CHALLENGER ENERGY LIMITED ACN 123 591 382

NOTICE OF ANNUAL GENERAL MEETING

TIME: 10.00am (WST)

DATE: 10 November 2015

PLACE: The offices of HLB Mann Judd Level 4

130 Stirling Street

Perth WA 6000

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on +61 3 9614 0600.

C O NT E N TS

Business of the Meeting (setting out the proposed Resolutions) 3

Explanatory Statement (explaining the proposed Resolutions) 5

Glossary 13

Proxy Form

I MP O R TA N T I NFO R M A T I O N

Time and place of Meeting

Notice is given that the Meeting will be held at 10.00 am (WST) on 10 November 2015 at: The offices of HLB Mann Judd

Level 4

130 Stirling Street

Perth WA 6000

Your vote is important

The business of the Meeting affects your shareholding and your vote is important.

Voting eligibility

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 10.00am (WST) on 9 November 2015.

Voting in person

To vote in person, attend the Meeting at the time, date and place set out above.

Voting by proxy

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

• each Shareholder has a right to appoint a proxy;

  
  

• the proxy need not be a Shareholder of the Company; and

  
  

• a Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member's votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

  
  

  Shareholders and their proxies should be aware that changes to the Corporations Act made in 2011 mean that:

  
  

• if proxy holders vote, they must cast all directed proxies as directed; and

• any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

  
  

  Further details on these changes are set out below.

  
  

  Proxy vote if appointment specifies way to vote

  
  

  Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does:

  
  

• the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (ie as directed); and

  
  

• if the proxy has 2 or more appointments that specify different ways to vote on the resolution, the proxy must not vote on a show of hands; and

  
  

• if the proxy is the chair of the meeting at which the resolution is voted on, the proxy must vote on a poll, and must vote that way (ie as directed); and

  
  

• if the proxy is not the chair, the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (ie as directed).

  
  

  Transfer of non-chair proxy to chair in certain circumstances

  
  

  Section 250BC of the Corporations Act provides that, if:

  
  

• an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and

  
  

• the appointed proxy is not the chair of the meeting; and

  
  

• at the meeting, a poll is duly demanded on the resolution; and

  
  

• either of the following applies:

  
  

  • the proxy is not recorded as attending the meeting; or

    
    

  • the proxy does not vote on the resolution,

the chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.

B US I NE S S O F T HE M E E T I NG

AGENDA

1. FINANCIAL STATEMENTS AND REPORTS

   
   

   To receive and consider the annual financial report of the Company for the financial year ended 30 June 2015 together with the declaration of the directors, the director's report, the Remuneration Report and the auditor's report.

   
   

2. RESOLUTION 1 - ADOPTION OF REMUNERATION REPORT

   
   

   To consider and, if thought fit, to pass, with or without amendment, the following resolution as a non-binding resolution:

   
   

   'That, for the purposes of section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the Remuneration Report as contained in the Company's annual financial report for the financial year ended 30 June 2015.'

   
   

   Note: the vote on this Resolution is advisory only and does not bind the Directors or the Company.

   
   

   Voting Prohibition Statement:

   
   

   A vote on this Resolution must not be cast (in any capacity) by or on behalf of either of the following persons:

   
   

3. a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report; or

   
   

4. a Closely Related Party of such a member.

   
   

   However, a person (the voter) described above may cast a vote on this Resolution as a proxy if the vote is not cast on behalf of a person described above and either:

   
   

   the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on this Resolution; or

   
   

5. the voter is the Chair and the appointment of the Chair as proxy:

   
   

6. does not specify the way the proxy is to vote on this Resolution; and

   
   

   expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

   
   

7. RESOLUTION 2 - RE-ELECTION OF DIRECTOR - BILL BLOKING

   
   

   To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

   
   

   'That, for the purpose of clause 13.2 of the Constitution, ASX Listing Rule 14.4 and for all other purposes, Mr Bill Bloking, a Director, retires by rotation, and being eligible, is re-elected as a Director.'

   
   

8. RESOLUTION 3 - APPROVAL OF 10% PLACEMENT CAPACITY- SHARES




To consider and, if thought fit, to pass the following resolution as a special resolution:




'That, for the purposes of Listing Rule 7.1A and for all other purposes, approval is given for the issue of Equity Securities totalling up to 10% of the issued capital of the Company at the time of issue, calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Statement.'




Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the issue of Equity Securities under this Resolution and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed and any associates of those persons. However, the Company will not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, 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.







Dated: 17 September 2015 By order of the Board




Adrien Wing Company Secretary




E XP LA NA TO R Y S TA TE M E N T







This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions.




1. FINANCIAL STATEMENTS AND REPORTS

   
   

   In accordance with the Constitution, the business of the Meeting will include receipt and consideration of the annual financial report of the Company for the financial year ended 30 June 2015 together with the declaration of the directors, the directors' report, the Remuneration Report and the auditor's report.

   
   

   The Company will not provide a hard copy of the Company's annual financial report to Shareholders unless specifically requested to do so. The Company's annual financial report is available on its website at http://challengerenergy.com.au/.

   
   

2. RESOLUTION 1 - ADOPTION OF REMUNERATION REPORT

   
   

3. General

   
   

   The Corporations Act requires that at a listed company's annual general meeting, a resolution that the remuneration report be adopted must be put to the shareholders. However, such a resolution is advisory only and does not bind the company or the directors of the company.

   
   

   The remuneration report sets out the company's remuneration arrangements for the directors and senior management of the company. The remuneration report is part of the directors' report contained in the annual financial report of the company for a financial year.

   
   

   The chair of the meeting must allow a reasonable opportunity for its shareholders to ask questions about or make comments on the remuneration report at the annual general meeting.

   
   

4. Voting consequences

   
   

   Under changes to the Corporations Act which came into effect on 1 July 2011, a company is required to put to its shareholders a resolution proposing the calling of another meeting of shareholders to consider the appointment of directors of the company (Spill Resolution) if, at consecutive annual general meetings, at least 25% of the votes cast on a remuneration report resolution are voted against adoption of the remuneration report and at the first of those annual general meetings a Spill Resolution was not put to vote. If required, the Spill Resolution must be put to vote at the second of those annual general meetings.

   
   

   If more than 50% of votes cast are in favour of the Spill Resolution, the company must convene a shareholder meeting (Spill Meeting) within 90 days of the second annual general meeting.

   
   

   All of the directors of the company who were in office when the directors' report (as included in the company's annual financial report for the most recent financial year) was approved, other than the managing director of the company, will cease to hold office immediately before the end of the Spill Meeting but may stand for re-election at the Spill Meeting.

   
   

   Following the Spill Meeting those persons whose election or re-election as directors of the company is approved will be the directors of the company.

5. Previous voting results

   
   

   At the Company's previous annual general meeting the votes cast against the remuneration report considered at that annual general meeting were less than 25%. Accordingly, the Spill Resolution is not relevant for this Annual General Meeting.

   
   

6. Proxy voting restrictions

   
   

   Shareholders appointing a proxy for this Resolution should note the following:

   
   

   If you appoint a member of the Key Management Personnel (other than the Chair) whose remuneration details are included in the Remuneration Report, or a Closely Related Party of such a member as your proxy;

   
   

   You must direct your proxy how to vote on this Resolution. Undirected proxies granted to these persons will not be voted and will not be counted in calculating the required majority if a poll is called on this Resolution.

   
   

   If you appoint the Chair as your proxy (where he/she is also a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report, or a Closely Related Party of such a member).

   
   

   You do not need to direct your proxy how to vote on this Resolution. However, if you do not direct the Chair how to vote, you must mark the acknowledgement on the Proxy Form to expressly authorise the Chair to exercise his/her discretion in exercising your proxy even though this Resolution is connected directly or indirectly with the remuneration of Key Management Personnel.

   
   

   If you appoint any other person as your proxy;

   
   

   You do not need to direct your proxy how to vote on this Resolution, and you do not need to mark any further acknowledgement on the Proxy Form.

   
   

7. RESOLUTION 2 - RE-ELECTION OF DIRECTOR - BILL BLOKING

   
   

   ASX Listing Rule 14.4 provides that a director of an entity must not hold office (without re-election) past the third AGM following the director's appointment or 3 years, whichever is the longer.

   
   

   Clause 13.2 of the Constitution provides that:

   
   

8. at the Company's first annual general meeting after incorporation, all the Directors shall retire from office;

   
   

9. at the Company's annual general meeting in every year, one-third of the Directors for the time being, or, if their number is not a multiple of 3, then the number nearest one-third (rounded upwards in case of doubt), shall retire from office, provided always that no Director (except a Managing Director) shall hold office for a period in excess of 3 years, or until the third annual general meeting following his or her appointment, whichever is the longer, without submitting himself or herself for re-election;

   
   

10. The Directors to retire at an annual general meeting are those who have been longest in office since their last election, but, as between persons who became Directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by drawing lots;

11. A Director who retires by rotation under clause 13.2 of the Constitution is eligible for re-election; and

    
    

12. in determining the number of Directors to retire, no account is to be taken of a Director who only holds office until the next annual general meeting pursuant to clause 13.4 of the Constitution.

    
    

13. Mr Bill Bloking has more than 40 years of experience in the petroleum sector and has worked in the USA, Europe, South America, Australia and throughout Asia. Until his retirement from the corporate sector in 2007, Bill was President, Australia/Asia Gas for BHP Billiton Petroleum. Prior to joining BHP Billiton, he spent 24 years with ExxonMobil in a variety of technical and senior executive positions. Bill is currently the Non-Executive Chairman of Nido Petroleum Limited. Bill was formerly the Managing Director of Gunson Resources Limited and Eureka Energy Limited and Non-Executive Chairman of the National Offshore Petroleum Safety Authority Advisory Board, Norwest Energy NL, Cool Energy Limited, and Cullen Wines (Australia) Pty Ltd. He was also a Vice Chairman of the Australia China Business Council, a Governor of the American Chamber of Commerce in Australia, an Adjunct Professor at Murdoch University, and Non-Executive Director of the John Holland Group, Miclyn Express Offshore Limited, the Australian Petroleum Production and Exploration Association, the Victorian Energy Networks Corporation, the Lions Eye Institute and the West Australian Symphony Orchestra.




The Company currently has 3 Directors and accordingly 1 must retire.




Bill Bloking retired and was re-appointed in accordance with clause 13.4 of the Constitution at last year's 2014 Annual General Meeting. With Mr Fry also being re- elected at last year's 2014 Annual General Meeting, Mr Bloking retires by rotation and seeks re-election.




14. RESOLUTION 3 - APPROVAL OF 10% PLACEMENT CAPACITY- SHARES

    
    

15. General

    
    

    ASX Listing Rule 7.1A provides that an Eligible Entity may seek Shareholder approval at its annual general meeting to allow it to issue Equity Securities up to 10% of its issued capital (10% Placement Capacity).

    
    

    The Company is an Eligible Entity.

    
    

    If Shareholders approve Resolution 4, the number of Equity Securities the Eligible Entity may issue under the 10% Placement Capacity will be determined in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 (as set out in section 0 below).

    
    

    Resolution 4 is a special resolution. Accordingly, at least 75% of votes cast by Shareholders present and eligible to vote at the Meeting must be in favour of Resolution 4 for it to be passed.

16. ASX Listing Rule 7.1A

    
    

    ASX Listing Rule 7.1A came into effect on 1 August 2012 and enables an Eligible Entity to seek shareholder approval at its annual general meeting to issue Equity Securities in addition to those under the Eligible Entity's 15% annual placement capacity.

    
    

    An Eligible Entity is one that, as at the date of the relevant annual general meeting:

    
    

17. is not included in the S&P/ASX 300 Index; and

    
    

18. has a maximum market capitalisation (excluding restricted securities and securities quoted on a deferred settlement basis) of $300,000,000.

    
    

    The Company is an Eligible Entity as it is not included in the S&P/ASX 300 Index and has a market capitalisation of approximately $11 million as at the date of this Notice.

    
    

    Any Equity Securities issued must be in the same class as an existing class of quoted Equity Securities. The Company currently has 4 classes of Equity Securities on issue, being:

    
    

19. the Shares (ASX Code: CEL);

    
    

20. listed options (CELO);

    
    

21. unlisted performance rights (CELAI); and




(c) unlisted Options exercisable at 15 cents on or before 20 November 2016 (CELAA).




The exact number of Equity Securities that the Company may issue under an approval under Listing Rule 7.1A will be calculated according to the following formula:




(A x D) - E




Where:




A is the number of Shares on issue 12 months before the date of issue or agreement:




1. plus the number of Shares issued in the previous 12 months under an exception in ASX Listing Rule 7.2;

   
   

2. plus the number of partly paid shares that became fully paid in the previous 12 months;

   
   

3. plus the number of Shares issued in the previous 12 months with approval of holders of Shares under Listing Rules 7.1 and 7.4. This does not include an issue of fully paid ordinary shares under the entity's 15% placement capacity without shareholder approval; and

   
   

4. less the number of Shares cancelled in the previous 12 months.




1. is 10%.

2. is the number of Equity Securities issued or agreed to be issued under ASX Listing Rule 7.1A.2 in the 12 months before the date of issue or agreement to issue that are not issued with the approval of holders of Ordinary Securities under ASX Listing Rule 7.1 or 7.4.




22. Technical information required by ASX Listing Rule 7.1A

    
    

    Pursuant to and in accordance with ASX Listing Rule 7.3A, the information below is provided in relation to this Resolution 4:

    
    

23. Minimum Price

    
    

    The minimum price at which the Equity Securities may be issued is 75% of the volume weighted average price of Equity Securities in that class, calculated over the 15 ASX trading days on which trades in that class were recorded immediately before:

    
    

24. the date on which the price at which the Equity Securities are to be issued is agreed; or

    
    

25. if the Equity Securities are not issued within 5 ASX trading days of the date in section 4.3(a)(i), the date on which the Equity Securities are issued.

    
    

26. Date of Issue

    
    

    The Equity Securities may be issued under the 10% Placement Capacity commencing on the date of the Meeting and expiring on the first to occur of the following:

    
    

27. 12 months after the date of this Meeting; and

    
    

28. the date of approval by Shareholders of any transaction under ASX Listing Rules 11.1.2 (a significant change to the nature or scale of the Company's activities) or 11.2 (disposal of the Company's main undertaking) (after which date, an approval under Listing Rule 7.1A ceases to be valid),

    
    

    (10% Placement Capacity Period).

    
    

29. Risk of voting dilution

    
    

    Any issue of Equity Securities under the 10% Placement Capacity will dilute the interests of Shareholders who do not receive any Shares under the issue.

    
    

    If Resolution 3 is approved by Shareholders and the Company issues the maximum number of Equity Securities available under the 10% Placement Capacity, the economic and voting dilution of existing Shares would be as shown in the table below.

    
    

    The table below shows the dilution of existing Shareholders calculated in accordance with the formula outlined in ASX Listing Rule 7.1A(2), on the basis of the current market price of Shares and the current number of Equity Securities on issue as at the date of this Notice.

    
    

    The table also shows the voting dilution impact where the number of Shares on issue (Variable A in the formula) changes and the economic

    dilution where there are changes in the issue price of Shares issued under the 10% Placement Capacity.

    
    

    Number of Shares on Issue (Variable 'A' in ASX Listing Rule 7.1A2)	Dilution
    	Issue Price (per Share)	$0.016 50% decrease in Issue Price	$0.033 Issue Price	$0.066 100% increase in Issue Price
    352,025,933 (Current Variable A)	Shares issued - 10% voting dilution	35,202,593 Shares	35,202,593 Shares	35,202,593 Shares
    	Funds raised	$563,241	$1,161,685	$2,323,371
    528,038,899 (50% increase in Variable A)	Shares issued - 10% voting dilution	52,803,889 Shares	52,803,889 Shares	52,803,889 Shares
    	Funds raised	$844,862	$1,742,528	$3,485,056
    704,051,866 (100% increase in Variable A)	Shares issued - 10% voting dilution	70,405,186 Shares	70,405,186 Shares	70,405,186 Shares
    	Funds raised	$1,126,482	$2,323,371	$4,646,742

    
    

    *The number of Shares on issue (Variable A in the formula) could increase as a result of the issue of Shares that do not require Shareholder approval (such as under a pro- rata rights issue or scrip issued under a takeover offer) or that are issued with Shareholder approval under Listing Rule 7.1.

    
    

    The table above uses the following assumptions:

30. There are currently 352,025,933 existing Shares on issue as at the date of this Notice of Meeting;

31. The issue price set out above is the closing price of the Shares on the ASX on 8 September 2015.

32. The Company issues the maximum possible number of Equity Securities under the 10% Placement Capacity.

33. The Company has not issued any Equity Securities in the 12 months prior to the Meeting that were not issued under an exception in ASX Listing Rule 7.2 or with approval under ASX Listing Rule 7.1.

34. The issue of Equity Securities under the 10% Placement Capacity consists only of Shares. It is assumed that no Options are exercised into Shares before the date of issue of the Equity Securities.

35. The calculations above do not show the dilution that any one particular Shareholder will be subject to. All Shareholders should consider the dilution caused to their own shareholding depending on their specific circumstances.

36. This table does not set out any dilution pursuant to approvals under ASX Listing Rule 7.1.

37. The 10% voting dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%.

38. The table does not show an example of dilution that may be caused to a particular Shareholder by reason of placements under the 10% Placement Capacity, based on that Shareholder's holding at the date of the Meeting.

Shareholders should note that there is a risk that:




1. the market price for the Company's Shares may be significantly lower on the issue date than on the date of the Meeting; and

   
   

2. the Shares may be issued at a price that is at a discount to the market price for those Shares on the date of issue.




39. Purpose of Issue under 10% Placement Capacity

    
    

    The Company may issue Equity Securities under the 10% Placement Capacity for the following purposes:

    
    

40. as cash consideration in which case the Company intends to use funds raised for continued expenditure on the Company's current South African projects (including exploration, feasibility studies, development and ongoing project administration), the acquisition of new resources, assets and investments (including expense associated with such an acquisition) in the oil and gas sector and general working capital; or

    
    

41. as non-cash consideration for services provided in relation to the Company's current South African projects and the acquisition of new resources, assets and investments (including expense associated with such an acquisition) in the oil and gas sector, in such circumstances the Company will provide a valuation of the non-cash consideration as required by listing Rule 7.1A.3.

    
    

    The Company will comply with the disclosure obligations under Listing Rules 7.1A(4) and 3.10.5A upon issue of any Equity Securities.

    
    

42. Allocation policy under the 10% Placement Capacity

    
    

    The Company's allocation policy for the issue of Equity Securities under the 10% Placement Capacity will be dependent on the prevailing market conditions at the time of the proposed placement(s).

    
    

    The recipients of the Equity Securities to be issued under the 10% Placement Capacity have not yet been determined. However, the recipients of Equity Securities could consist of current Shareholders or new investors (or both), none of whom will be related parties of the Company.

    
    

    The Company will determine the recipients at the time of the issue under the 10% Placement Capacity, having regard to the following factors:

    
    

43. the purpose of the issue;

    
    

44. alternative methods for raising funds available to the Company at that time, including, but not limited to, an entitlement issue or other offer where existing Shareholders may participate;

    
    

45. the effect of the issue of the Equity Securities on the control of the Company;

    
    

46. the circumstances of the Company, including, but not limited to, the financial position and solvency of the Company;

    
    

47. prevailing market conditions; and