Mr. Walter Vrataric reports

CHINOOK ENERGY INC. PROVIDES OPERATIONAL AND CORPORATE UPDATE

Chinook Energy Inc. is pleased to provide the following operational and corporate update.

Operational update

On Dec. 22, 2017, Chinook commissioned the on-time expansion of its compressor station at Birley/Umbach from 25 million cubic feet per day to 50 mmcf/d. Total costs for this facility expansion were $13.8-million ($11.1-million net). With the completion of this expansion, the company now has the capacity to produce all of its 13 (11.23 net) Birley/Umbach wells. However, due to the extreme cold weather in December and the outages on the Enbridge Oak 16-inch gathering line, Chinook currently only has three (2.5 net) Birley wells on production. As a result of this volatility, Chinook had 2017 exit production volumes of 3,572 barrels of oil equivalent per day as calculated from Dec. 31, 2017, to Jan. 10, 2018, with peak production of 5,170 boe/d on Dec. 24, 2017. Enbridge is currently indicating a return to service of late February or early March at which time Chinook may flow its complete well inventories from its Birley/Umbach properties. The company has further been impacted by the high price volatility at Westcoast station 2 where the majority of its production is sold and continues to pursue transportation alternatives with more favourable pricing.

Private placement

On Dec. 11, 2017, Chinook completed a private placement of 6.45 million flow-through common shares at 31 cents per share for total consideration of $2.0-million. Proceeds from this private placement will be used to finance the two-well drilling program discussed further below.

Natural gas hedges

Chinook has entered into hedges to fix the Chicago City Gate Index price of natural gas on 6,000 million British thermal units of natural gas production at an average of $2.68 (U.S.) per mmbtu (approximately $3.85 (Canadian)/thousand cubic feet) from February, 2018, to March, 2019.

2018 outlook

Due to the continued volatility in spot and future natural gas prices, specifically at Westcoast station 2, Chinook has determined that it is prudent to defer providing 2018 guidance until commodity prices stabilize. Chinook's board of directors has approved a $3.4-million capital program for the first half of 2018, financed predominantly by the aforementioned private placement. This capital program for the first half of 2018 will include the drilling of two (2.0 net) vertical wells in the Birley/Umbach area as well as other minor expenditures. The drilling of the two vertical wells will help delineate 17 undrilled contiguous sections of 100-per-cent-owned Montney rights (located three kilometres north of Chinook's main Montney landblock and eight kilometres from the nearest well drilled into the Montney) by evaluating the pay thickness and reservoir quality throughout the entire 235-metre-thick Montney zone. Chinook's objectives for 2018 are to pro-actively manage its capital program to maintain optionality from its Montney asset base while preserving balance sheet strength and flexibility.

About Chinook Energy Inc.

Chinook is a Calgary-based public oil and natural gas exploration and development company which is focused on realizing per share growth from its large contiguous Montney liquids-rich natural gas position at Birley/Umbach, in British Columbia.

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