

Mr Adrien Wing Secretary

The accompanying Explanatory Memorandum and the Proxy and Voting Instructions form part of this Notice of Meeting.

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PROXY AND VOTING INSTRUCTIONS

Proxy Instructions

A member who is entitled to vote at a meeting may appoint:

• (a) one proxy if the member is only entitled to one vote; and

• (b) one or two proxies if the member is entitled to more than one vote.

Where more than one proxy is appointed each proxy may be appointed to represent a specific proportion of the member ’ s voting rights. If the appointment does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes in which case any fraction of votes will be disregarded.

The proxy form (and the power of attorney or other authority, if any, under which the proxy form is signed) or a copy or facsimile which appears on its face to be an authentic copy of the proxy form (and the power of attorney or other authority) must be lodged at the registered office of the Company or sent by facsimile transmission to the Company's registered office on (03) 9614 0550 not less than 48 hours before the time for holding the Meeting, or adjourned meeting as the case may be, at which the individual named in the proxy form proposes to vote.

The proxy form must be signed by the member or his/her attorney duly authorised in writing or, if the member is a corporation, in a manner permitted by the Corporations Act. A proxy given by a foreign corporation must be executed in accordance with the laws of that corporation ’ s place of incorporation.

The proxy may, but need not, be a member of the Company.

If you sign the proxy form and do not appoint a proxy, you will have appointed the Chairman of the meeting as your proxy. In that case, your shares will not be voted on Resolution 1 (Remuneration Report) unless you direct the Chairman of the meeting as your proxy how to vote by marking the appropriate box on the proxy form.

A proxy form is attached to this Notice.

How the Chairman will vote undirected proxies

The Chairman of the meeting will vote undirected proxies on, and in favour of, all of the proposed resolutions, except for Resolution 1 (Remuneration Report). Any undirected proxies held by the Chairman of the meeting will not be voted on Resolution 1.

Proxies that are undirected on Resolution 1 (Remuneration Report)

If you appoint the Chairman of the meeting as your proxy (or if he maybe appointed by default) and do not direct him how to vote on Resolution 1 ( “ Remuneration Report ” ), he will not vote your proxy on that item of business. Accordingly, if you appoint the Chairman of the meeting as your proxy (or if he may be appointed by default), you should direct him how to vote on Resolution 1 (Remuneration Report) if you want your shares to be voted on that item of business.

The same will apply if you appoint any other director of the Company, any other of its key management personnel or any of their closely related parties. Key management personnel of the Company comprise the directors of the Company and those other persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. The Remuneration Report identifies key management personnel for the year ending 30 June 2011. Their closely related parties are defined in the Corporations Act 2001 (Cth) and include specified family members, dependants and companies they control.

Corporate Representatives

Any corporation which is a member of the Company may appoint a proxy, as set out above, or authorise (by certificate under common seal or other form of execution authorised by the laws of that corporation ’ s place of incorporation, or in any other manner satisfactory to the chairperson of the Meeting) a natural person to act as its representative at any general meeting. Corporate representatives are requested to bring appropriate evidence of appointment as a representative in accordance with the constitution of the Company. Attorneys are requested to bring the original or a certified copy of the power of attorney pursuant to which they were appointed. Proof of identity will also be required for corporate representatives and attorneys.

Voting Entitlement

For the purposes of the Corporations Act and Corporations Regulations shareholders entered on the Company ’ s Register of Members as at 21 November 2011 at 10.30am (Melbourne, Victoria time) are entitled to attend and vote at the meeting.

On a poll, members have one vote for every fully paid ordinary share held. Holders of options are not entitled to vote.

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CHALLENGER ENERGY LIMITED

ACN 123 591 382

(" the Company ")

2011 ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

PURPOSE OF INFORMATION

This Explanatory Memorandum ("this Memorandum ") accompanies and forms part of the Company ’ s Notice of the 2011 Annual General Meeting (" AGM ") to be held at Rendezvous Hotel Melbourne in Rendezvous Room #8 on Wednesday 23[rd] November 2011 at 10.30am. The Notice of the 2011 Annual General Meeting incorporates, and should be read together with, this Memorandum.

BUSINESS

2011 Annual Financial Statements

The 2011 Annual Financial Statements, comprising the Financial Report, Directors' Report and Auditor's Report for the year ended 30 June 2011 will be laid before the meeting. Shareholders will have the opportunity to ask questions about or make comments on the 2011 Annual Financial Statements and the management of the Company. A representative of the auditor will be invited to attend to answer questions about the audit of the Company ’ s 2011 Annual Financial Statements.

The Company ’ s 2011 Annual Financial Statements are set out in the Company ’ s 2011 Annual Report which can be obtained from the Company ’ s website, www.challengerenergy.com.au, or upon request to the Secretary at the Company ’ s registered office, Level 17, 500 Collins Street, Melbourne, Victoria, 3000 (telephone (03) 9614 0600).

There is no requirement for these reports to be formally approved by shareholders. No resolution is required to be moved in respect of this item of business.

Resolution 1: Non-binding Resolution - Remuneration Report

The Company is required, pursuant to the Corporations Act 2001, to propose a non-binding resolution regarding the Remuneration Report, which forms part of the Directors' Report in the Annual Financial Statements. The vote is advisory only and does not bind the Directors or the Company.

Shareholders attending the 2011 Annual General Meeting of the Company will have an opportunity to discuss and put questions in respect of the Remuneration Report.

The resolution is advisory only and does not bind the Company or its directors. The Board will consider the outcome of the vote and comments made by shareholders on the Remuneration Report at the meeting when reviewing the Company's remuneration policies. Under the Corporations Act, if 25% or more of votes that are cast are voted against the adoption of the Remuneration Report at two consecutive AGMs (treating this AGM as the first such meeting), shareholders will be required to vote at the second of those AGM's on a resolution (a "spill resolution") that another meeting be held within 90 days at which all of the Company's directors (other than the Managing Director and CEO) must be put up for re-election. The outcome of the vote on the Remuneration Report contained in the Company's 2010 Annual Financial Statements is not considered and thus a spill resolution will not be required in the event that 25% or more of votes that are cast at the 2011 Annual General Meeting are against the adoption of the 2011 Remuneration Report.

Any undirected proxies held by the Chairman of the meeting, other directors or other key management personnel or any of their closely related parties will not be voted on this Resolution.

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'Closely related parties' are defined by the Corporations Act 2001 (Cth), and include specified family members, dependants and companies they control.

If you chose to appoint a proxy, you are encouraged to direct your proxy how to vote on this Resolution by marking either "For", "Against" or "Abstain" on the proxy form for this Resolution. If the Chairman of the meeting is appointed as your proxy by default and you do not direct your proxy how to vote on this Resolution, the Chairman will not vote your proxy on this Resolution and your votes will not be counted.

Resolution 2: Re-Election of Mr Michael Fry as a Director

Resolution 2 is a resolution for the re-election of Mr Michael Fry as a Director of the Company.

Pursuant to the Constitution of the Company, one-third of the Directors or, if their number is not a multiple of three, the number nearest to one-third, not exceeding one third, are required to retire by rotation at each Annual General Meeting. The Company has three directors, one of whom is the Managing Director. Accordingly, one director is required to retire by rotation at the 2011 Annual General Meeting.

Mr Fry retires by rotation and, being eligible, offers himself for re-election.

Resolution 3: Election of Mr Michael Much as a Director

Resolution 3 is a resolution for the election of Mr Michael Much as a Director of the Company. Mr Much was appointed a Director of the Company to fill a casual vacancy on 19 October 2011.

In accordance with the Company ’ s Constitution, any Director appointed to fill a casual vacancy must retire from office, and will be re-eligible for re-election, at the next Annual General Meeting following their appointment, but that Director will not be taken into account when determining the number of Directors who are to retire by rotation at each Annual General Meeting.

Mr Much, being eligible, offers himself for re-election.

Resolution 4: Approval to Issue Options to Southern Cross LLC

On or about 19 October 2011, the Company entered into a Consultancy Agreement with Southern Cross LLC ("Consultant"), a director related entity of Mr Michael Much. Pursuant to the terms of the Consultancy Agreement, the Company agreed to issue Southern Cross LLC (or its nominee/s) 2,000,000 Director A Options and 2,000,000 Director B Options as an incentive to the Consultant to provide ongoing service and commitment to the Company. The Director A Options and the Director B Options have different terms as detailed below.

Resolution 4 seeks shareholder approval pursuant to ASX Listing Rule 10.11 for the issue of 2,000,000 Director A Options and 2,000,000 Director B Options to the Consultant.

The full terms of the Director A Options are set out in Annexure A. The full terms of the Director B Options are set out in Annexure B.

ASX Listing Rule 7.1 requires the prior approval of shareholders in general meeting to issue securities if the number of those securities exceeds 15% of the number of the same class of securities at the commencement of the relevant 12 month period. If approval is given under ASX Listing Rule 10.11, approval is not required under ASX Listing Rule 7.1. Therefore, by obtaining shareholder approval sought through Resolution 4, the Company retains the ability to issue further shares or options of up to 15% of its ordinary shares under Chapter 7 of the ASX Listing Rules to take advantage of opportunities to obtain further funds if required and available in the future.

ASX Listing Rule 10.13 requires that the meeting documents concerning a proposed resolution to approve an issue of securities in accordance with ASX Listing Rule 10.11 must include the following

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information:

• (a) The options the subject of Resolution 4 are to be issued to Southern Cross LLC (or its nominee/s), a director related entity of Mr Michael Much.

• (b) The maximum number of options to be issued under Resolution 4 is 4,000,000.

• (c) The Company will issue the options the subject of Resolution 4 on the date of the meeting.

• (d) Mr Much is a Director of the Company.

• (e) The options the subject of Resolution 4(a) have a nil issue price and are issued on the terms set out in Annexure A. The options have an exercise price of 125% of the Company's closing share price on the trading day before the meeting and expire on 20 November 2014. The options the subject of Resolution 4(b) have a nil issue price and are issued on the terms set out in Annexure B. The options have an exercise price of 150% of the Company's closing share price on the trading day before the meeting and expire on 20 November 2014

• (f) A voting exclusion statement is contained in the Notice of Meeting.

• (g) No funds will be raised through the issue of the options the subject of Resolution 4. Funds raised on the exercise of the options will be applied to the working capital requirements of the Company at the time of exercise.

Resolution 5: Approval to Issue Options to Director - Mr Paul Bilston

Resolution 5 is proposed to obtain shareholder approval under ASX Listing Rule 10.11 for the issue of a total of 15,000,000 options to Mr Paul Bilston (or his nominee/s), a director of the Company. The options are to be issued to Mr Bilston as part of his remuneration for services provided to the Company and for incentive purposes. The table below sets out the number of shares and options held by Mr Bilston, directly and through his associate entities, as at the date of this Notice of Meeting.

Existing Shares Existing Options Total 4,483,975 6,440,134

It is proposed to issue Mr Bilston the options in two tranches. Mr Bilston will be issued 7,500,000 first tranche options each to acquire one fully paid ordinary share in the Company and each having an exercise price of a 125% premium to 5 day VWAP up to and including the trading day before the meeting and expiring three years from the date of issue as described below ("First Tranche Options"). Mr Bilston will be issued a further 7,500,000 second tranche options each to acquire one fully paid ordinary share in the Company and each having an exercise price of a 150% premium to 5 day VWAP up to and including the trading day before the meeting and expiring five years from the date of issue ("Second Tranche Options") Both the First Tranche Options and the Second Tranche Options will be issued on the same date.

The full terms of the First Tranche Options are set out in Annexure C. The full terms of the Second Tranche Options are set out in Annexure D.

ASX Listing Rule 7.1 requires the prior approval of shareholders in general meeting to issue securities if the number of those securities exceeds 15% of the number of the same class of securities at the commencement of the relevant 12 month period. If approval is given under ASX Listing Rule 10.11, approval is not required under ASX Listing Rule 7.1. Therefore, by obtaining shareholder approval sought through Resolution 5, the Company retains the ability to issue further shares or options of up to 15% of its ordinary shares under Chapter 7 of the ASX Listing Rules to take advantage of

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opportunities to obtain further funds if required and available in the future.

ASX Listing Rule 10.13 requires that the meeting documents concerning a proposed resolution to approve an issue of securities in accordance with ASX Listing Rule 10.11 must include the following information:

• (h) The options the subject of Resolution 5 are to be issued to Mr Paul Bilston (or his nominee/s).

• (i) The maximum number of options to be issued under Resolution 5 is 15,000,000.

• (j) The Company will issue the options the subject to Resolution 5 on the day of the meeting.

• (k) Mr Bilston is a Director of the Company.

• (l) The options the subject of Resolution 5(a) have a nil issue price and are issued on the terms set out in Annexure C. The options are exercisable at a 125% premium to 5 day VWAP up to and including the trading day before the meeting and will expire three years from the date of issue. The options the subject of Resolution 5(b) have a nil issue price and are issued on the terms set out in Annexure D. The options are exercisable at a 150% premium to 5 day VWAP up to and including trading the day before the meeting and will expire five years from the date of issue

• (m) A voting exclusion statement is contained in the Notice of Meeting.

• (n) No funds will be raised through the issue of the options the subject of Resolution 5. Funds raised on the exercise of the options will be applied to the working capital requirements of the Company at the time of exercise.

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Annexure A Terms of Director A Options Resolution 4(a)

The Director A Options entitle the holder to subscribe for Shares on the following terms and conditions:

• (a) Each Director A Option gives the Optionholder the right to subscribe for one Share. To obtain the right given by each Director A Option, the Optionholder must exercise the Director A Options in accordance with the terms and conditions of the Director A Options.

• (b) Subject to paragraph (c), the Director A Options are exercisable on or before 5:00 pm (WST) on 20 November 2014 ( Expiry Date ), provided that the Company has booked certified 2P reserves of 75 PJ (or BOE equivalent) before this date. Any Director A Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

• (c) In the event the Optionholder ’ s consultancy agreement with the Company is terminated within 2 years of the date of such agreement, those Director A Options which have not become exercisable in accordance with these terms shall automatically lapse.

• (d) The amount payable upon exercise of each Director A Option will be 125% of the closing share price on the trading day before the date of the general meeting at which shareholder approval to issue the Director A Options is received ( Exercise Price ).

• (e) The Director A Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• (f) An Optionholder may exercise their Director A Options by lodging with the Company, before the Expiry Date:

• (A) a written notice of exercise of Director A Options specifying the number of Director A Options being exercised; and

• (B) a cheque or electronic funds transfer for the Exercise Price for the number of Director A Options being exercised, ( Exercise Notice ).

• (g) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

• (h) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Director A Options specified in the Exercise Notice.

• (i) The Director A Options are not transferable.

• (j) All Shares allotted upon the exercise of Director A Options will upon allotment rank pari passu in all respects with other Shares.

• (k) The Company will not apply for quotation of the Director A Options on ASX. However, the Company will apply for quotation of all Shares allotted pursuant to the exercise of Director A Options on ASX within 10 Business Days after the date of allotment of those Shares.

• (l) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

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• (m) There are no participating rights or entitlements inherent in the Director A Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Director A Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 Business Days after the issue is announced. This will give Optionholders the opportunity to exercise their Director A Options prior to the date for determining entitlements to participate in any such issue.

• (n) A Director A Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Director A Option can be exercised.

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Annexure B Terms of Director B Options Resolution 4(b)

The Director B Options entitle the holder to subscribe for Shares on the following terms and conditions:

• (a) Each Director B Option gives the Optionholder the right to subscribe for one Share. To obtain the right given by each Director B Option, the Optionholder must exercise the Director B Options in accordance with the terms and conditions of the Director B Options.

• (b) Subject to paragraph (c), the Director B Options are exercisable on or before 5:00 pm (WST) on 20 November 2016 ( Expiry Date ) provided that the Company has booked certified 2P reserves of 150 PJ (or BOE equivalent) before this date. Any Director B Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

• (c) In the event the Optionholder ’ s consultancy agreement with the Company is terminated within 2 years of the date of such agreement, those Director B Options which have not become exercisable in accordance with these terms shall automatically lapse.

• (o) The amount payable upon exercise of each Director B Option will be 150% of the closing share price on the trading day before the date of the general meeting at which shareholder approval to issue the Director B Options is received ( Exercise Price ).

• (d) The Director B Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• (e) An Optionholder may exercise their Director B Options by lodging with the Company, before the Expiry Date:

• (A) a written notice of exercise of Director B Options specifying the number of Director B Options being exercised; and

• (B) a cheque or electronic funds transfer for the Exercise Price for the number of Director B Options being exercised, ( Exercise Notice ).

• (f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

• (g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Director B Options specified in the Exercise Notice.

• (h) The Director B Options are not transferable.

• (i) All Shares allotted upon the exercise of Director B Options will upon allotment rank pari passu in all respects with other Shares.

• (j) The Company will not apply for quotation of the Director B Options on ASX. However, the Company will apply for quotation of all Shares allotted pursuant to the exercise of Director B Options on ASX within 10 Business Days after the date of allotment of those Shares.

• (k) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

• (l) There are no participating rights or entitlements inherent in the Director B Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Director B Options. However, the Company will

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ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 Business Days after the issue is announced. This will give Optionholders the opportunity to exercise their Director B Options prior to the date for determining entitlements to participate in any such issue.

• (m) A Director B Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Director B Option can be exercised.

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Annexure C Terms of Options to be issued to Mr Paul Bilston Resolution 5(a)

Rights attaching to the Options to Mt Paul Bilston are as follows:

• (a) Each Option entitles the holder to acquire one ordinary fully paid ordinary share in the capital of the Company.

• (b) The Options are exercisable at any time for three (3) years from the date of issue ("Exercise Period") by completing the Option exercise form and delivering it together with the payment for the number of shares in respect of which the Options are exercised to the registered office of the Company. Any Option that is not exercised during the Exercise Period automatically lapses.

• (c) The exercise price of the Options is a 125% premium to 5 day VWAP up to and including the trading day before the date of the general meeting at which shareholder approval to issue the Options is received, payable in full on exercise.

• (d) Subject to the Corporations Act, the ASX Listing Rules, and the Constitution of the Company, Options are freely transferable. All shares issued upon exercise of Options will rank pari passu in all respects with, and will have the same terms as, the Company's then issued ordinary fully paid shares. The Company will apply for official quotation by ASX of all shares issued upon exercise of Options, subject to any restriction obligations imposed by ASX.

• (e) The Options will not give any right to participate in dividends until shares are issued pursuant to the exercise of the relevant Options.

• (f) There are no participation rights or entitlements inherent in the Options. Option holders are not entitled to participate in new issues of securities offered to shareholders without first exercising the Options. Subject to any waiver granted by ASX, the Company will send notices to Option holders at least five business days prior to the record date applying to offers of securities made to shareholders during the currency of the Options.

• (g) In the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company prior to the expiry of the Exercise Period, the number of Options or the exercise price of the Options or both shall be reconstructed in accordance with the ASX Listing Rules applying to a reorganisation of capital at the time of the reconstruction.

• (h) Shares issued upon the exercise of Options will be fully paid ordinary shares and will have the same voting and other rights as the existing shares of the Company.

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Annexure D Terms of Options to be issued to Mr Paul Bilston Resolution 5(b)

Rights attaching to the Options to Mt Paul Bilston are as follows:

• (i) Each Option entitles the holder to acquire one ordinary fully paid ordinary share in the capital of the Company.

• (j) The Options are exercisable at any time for five (5) years from the date of issue ("Exercise Period") by completing the Option exercise form and delivering it together with the payment for the number of shares in respect of which the Options are exercised to the registered office of the Company. Any Option that is not exercised during the Exercise Period automatically lapses.

• (k) The exercise price of the Options is a 150% premium to 5 day VWAP up to and including the trading day before the date of the general meeting at which shareholder approval to issue the Options is received, payable in full on exercise.

• (l) Subject to the Corporations Act, the ASX Listing Rules, and the Constitution of the Company, Options are freely transferable. All shares issued upon exercise of Options will rank pari passu in all respects with, and will have the same terms as, the Company's then issued ordinary fully paid shares. The Company will apply for official quotation by ASX of all shares issued upon exercise of Options, subject to any restriction obligations imposed by ASX.

• (m) The Options will not give any right to participate in dividends until shares are issued pursuant to the exercise of the relevant Options.

• (n) There are no participation rights or entitlements inherent in the Options. Option holders are not entitled to participate in new issues of securities offered to shareholders without first exercising the Options. Subject to any waiver granted by ASX, the Company will send notices to Option holders at least five business days prior to the record date applying to offers of securities made to shareholders during the currency of the Options.

• (o) In the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company prior to the expiry of the Exercise Period, the number of Options or the exercise price of the Options or both shall be reconstructed in accordance with the ASX Listing Rules applying to a reorganisation of capital at the time of the reconstruction.

• (p) Shares issued upon the exercise of Options will be fully paid ordinary shares and will have the same voting and other rights as the existing shares of the Company.

CHALLENGER ENERGY LIMITED

ACN 123 591 382

(" the Company ")

If you do not wish to direct your proxy how to vote, please place a mark in the box

PROXY FORM

==> picture [55 x 38] intentionally omitted <==

I/We ________ of __________ being a member(s) of Challenger Energy Limited

By marking this box you acknowledge that the Chairman may exercise your proxy (other than on Resolution 1) even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest.[1] The Chairman intends voting undirected proxies in favour of the resolutions on which he is permitted to vote. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

and entitled to ________ shares appoint:

Name of Proxy:	__________
Address of Proxy:	__________

or in his/her absence, the Chairman of the meeting as my/our proxy to vote on my/our behalf at the 2011 Annual General Meeting of the Company to be held at Rendezvous Hotel Melbourne in Rendezvous Room #8 on Wednesday 23[rd] November 2011 at 10.30am and at any adjournment of that meeting.

1. Note: If you appoint a proxy, the Company encourages you to direct your proxy how to vote on each item of business. The Chairman of the meeting, Directors and other Key Management Personnel of the Company and their closely related parties (see the Notice of Meeting) will not cast any votes in respect of Resolution 1 (Adoption of Remuneration Report) that arise from any undirected proxy that they hold.

If two proxies are appointed, complete the following sentence:

This proxy is authorised to exercise ……………… .. votes/ ……… .. % of my/our total voting rights.

Proxy Instructions

To instruct your proxy how to vote, insert ‘X’ in the appropriate column against each resolution set out below. If you do not instruct your proxy how to vote on a resolution, your proxy may vote as he/she thinks fit or abstain from voting.

I/We direct my/our proxy to vote as indicated below: Resolution 1. Adoption of Remuneration Report Resolution 2. Re-Election of Director–Mr Michael Fry Resolution 3 Election of Director–Mr Michael Much Resolution 4 Issue of options to Southern Cross LLC Resolution 5 Issue of options to Director - Mr Paul Bilston		For	Against	Abstain
If a person: ____ (Signature) ____ Name (print) Date: _//__	If a company: EXECUTED by: in accordance with the Corporations Act ___ (Signature) Date: __/_/___		___ Name of company (print) __ (Signature)

This proxy and any power of attorney or other authority under which it is signed (or a certified copy) must be lodged at:

(a) Level 17, 500 Collins Street, Melbourne, Victoria, 3000; or

(b) by facsimile on (03) 9614 0550 by 10.30am on 21 November 2011, being not less than 48 hours before the time for holding the meeting or adjourned meeting as the case may be.