Mr. Pat Carlson reports

SEVEN GENERATIONS PRODUCTION SURPASSES 100,000 BOE/D IN APRIL; RECORD QUARTERLY PRODUCTION OF 88,525 BOE/D IN Q1

Seven Generations Energy Ltd. delivered record production of 88,525 barrels of oil equivalent per day in the first quarter of 2016, up 82 per cent from the same period one year earlier. With the new Cutbank processing plant on stream, April production averaged more than 105,000 barrels of oil equivalent per day, putting the company on track to achieve 2016 production guidance of 100,000 to 110,000 boe/d.

First quarter funds from operations were about $111-million, up 27 per cent compared with the same period in 2015, despite benchmark commodity prices that were about 30 per cent lower. First quarter capital investment was $267-million, 27 per cent lower than during the first quarter of 2015. The company's 2016 capital investment program is weighted toward the early part of the year and is in line with the planned investment range of $900-million to $950-million.

Growth in 2016 ramping up with the addition of new processing capacity

"We are continuing to execute our growth as planned. We now have sufficient liquids-rich natural gas processing to meet our Alliance pipeline transportation volumes which increase to 500 million cubic feet per day by late 2018," said Marty Proctor, the company's president and chief operating officer.

"Near the end of the first quarter, we started up our second large natural gas processing plant -- Cutbank -- about a week ahead of schedule. The capital cost was about 25 per cent under budget, largely due to optimization and lessons learned from building the Lator 2 plant in 2015, plus favourable weather for construction. When Cutbank's 250 million cubic feet per day of new processing capacity is combined with our Lator complex, we have 510 million cubic feet per day of natural gas processing capacity. We have five drilling rigs in the field, two completion spreads and are increasing production as in-field facilities construction projects are complete."

Drilling faster and cheaper wells, with fewer rigs

"We are drilling wells faster and at a lower cost. We started the year with 10 rigs and plan to run five through the remainder of 2016, which we expect will be sufficient to achieve our planned production growth this year. Compared with the first quarter of 2015, our drilling days per well are down 25 per cent and per-well costs are down 31 per cent. Drilling costs averaged $4.3-million with the horizontal length averaging 2,694 metres in the first quarter of 2016," Mr. Proctor said.

"Our strategic focus on innovation and operational effectiveness in drilling, completions, construction, facilities installation and the development of our core resource under our Nest 2 lands put us right on track to profitably grow production. We now have a very large and sophisticated production network built, from our Montney resource to two receipt points on the transcontinental Alliance pipeline," said Pat Carlson, the company's chief executive officer.

Capturing stronger natural gas prices in the U.S. Midwest

Before December, 2015, the company's natural gas price was based on an Alberta price at AECO, which often trades at a significant discount to U.S. Midwest prices. With the company's natural gas now sold into the Chicago market via Alliance pipeline, where it receives a Chicago Citygate price, the company has been able to realize stronger prices than those available in Alberta.

"In 2014 we contracted a ramp-up of delivery to 500 million cubic feet per day, which is approximately 30 per cent of the capacity on Alliance pipeline, by the end of 2018. Anticipating a weak market in Alberta due to production from deferred liquefied natural gas projects, we contracted delivery of our liquids-rich natural gas all the way to Chicago, and have avoided the congestion and resulting depressed prices in the Alberta market. By reaching the U.S. Midwest region, our first quarter realized natural gas price was $3.24 per thousand cubic feet, up 24 per cent from a year ago. This higher price, which is partially offset by increased transportation costs to the Chicago area, reflects the stronger U.S. Midwest market. With the grossly oversupplied natural gas market in North America, access to the best markets remains among the toughest obstacles to profitable growth. Matching marketing opportunities with our resource capacity has been our focus for several years and we are seeing the benefits now. However, competition for markets is likely to remain a dominant force in North America's natural gas business and we are continuing to prioritize the search for superior market arrangements."

Strengthened financial standing

On Feb. 24, 2016, the company closed a private placement of 21,428,600 common shares at $14 per share, resulting in gross proceeds of $300-million that continued to strengthen the company's balance sheet. Seven Generations had $448-million of adjusted working capital at March 31, 2016. When the company's $813-million revolving credit facility is combined with adjusted working capital, the company has about $1.3-billion of available financing. The company expects to finance its 2016 capital program, between $900-million and $950-million, with cash on hand and funds from operations.

Highlights for the quarter ended March 31, 2016:

• Continued strong production growth averaged 88,525 boe/d, leading to an average in April of more than 105,000 boe/d. First quarter production consisting of 58 per cent liquids, with a liquids-to-gas ratio of approximately 227 barrels per million cubic feet of sales gas. Production increased 82 per cent from the first quarter of 2015 and was up 14 per cent from the fourth quarter of 2015.
• Funds from operations were about $111-million in the first quarter, up 27 per cent compared with the first quarter of 2015, despite a drop in benchmark oil and natural gas prices of about 30 per cent.
• Compared with the first quarter of 2015, the company increased production per share by 76 per cent and funds from operations per share by 24 per cent during the first quarter of 2016. The company's diluted share count increased by 13 per cent largely due to the $300-million equity financing in February.
• First quarter capital investment was $267-million, down 27 per cent compared with first quarter 2015 and consistent with planned 2016 capital investments of between $900-million and $950-million.
• Operating expenses were $3.85 per barrel, down 21 per cent from the first quarter of 2015 as the company captured economies of scale and improved operating efficiencies.
• Realized natural gas prices increased to $3.24 per thousand cubic feet, up 24 per cent compared with the first quarter of 2015.
• Seven Generations drilled 15 wells and completed 18 wells, taking the number of producing Montney wells to 117. At the end of the first quarter, approximately 72 wells were in various stages of construction between drilling and tie-in. This inventory of in-progress wells represents significant productive capacity that will be brought on stream throughout 2016.
• The Cutbank natural gas plant, built and commissioned to process 250 million cubic feet per day, came on-line about a week ahead of schedule and capital costs were about 25 per cent lower than budgeted.
• The company completed the 24-inch Cutbank sales pipeline, a 29-kilometre connection to deliver liquids-rich natural gas on the Alliance pipeline.
• At the Karr condensate stabilization facility, construction was nearly complete at the end of March on the 18,000-barrel tank farm with 10 truck-loading stations. Commissioning was completed in April.

                                                                           
        FIRST QUARTER 2016 FINANCIAL AND OPERATING RESULTS
           (In thousands, except per share and volumes)

                                        Three months ended March 31,
                                                   2016        2015
Production
Condensate (bbl/d)                               28,423      15,810
NGLs (bbl/d)                                     22,611      12,042
Natural gas (MMcf/d)                                225         125
                                                -------     -------
Total (boe/d)                                    88,525      48,768
Liquids ratio                                       58%         57%
                                                -------     -------
Realized prices
Condensate and oil ($/bbl)                        39.92       47.59
NGLs ($/bbl)                                       8.96       10.41
Natural gas ($/Mcf)                                3.24        2.62
                                                -------     -------
Total ($/boe)                                     23.34       24.73
                                                -------     -------
Operating netback ($/boe)
Liquids and natural gas revenues                 $23.34      $24.73
Royalties                                         (1.61)      (3.46)
Operating expenses                                (3.85)      (4.89)
Transportation expenses                           (4.95)      (2.95)
                                                -------     -------
Netback prior to hedging                          12.93       13.43
Realized hedging gain                              4.50       11.54
                                                -------     -------
Operating netback after hedging                   17.43       24.97
                                                -------     -------
General and administrative expenses per boe        0.99        1.51
                                                -------     -------
Liquids and natural gas revenue                 187,996     108,540
Funds from operations                           110,654      86,889
Per share -- diluted                               0.40        0.32
Operating income                                  9,310      23,998
Per share -- diluted                               0.03        0.09
Net income (loss)                               138,449     (82,698)
Per share -- diluted                               0.50       (0.34)
Total capital investments                       267,134     368,400
Available financing                           1,260,447   1,193,385
Net debt                                      1,013,427     505,234
Debt outstanding                              1,451,528   1,546,761

Operations

Drilling days reduced by 25 per cent and well costs trimmed 31 per cent

Seven Generations drilled 15 first quarter wells, on average, 25 per cent faster and at a 31-per-cent-lower cost than in the first quarter of 2015. Wells averaged 2,694 metres of horizontal length, 38.5 days to drill and had an average cost of $4.3-million. The company began the year running 10 drilling rigs targeting the Upper and Middle Montney formation in the company's Nest area and ended the first quarter operating five drilling rigs, with the expectation of staying on pace to meet 2016 production guidance.

Completions costs down 18 per cent

The company completed 18 wells in the first quarter of 2016, each with an average of 27 stages and an average of 4,770 tonnes of proppant, for an average cost of $5.6-million, down 18 per cent compared with one year earlier and 8 per cent less than the fourth quarter of 2015.

Innovation continues to show promise for increased resource recovery

"We are seeing encouraging results from the four slickwater well completions we pumped in the first quarter compared with our traditional nitrogen foam completions. We also increased proppant sand injections, pumping four first quarter wells with proppant densities greater than two tonnes per metre. Early results from these slickwater and higher density completions suggest improvement over the previous design. Combined, these initiatives are helping reduce costs and increase productivity."

                          DRILLING AND COMPLETIONS

Drilling                                                 Q1 2016     Q1 2015

Net Hz wells rig released(1)                                  15        22.5
Average measured depth (m)                                 5,936       5,901
Average horizontal length (m)                              2,694       2,717
Average drilling days per well                              38.5          51
Average drilling cost per lateral metre ($/m)             $1,597      $2,476
Average well cost ($M)                                       4.3         6.2

(1) During the drilling of Kakwa100/2-19-63-4 W6 on pad 8-25, the well was   
abandoned due to pipe stuck in the wellbore that could not be recovered. 
This well is not reported in the above list.   
                            
Completions                                              Q1 2016     Q1 2015

Net wells completed                                           18        16.5
Average number of stages per well                             27          30
Average tonnes pumped per well                             4,770       4,200
Average well cost ($M)                                      $5.6        $6.8

Superpads seven and eight now operating, ninth superpad under construction

During the first quarter, the company's seventh and eighth superpads were brought on production, and construction was progressing on schedule and budget for the company's ninth superpad, which is expected to be commissioned in the third quarter of 2016. With nine superpads and the addition of compression at two existing pad sites, the company's total field gathering and processing capacity will increase to 510 million cubic feet per day of natural gas and more than 100,000 barrels per day of field condensate. The newly designed megapads will see select superpads expanded from 50 million cubic feet per day to 100 million cubic feet per day with the inclusion of additional compression and dehydration capacity. At the end of the first quarter, The company had two satellite pads and six well tie-ins under construction and an inventory of approximately 72 wells at various stages of construction between drilling and tie-in.

Karr condensate loading stations built

At the Karr condensate stabilization facility, construction of an 18,000-barrel tank farm with 10 truck-loading stations was completed in April. Planned 2016 investments at Karr include a second 25,000 bbl/d stabilization train and a second sales condensate pipeline to increase shipments on the Pembina system.

Financial update

First quarter commodity prices continued to languish at long-term lows with benchmark oil and natural gas prices down about 30 per cent year over year. Despite weaker prices, first quarter funds from operations increased 27 per cent to about $111-million compared with the same period in 2015, largely due to increased production. First quarter operating netbacks were $17.43 per boe after hedging, down 30 per cent in the past year due to the approximate 30-per-cent drop in benchmark prices and the expiry of higher-priced hedges put in place before the commodity price fall. Higher production and continued efficiency gains lowered operating expenses on a per-boe basis helping to partially offset the realized price declines.

The company continues to maintain a position of financial strength. Combining the company's $813-million credit facility with adjusted working capital, which includes $287-million of net proceeds from the February equity raise, it has about $1.3-billion of available financing. Balance sheet strength and access to capital remain a top priority.

Managing market risk

Seven Generations employs financial hedges to partially protect funds from operations against commodity price volatility. The company's hedge targets include up to 65 per cent of forecasted production volumes (net of royalties) for the upcoming four quarters, up to 35 per cent of forecasted volumes for the next four quarters after that and up to 20 per cent for the four quarters beyond that period. Price targets are established at levels that are expected to provide a threshold rate of return on capital investment based on a combination of benchmark oil and natural gas prices, projected well performance, and capital efficiencies.

               COMMODITY PRICE HEDGE POSITION -- MARCH 31, 2016  

                                                         2016    2017    2018
Liquids hedging
WTI hedged (bbl/d)(i)                                  13,667   9,750   7,250
Average floor ($/bbl)                                  $70.05  $66.80  $60.80
Average ceiling ($/bbl)                                 80.35   77.64   72.93
                                                      ======= ======= =======
Natural gas hedging
Gas hedged (MMBtu/d)                                  123,333 105,000  47,500
Average Chicago Citygate swap ($US/MMBtu)               $3.19   $3.10   $2.80
Average swap ($/MMBtu)(ii)                               4.01    4.00    3.83
                                                      ======= ======= =======
Currency exchange hedging
$US notional hedged (M)                               $108.21 $118.82  $48.46
Average rate ($Cdn/$US)                                1.2562  1.2879  1.3690
                                                      ======= ======= =======

(i) Includes $40.00/bbl puts of sold puts on three-way collars for 2,000 
bbl/d in 2017 and 4,000 bbl/d in 2018.                              
(ii) Chicago Citygate natural gas price converted to $/MMbtu at average   
Cdn$/US$ hedge rate.

Outlook -- investing to fill infrastructure and drive toward cash flow self-sufficiency

Seven Generations continues to plan a 2016 capital investment program of $900-million to $950-million directed at drilling and completing wells to help achieve a self-financing state of producing free cash flow. Two thousand sixteen production is expected to average 100,000 to 110,000 boe/d, which, at the midpoint, would represent an approximately 75-per-cent increase over 2015 average production of 60,400 boe/d. In 2016, The company's liquids are expected to range between 55 and 60 per cent of total production.

"With our two new processing plants built and operating we are very well positioned to incrementally grow production towards our contracted firm transportation capacity on Alliance pipeline that averages approximately 350 million cubic feet per day in 2016 and steps up to 500 million cubic feet per day in late 2018. We also have contracted 107 million cubic feet per day of lean gas delivery to the TransCanada pipeline system starting in 2018," said Mr. Proctor.

Corporate

On April 21, 2016, the government of Alberta announced additional royalty details and technical formulas for its modernized royalty framework (MRF). Based on a detailed review of the program, the company believes that the MRF will allow for similar development economics for Nest 2 wells and it will incentivize experimentation to improve returns. For the company, rates of return on expected Montney drilling and development do not appear to have changed materially and are in line with the government's stated target of keeping internal rates of return neutral, compared with the existing royalty structure. In addition, the inclusion of total proppant pumped, plus measured and true vertical depth, in the new royalty equations provides the company a more suitable framework to remain competitive in the North American natural gas business, and provides the opportunity to increase both rates of return and royalties generated per well. This achieves the resource owners' objective of creating a win-win for the government and industry. Seven Generations Energy commends the Alberta government for producing a royalty framework that is expected to provide a stable platform for keeping Alberta's natural gas industry competitive and for attracting long-term investment.

Conference call

The company's management plans to hold a conference call to discuss results and address investor questions on Wednesday, May 4, 2016, at 8 a.m. MT (10 a.m. ET).

Participant dial-in numbers:

Operator-assisted toll-free number:  877-291-4570

Local or international number:  647-788-4919

Conference call ID:  87611761

Encore dial-in number:  800-585-8367 or 416-621-4642

Replay code:  31684275 followed by the pound key

Available:  May 4, 2016, to May 18, 2016

Event link:  available on-line

We seek Safe Harbor.