Mr. Patrick Oliver reports

BONTERRA ENERGY CORP. ANNOUNCES FIRST QUARTER 2023 RESULTS

Bonterra Energy Corp. has released its operating and financial results for the three-month period ended March 31, 2022. The related unaudited condensed financial statements and notes, as well as management's discussion and analysis, are available on SEDAR and on Bonterra Energy's website.

Financial and operating highlights:

• Production in first quarter 2023 averaged 13,464 barrels of oil equivalent per day, 4 per cent higher than fourth quarter 2022, driven by an active, front-loaded capital program, along with the reactivation of wells that had been shut in during the previous quarter.
• Record production levels were realized subsequent to quarter-end, with field estimate production volumes averaging 15,400 boe per day during the month of April, stemming from the success of the company's Q1 2023 drilling program.
• Funds flow totalled $29.3-million (79 cents per fully diluted share) in Q1 2023, compared with $41.1-million ($1.10 per fully diluted share) generated in Q4 2022, consistent with lower realized oil and gas sales of $77.3-million for the period due to reduced commodity prices, slightly offset by higher production:
  • Of the cash taxes owing in Q1 2023, $3.8-million of investment tax credit receivable (ITC) was used to settle federal income tax owing. If ITCs used to settle cash taxes owing were included in funds flow, the company's Q1 2023 cash netback would increase by $3.14 per boe to $27.35 per boe, and funds flow would increase to $33.1-million (89 cents per fully diluted share).
• Production costs of $17.54 per boe in Q1 2023 were comparable with Q1 2022 but increased 9 per cent from the previous quarter. With significantly reduced capital spending and field activity planned in second quarter 2023 compared with first quarter 2023, along with higher expected average production, the company anticipates operating costs per boe to return to lower levels in the second quarter.
• Capital expenditures totalled $60.2-million in Q1 2023, 87 per cent higher than the same quarter in 2022, with $48.4-million directed to the drilling of 22 gross (20.6 net) operated wells and the completion, equip and tie-in of 15 gross (14.2 net) operated wells, $3.7-million directed to expanding a wholly owned gas plant to alleviate processing capacity limitations, and an additional $8.1-million allocated to related infrastructure, recompletions and non-operated capital programs:
  • Seven (6.4 net) remaining wells drilled in Q1 2023 were placed on production in early second quarter 2023, contributing to the record field estimate production volumes realized in April.
• Bank debt reduced by 30 per cent over year-end 2022, totalling $12.4-million at March 31, as the company continues to focus on enhancing financial flexibility and sustainability. Net debt totalled $183.7-million at March 31, 2023, as a result of increased capital investments and a decrease in cash flow from lower commodity prices during the period, leading to a net debt to 12-month trailing cash flow ratio of 1.1 times compared with 0.8 times at Dec. 31, 2022:
  • On May 9, 2023, Bonterra Energy completed the renewal of its $110-million bank facility, which is structured as a normal-course, reserve-based credit facility available on a revolving basis through April 30, 2024, with biannual borrowing base redeterminations and a maturity of April 30, 2025.
  • Bonterra Energy's strong debt profile continues to support the reintroduction of a shareholder-return-based business model by the end of 2023.

Outlook

Following on a successful first quarter of 2023, Bonterra Energy is pleased to reaffirm its previously released 2023 guidance:

• Annual production volumes averaging between 13,500 and 13,700 boe per day in 2023, weighted approximately 60 per cent to oil and liquids;
• Year-over-year expected exit rate growth exceeding 10 per cent, reflecting planned 2023 exit volumes between 14,100 and 14,400 boe per day;
• Capital expenditure budget ranging from $120-million to $125-million in 2023, allocated approximately 75 per cent to drilling and completing new Cardium wells in Pembina and Willesden Green, with the balance directed to facilities, pipelines and a continued commitment to continuing abandonment and reclamation activities;
• Corporate funds flow ranging from $170-million to $175-million, resulting in free funds flow of approximately $45-million to $50-million in 2023 (assuming $74.85 (U.S.) West Texas Intermediate price for the remaining three quarters), which is expected to drive continued improvement in leverage metrics and a year-end net debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio of 0.7 times.

Update on current Alberta wildfire situation

Bonterra Energy is actively monitoring the wildfire situation near to its operations in the Pembina area within Brazeau county. The company has approximately 2,400 barrels of oil equivalent per day awaiting reactivation once access becomes available.

Bonterra Energy wishes to thank its dedicated staff and emergency responders for their tireless efforts dealing with the wildfire situation, and the company sends thoughts and best wishes to everyone affected.

Bonterra Energy is a conventional oil and gas corporation with operations in Alberta, Saskatchewan and British Columbia, focused on its strategy of long-term, sustainable growth and value creation for shareholders. The company's shares are listed on the Toronto Stock Exchange under the symbol BNE.

We seek Safe Harbor.