Mr. Jeff Chisholm reports

CANASIA ENERGY CORP. 2023 YEAR-END FINANCIAL & OPERATING RESULTS

Canasia Energy Corp. has released its 2023 year-end and fourth quarter consolidated financial and operating results.

The company is today filing its audited consolidated financial statements as at and for the year ended Dec. 31, 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 at the company's website.

Commenting today on Canasia's 2023 results, president and chief executive officer Jeff Chisholm stated:

"The focus of the company remains monetization of the Sawn Lake heavy oil asset and the 25th onshore Thailand licensing round.

"A Feb. 9, 2024, article in the Bangkok Post, titled 'Round 25 bidding by end of the year,' stated: 'Once the plan to hold the auction is approved by Energy Minister Pirapan Salirathavibhaga, officials will invite energy companies to join the bidding process,' said Warakorn Brahmopala, director-general of the Department of Mineral Fuels.

"He expects the process to be finalized by the middle of the year.'

"At this time, we are uncertain if this means the bid round will be announced in June, 2024, with bids due at year-end (normally a six-month period is allowed for data review and bid submission), or an announcement of the start of the bid round will be made at year-end. The possibility exists that timing may be related to global oil prices, which were just above $76 (U.S.) per barrel the day of the news article. The company will update shareholders as more information becomes available regarding the timing of this bid round.

"The Sawn Lake heavy oil project, despite a successful pilot in 2015, has been impacted by a number of issues with the project's 25-per-cent joint venture interest holders, who currently owe Canasia approximately $600,000. The company has been successful in a series of recent court rulings related to enforcement actions against the joint venture interest holders. It is anticipated these issues will be resolved by mid-May, 2024, at which time the company will follow a path focused on near-term shareholder value.

"Lastly, as part of the recent $6.2-million financing, the company has agreed to a nominee director from Risco Energy Investment Sea Ltd. (Risco). Postfinancing, Risco's ownership in Canasia is approximately 17.7 per cent. Canasia directors and Risco hold an aggregate of approximately 39 per cent of Canasia's outstanding shares.

"Subject to regulatory and shareholder approval, Risco's nominee on Canasia's board will be Mr. Chris Newton. Chris co-founded the Risco group in 2010, where Risco has participated in and funded over $450-million (U.S.) in successful transactions. Chris served as director of business development at Risco, and built a portfolio of producing, development and exploration assets across Southeast Asia with a net 6,000 barrels of oil equivalent per day of production before monetizing the portfolio with a sale to Kufpec in 2014.

"Chris has a career spanning 45 years in upstream oil and gas, covering the full spectrum of exploration, development and production. Prior to Risco, former positions included: managing director of Fletcher Challenge in Brunei, managing director of Shell Deepwater Borneo, president of Santos-Indonesia and CEO of Jakarta-listed oil and gas company EMP.

"Most recently, Chris had served seven years as executive chairman at Tap Oil Ltd., until the sale of the company, including its offshore Gulf of Thailand interest in the concession G1 Monara field in late 2023, delivering Tap shareholders attractive returns.

"Chris was an active director of the Indonesian Petroleum Association between 2003 to 2008, including serving as president from 2004 to 2007. He remains the oil and gas adviser to the Jakarta-based Castle Asia Group, and is a non-executive director of ASX [Australian Securities Exchange]-listed Lion Energy Ltd."

Highlights:

• Canasia had working capital totalling $5.9-million, no long-term debt and shareholders' equity of $5-million at Dec. 31, 2023.
• Common shares outstanding were 112.8 million at March 12, 2024, and 100.2 million at Dec. 31, 2023.
• On Jan. 16, 2024, the company completed a brokered private placement financing for gross proceeds of $1,258,000, composed of 12.58 million common shares at a price of 10 cents per common share. In connection with the brokered private placement, the company recorded $118,000 in share issue costs, composed of $116,000 in commission and fees, and the estimated fair value of $2,000 associated with 24,600 broker warrants issued to the broker. Each broker warrant is exercisable for common shares at a price of 10 cents per share for a period of two years from the issue date.
• On Dec. 21, 2023, the company completed a brokered private placement financing for gross proceeds of $5,042,000, composed of 50.42 million common shares at a price of 10 cents per common share. In connection with the private placement, the company recorded $533,000 in share issue costs, composed of $416,000 in commission and fees, and the estimated fair value of $117,000 associated with 1,825,200 broker warrants issued to the broker. Each broker warrant is exercisable for common shares at a price of 10 cents per share for a period of two years from the issue date.
• Net loss attributable to common shareholders for 2023 was $3.2-million (six cents per share) compared with $700,000 (one cent per share) in the period from May 27, 2022, to Dec. 31, 2022. The company did not have active operations until Aug. 25, 2022, and the financial results in 2022 reflected approximately four months of operations. Net loss attributable to common shareholders in the fourth quarter of 2023 was $1.1-million (two cents per share) compared with $800,000 (two cents per share) in the fourth quarter of 2022.
• Cash flow used in operations in 2023 was $2-million (four cents per share) compared with $600,000 (one cent per share) in the period from May 27, 2022, to Dec. 31, 2022. Cash flow used in operations in the fourth quarter of 2023 was $400,000 (one cent per share) compared with $500,000 (one cent per share) in the fourth quarter of 2022.
• General and administrative expense for 2023 was $2,078,000 compared with $782,000 in the period from May 27, 2022, to Dec. 31, 2022. General and administrative expense in the fourth quarter of 2023 was $518,000 compared with $565,000 in the fourth quarter of 2022. General and administrative expense is composed primarily of expenses related to personnel and premises, external services, and public company costs:
  • Personnel and premises costs for 2023 were $712,000 compared with $260,000 in the period from May 27, 2022, to Dec. 31, 2022. Personnel and premises costs in the fourth quarter of 2023 were $172,000 compared $171,000 in the fourth quarter of 2022. 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 for 2023 were $822,000 compared with $377,000 in the period from May 27, 2022, to Dec. 31, 2022. External services costs in the fourth quarter of 2023 were $184,000 compared with $283,000 in the fourth quarter of 2022. These costs mainly related to professional fees for legal, audit and tax services. The higher costs in the fourth quarter of 2022 were mainly due to higher legal and audit fees for setting up the company.
  • Public company costs for 2023 were $356,000 compared with $128,000 in the period from May 27, 2022, to Dec. 31, 2022. Public company costs in the fourth quarter of 2023 were $99,000 compared with $98,000 in the fourth quarter of 2022. These costs were incurred for maintaining the company's status as a public company.
• Operating expenses in 2023 were $625,000 compared with $149,000 in the period from May 27, 2022, to Dec. 31, 2022. Operating expenses in the fourth quarter of 2023 were $280,000 compared with $113,000 in the fourth quarter of 2022. These expenses were incurred to safeguard and maintain the assets of Andora's suspended SAGD (steam-assisted gravity drainage) project facility and well pair at Sawn Lake Central. The increase in the fourth quarter of 2023 was due to environmental work performed at Sawn Lake.
• The natural gas pipeline tariff agreement, which was entered into between Andora and a third party in 2018, with a commencement date of June 1, 2023, was recognized as an onerous contract under IAS (International Accounting Standard) 37 since the operation at Sawn Lake is shut-in. The company has recognized a provision of $1.1-million representing the net cost of fulfilling the contract.
• The current portion of the decommissioning provision of $600,000 as at Dec. 31, 2023, relates to the legacy subsidiaries of POEH (Pan Orient Energy Holdings Ltd.) which had held interests in the East Jabung production sharing contract (PSC) in Indonesia, and a well pertaining to Andora's interests in Sawn Lake, Alta. Canasia is withdrawing from activities in Indonesia and decommissioning-related costs are expensed when incurred. During 2023, the company revised its estimate of the decommissioning provision at the Jambi PSC, resulting in a $300,000 reduction to the current decommissioning provision during the year. The non-current portion of the decommissioning provision of $1.4-million as at Dec. 31, 2023, pertained to Andora's interests in Sawn Lake, Alta.

Outlook

Thailand

The company plans on participating in the upcoming Thailand 25th onshore concession bid round as part of a consortium. Upon announcement by the government of Thailand regarding the commencement of the 25th bid round, further details will be provided regarding the proposed bidding consortium.

Canada: Sawn Lake

The Sawn Lake heavy oil project, despite a successful pilot in 2015, has been impacted by a number of issues with the project's 25-per-cent joint venture interest holders, which currently owe Canasia approximately $600,000. The company has been successful in a series of recent court rulings related to enforcement actions against the joint venture interest holders. It is anticipated these issues will be resolved by mid-May, 2024, at which time the company will follow a path focused on near-term shareholder value.

We seek Safe Harbor.