Mr. Joel MacLeod reports

HIGHWOOD ASSET MANAGEMENT LTD. ANNOUNCES EXPANDED CREDIT FACILITY TO $140 MILLION, OPERATIONAL AND GUIDANCE UPDATE AND COMMENCEMENT OF 2H2025 DRILLING PROGRAM

The annual borrowing base redetermination of Highwood Asset Management Ltd.'s credit facility has been completed. As a result of another successful drilling program that delivered significant PDP reserves growth, the borrowing base has been increased from $120-million to $140-million, comprised of a $10-million operating facility and $130-million syndicated credit facility. The maturity date of the credit facilities has been extended from Aug. 2, 2026, to Aug. 2, 2027. If not extended, the credit facilities would be repayable on Aug. 2, 2026. The next semi-annual borrowing base determination is scheduled on or before Nov. 30, 2025.

Furthermore, Highwood is pleased to announce Business Development Bank of Canada as a new lender in the syndicated credit facility, joining Royal Bank of Canada, ATB Financial, Canadian Imperial Bank of Commerce and Macquarie Bank Ltd.

Operational and guidance update

Highwood drilled six booked gross (4.3 net) wells in the first quarter of 2025, most of which were brought on line in the second quarter of 2025. The wells have taken longer than anticipated to clean up and early indications suggest variable results. Highwood anticipates second quarter production to 5,600 to 5,750 boe/d (barrels of oil equivalent per day) (approximately 70 per cent oil and liquids). As a result of incorporating second quarter realized actuals, the company is revising its 2025 annual guidance to be approximately 5,700 to 6,000 boe/d (approximately 70 per cent oil and liquids). With the continued volatility in commodity prices, Highwood has strategically added hedging. Over the past two weeks, Highwood added an additional 600 bbl/d of WTI (West Texas Intermediate) hedges through 2026 and 300 bbl/d through Q1 2027 at approximately $90 WTI/bbl.

The current market value of Highwood's commodity contracts is approximately $11-million in the money.

Drilling update and outlook

Highwood is also pleased to announce that it has commenced the H2 2025 drilling program, spudding the 100/13-15-048-14W5 unbooked well on June 12, 2025, in the Basal sand at Brazeau. The company anticipates drilling four gross wells (3.4 net) for the remainder of 2025, three gross (2.4 net) booked locations in Wilson Creek and one unbooked location near Bonnyville.

Near Bonnyville, Alta., the company will drill its first unbooked multilateral open-hole well (MLOH) into the company's new stacked Mannville sands play on a contiguous 11-section unencumbered block. The company anticipates having results from the first well in early fall.

Highwood remains dedicated to growing its free cash flow profile, on a per-share basis, while using prudent leverage to provide it with maximum flexibility for organic growth and/or other strategic M&A (merger and acquisition) opportunities. As a result of the volatility in commodity pricing, along with the increase in the company's credit facilities, Highwood believes it is positioned well for M&A opportunities. Additional free cash flow that may result due to higher oil prices in H2 2025 will be primarily allocated to further reduce outstanding indebtedness.

We seek Safe Harbor.