Mr. David Sealock reports

PETROTEQ ENERGY ANNOUNCES RESOURCE ACQUISITION

Petroteq Energy Inc. has entered into a definitive agreement for the acquisition of 50 per cent of the operating rights and interests relating to oil sands under U.S. federal oil and gas leases encompassing approximately 8,480 gross acres (4,240 net acres, less royalty) in the state of Utah. The lands included in the leases are located in P.R. Springs and the Tar Sands Triangle, two areas that have been designated as "special tar sands areas" by the U.S. Bureau of Land Management.

The details of the acquisition are disclosed herein. TMC Capital LLC, an indirect wholly owned operating subsidiary of the company, will acquire an undivided 50-per-cent interest in the operating rights (working interests) under a federal oil and gas lease located in P.R. Springs as well as five federal oil and gas leases located in the Tar Sands Triangle. Under this transaction, TMC will pay Momentum Asset Partners I LLC, a Nevada limited liability company, a total consideration of $10.8-million (U.S.), of which $1.8-million (U.S.) is payable in cash and $9-million (U.S.) is payable in shares, namely 15 million common shares of the company, at a deemed value of 60 U.S. cents per share, representing a premium of approximately 76 per cent from the last closing price of the common shares.

According to a report titled, "Evaluation of Contingent Resources," from Chapman Petroleum Engineering Ltd. dated Dec. 31, 2018, the 50-per-cent interests in the P.R. Springs leases to be acquired by TMC are estimated to contain gross contingent resources of 45 million barrels of minable oil/bitumen in place, with an arithmetic-average-after-risk estimate, determined on a net basis (discounted by risk and royalty), of 20.38 million barrels of minable oil/bitumen in place. Based on certain assumptions in the Chapman report concerning forecasted oil prices and a recovery factor, the minable resources that are attributable to the interests in the P.R. Spring lease to be acquired by TMC have: (i) an estimated after-risk cash flow value of $1.19-billion (U.S.) on an undiscounted basis; (ii) a cash flow value of $153.2-million (U.S.) on a 10-per-cent-per-year discounted basis; and (iii) a cash flow value of $86.2-million (U.S.) on a 15-per-cent-per-year discounted basis.

According to the Chapman report, the 50-per-cent interests in the Tar Sands Triangle leases to be acquired by TMC are estimated to contain gross contingent resources of 41.3 million barrels of in situ oil/bitumen in place, with an arithmetic-average-after-risk estimate, determined on a net basis (discounted by risk and royalty), of 20.7 million barrels of in situ oil/bitumen in place. No economic evaluation of the resources contained in the Tar Sands Triangle leases has been conducted.

The Chapman report was prepared in compliance with the COGE handbook and National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities.

"Petroteq's disciplined approach to asset acquisition prioritizes future financial strength, while creating alignment to the capabilities of our technology to enhance value by extracting surface oil sands heavy oil in an environmentally friendly, industry-leading process. The low cost of capital required to acquire these assets not only increases the quality of Petroteq's assets, but is intended to allow the company to leverage its technology and adjust capital spending to harvest these resource-rich areas," commented David Sealock, chief executive officer.

"In light of the current environment, as we continue to work on our 2019 production plan and if oil pricing maintains its stabilization, Petroteq anticipates layering in production growth that supports our strategy to initiate production and leverage cash flow from operations. Donald Clark, our chief geologist, is currently working on the resource development plan that will be issued this quarter," concluded Mr. Sealock.

This acquisition is part of the company's larger strategy of developing a long-term strategic capability to produce oil for decades. Strategically, it makes sense for the company to acquire assets now on a cost-effective basis, so that if valuations in the region rise, the company will already have a large resource base to monetize, without having to pay incrementally higher prices for land and mineral resources.

All securities issued pursuant to the above-noted transaction will be subject to a four-month hold period. The transaction is ultimately subject to the approval of the directors of the company and the TSX Venture Exchange.

About Petroteq Energy Inc.

Petroteq is a fully integrated oil and gas company that is focused on the development and implementation of a new proprietary technology for oil extraction. The company has an environmentally safe and sustainable technology for the extraction of heavy oils from oil sands, oil shale deposits and shallow oil deposits. Petroteq is engaged in the development and implementation of its patented environmentally friendly heavy oil processing and extraction technologies.

We seek Safe Harbor.