Mr. Jeff Chisholm reports

CANASIA ENERGY CORP. - 2023 SECOND QUARTER FINANCIAL & OPERATING RESULTS

Canasia Energy Corp. has released second quarter 2023 consolidated financial and operating results.

The company is filing today its unaudited consolidated financial statements as at and for the six months ended June 30, 2023, and related management's discussion and analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained on-line at SEDAR+ or the company's website.

Commenting today on Canasia's second quarter 2023 results, president and chief executive officer Jeff Chisholm stated: "Second quarter activities were focused mainly on a number of items related to the Sawn Lake joint venture. Andora received a summary judgment in its favour for the payment of $200,000 for a portion of the amounts owing by its Sawn Lake partners. Actions enforcing this judgment are currently under way. The company still anticipates an onshore Thailand licensing round to be announced in 2023, shortly after the appointment of a prime minister and formation of a new cabinet in Thailand."

Highlights:

• Canasia had working capital totalling $2.4-million, no long-term debt and shareholders equity of $1.5-million at June 30, 2023.
• Common shares outstanding were 49.8 million at Aug. 1, 2023, and June 30, 2023.
• Net loss attributable to common shareholders for the second quarter of 2023 was $700,000 (one cent per share) compared with $1.3-million (three cents per share) in the first quarter. Cash flow used in operations for the second quarter of 2023 was $1.1-million (two cents per share) compared with $84,000 (nil per share) in the first quarter.
• General and administrative expense in the second quarter of 2023 was $480,000 compared with $529,000 in the first quarter, composed primarily of expenses related to personnel and premises, external services, and public company costs:
  • Personnel and premises costs in the second quarter of 2023 were $171,000 compared with $189,000 in the first quarter. These costs include salaries and benefits for employees, and fees incurred for consultants and contractors. They also include rent and other office costs related to the company's Calgary office.
  • External service costs in the second quarter of 2023 were $177,000 compared with $235 in the first quarter, mainly related to professional fees for legal, audit and tax services.
  • Public company costs of $75,000 in the second quarter of 2023 compared with $94,000 in the first quarter were incurred for maintaining the company's status as a public company.
• Operating expenses in the second quarter of 2023 were $145,000 compared with $90,000 in the first quarter. These were incurred to safeguard and maintain the assets of the suspended steam-assisted gravity drainage project facility and wellpair of Canasia's wholly owned subsidiary Andora Energy Corp. at Sawn Lake Central.
• The natural gas pipeline tariff agreement, which was entered into between Andora and a third party in 2018 with a commencement date of May 1, 2023, is considered an onerous contract as of March 31, 2023, under international accounting standard 37 since the operation at Sawn Lake is shut in. The company has recognized a provision of $900,000, representing the net cost of fulfilling the contract.
• The current portion of the decommissioning provision of $1.0-million as at June 30, 2023, relates to the legacy subsidiaries of Canasia's wholly owned subsidiary Pan Orient Energy Holdings Ltd., which held interests in the East Jabung and Jambi production-sharing contracts in Indonesia and a well pertaining to Andora's interests in Sawn Lake, Alberta. Canasia is withdrawing from activities in Indonesia, and decommissioning-related costs are expensed when incurred. The non-current portion of the decommissioning provision of $1.4-million as at June 30, 2023, pertained to Andora's interests in Sawn Lake, Alberta.
• In February, 2023, Andora sold equipment to a third party for $100,000. The net book value of the equipment was nil, resulting in a gain on sale of $100,000.
• On Feb. 28, 2023, the board of directors of Andora accepted a formal proposal made by Canasia with respect to a transaction whereby the outstanding shares of Andora were consolidated; and all fractional shares resulting from the consolidation were redeemed by Andora and cancelled, and the holders thereof would be entitled to receive a cash redemption payment of 4.4 cents for each preconsolidation share of Andora. As part of the transaction, all issued and outstanding options to acquire shares of Andora were surrendered for their in-the-money value.
• The Andora transaction was approved by shareholders of Andora at a special meeting held on March 27, 2023. All other conditions to the Andora transaction becoming effective were also satisfied or waived, and the Andora transaction was completed on March 27, 2023. As a result of the Andora transaction, Andora now has one common share outstanding. Canasia, which previously owned 88.2 per cent of the outstanding shares of Andora as at Dec. 31, 2022, now owns 100 per cent of Andora. Non-controlling interest was reduced to nil on March 27, 2023, with a corresponding offset to deficit.
• Consideration paid for redeeming fractional shares pursuant to the Andora transaction amounted to $1.24-million. Andora paid former optionholders a total of $330,000, representing the in-the-money value of all the options surrendered. Other expenses of the Andora transaction totalled $120,000.

Outlook

Enforcement actions against Andora's 25-per-cent-working-interest Sawn Lake partners will continue in the third quarter. Canasia will seek either a farmout of a portion of Andora's interest or an outright sale of the asset. The company plans to participate in an onshore Thailand bid round that will likely be announced in 2023, possibly in late third quarter.

We seek Safe Harbor.