Mr. Robert Zakresky reports

COELACANTH ENERGY INC. ANNOUNCES CAPITAL BUDGET & OPERATIONS UPDATE

Coelacanth Energy Inc.'s board of directors has approved a capital budget of up to $128-million to be invested in 2024 and Q1 2025. Substantially all of the budget will be spent at Two Rivers, where Coelacanth is developing its large Montney acreage position. Approximately $80-million is to be invested in infrastructure at Two Rivers East, where the company had previously announced its successful first pad (see below), with drilling and completions estimated at $45-million, including the drilling and completion of four additional Lower Montney wells on its 5-19 pad, plus complete a previously drilled Upper Montney well on the 5-19 pad.

The infrastructure is anticipated to be completed for April 1, 2025, at which point Coelacanth will be able to produce a total of 10 wells from the 5-19 pad (five current wells and five new budgeted wells).

Two Rivers East

The budget includes approximately $50-million for a new battery facility at Two Rivers East designed for gas compression/dehydration, oil treating and water handling, plus $20-million for gathering and sales lines to connect from the 5-19 pad through the facility to a mid-stream gathering line. Manufacturing of components for the facility will commence shortly, with in-field construction for both the facility and pipelines scheduled for Q4 2024 and Q1 2025.

The project is anchored by the Lower Montney but has additional potential upside in both the Upper Montney and Basal Montney. As previous released, the average rate achieved for the three Lower Montney wells was 1,338 boe/d (barrels of oil equivalent per day) per well, composed of 729 bbl/d (barrels per day) of 39 API (American Petroleum Institute) light sweet oil and 3.7 mmcf/d (million cubic feet per day) of liquids-rich gas. The rates per well were similar, as outlined in the associated table.

Of the 10 wells anticipated to come on stream in April, 2025, eight are Lower Montney wells, one is an Upper Montney well and one is a Basal Montney well.

Two Rivers West

Coelacanth had announced in October, 2023, that it had completed the two Upper Montney wells on its 10-08 pad at Two Rivers West and placed the first well (C10-08) on production at a rate of 542 boe/d, composed of 225 bbl/d of 42 API light oil, 1.75 mmcf/d of liquids-rich gas and approximately 26 bbl/d of NGLs (natural gas liquids). The well produced at approximately that rate for the first four months, but was restricted due to the large volume of water also being produced and the lack of pump capacity at Coelacanth's facility. Based on log properties, the water is likely being produced from the top of the Upper Montney, where a localized wet zone was identified.

In February, 2024, Coelacanth was able to increase pump capacity and ran a short-term test (2.2 days) on C10-08 with most of the restrictions removed to determine capability of the well. Removing the restrictions resulted in the well achieving a test rate of 1,284 boe/d, composed of 376 bbl/d of oil, 5.0 mmcf/d of gas and 75 bbl/d of NGLs. The test rate significantly exceeded expectations, especially considering the rate achieved was after the well had already been producing for four months.

After the test, both the C10-08 and B10-08 were placed on production at restricted rates until modifications can be made to accommodate more water and gas handling and egress. Coelacanth is now in process of determining the infrastructure capital required to scale up the Two Rivers West project that will include installing a new sales gas line, in addition to adding gas compression and water handling.

From a go-forward perspective, the test provides valuable positive insights on the potential longer-term increased deliverability and ultimate recoveries per well from the Upper Montney at Two Rivers West. The C10-08 test also has a positive correlation to the Upper Montney well at the 5-19 pad (drilled but not completed) that has similar characteristics but does not include the wet Upper Montney zone identified at Two Rivers West.

Financial

Coelacanth estimates that it had approximately $67-million of positive working capital and no debt at the end of 2023. Financing of its budget is anticipated to come from cash on hand, cash flow and short-term debt.

We seek Safe Harbor.