Mr. Pat Carlson reports

KIWETINOHK PROVIDES SECOND QUARTER 2023 FINANCIAL AND OPERATIONAL RESULTS AND UPDATED ANNUAL CORPORATE GUIDANCE

Kiwetinohk Energy Corp. has released its second quarter 2023 financial and operational results. As companion documents to this news release, please review the company's management's discussion and analysis and condensed consolidated interim financial statements for additional financial and operational details.

Message to shareholders

"Kiwetinohk demonstrated its resilience in the face of challenging circumstances after being impacted by the Alberta wildfires during the second quarter. The company's dedication to safety and operational excellence was evident in its response to the wildfire situation, ensuring the well-being of stakeholders while minimizing disruptions to operations. I want to express gratitude to the dedicated team members, who responded swiftly and worked tirelessly to ensure the safety of personnel, limitation to environmental impacts and maintenance of asset integrity, while working cohesively with Alberta wildfire response teams throughout the impacted communities. The team was empowered to work with other operators, service providers and regulators to determine what assets to shut in on a day-to-day basis. The environmental damage was devastating to see. We were able to protect operating personnel and equipment," said chief executive officer Pat Carlson. "We estimate the shutdown to have deferred, approximately, an average of 1,000 [barrels of oil equivalent per day] (370,000 total boe) of production into future years.

"The risk of further wildfire is still present, and we are exercising caution while back in the field drilling a four-well Duvernay pad in the Simonette area. We have drilled several wells in the Duvernay in this region in the past year. The wells that have now been on production for at least 180 days have averaged approximately 1,500 boe per day over this period.

"Kiwetinohk's focus continues to be the building of a highly profitable upstream business and the ability to advance as leaders along the path of energy transition. The company is rich in opportunities and is confident on building significant value across its upstream and green energy project portfolio. The Homestead solar and Opal Firm renewable projects continue to progress, from both a regulatory, engineering and power purchase agreement process in anticipation of financing, with an earliest [final investment decision] date remaining in the fourth quarter of 2023. The company remains committed to lowering emissions and has completed a feasibility study to advance its two carbon storage hubs with the intent to integrate carbon capture, utilization and storage on its gas-fired power projects."

Guidance update

Management continues to execute on its upstream and green energy development plans, and is making the following adjustments to the previously communicated 2023 guidance:

• Production for the year was negatively impacted by wildfires, which resulted in a decrease of approximately 1,000 boe/d on an annualized basis. In response, the company has lowered its production guidance to a range of 21.5 to 23.5 Mboe/d.
• General and administrative expense has been reduced as a result of corporate cost savings achieved during the first half of the year and the expectation of continued discipline over corporate costs.
• Adjusted funds flow from operations and net debt to adjusted funds flow from operations have been reduced as a result of lower-than-anticipated realized West Texas Intermediate pricing during the second quarter of 2023, combined with reduced production expectations. The resulting guidance levels have been reduced to a revised range of $230-million to $250-million using $70 (U.S.) per barrel WTI and $2.75 (U.S.) per million British thermal units HH or $240-million to $265-million using $80 (U.S.) per bbl WTI and $3.25 (U.S.) per MMBtu HH. The company has taken this opportunity to provide additional guidance sensitivities around the impact of commodity price volatility to the adjusted funds flow expectations as outlined herein. The reduction in adjusted funds flow from operations while maintaining the company's capital guidance has resulted in an increase in net debt to adjusted funds flow from operations, exiting 2023 at 0.7 times to 0.9 times.
• Capital expenditures have been reduced to a revised range of $303-million to $322-million based on actual results and cost-efficiencies achieved through the year.

The attached guidance tables summarize Kiwetinohk's updated guidance for 2023.

Chief financial officer Jakub Brogowski said: "Kiwetinohk continues to build value through its capital investment in the first half of the year. Production for the first half of 2023 has grown approximately 50 per cent from the first half of 2022. More than half of the budgeted capital has now been invested in our Simonette gas plant expansions, which will add 45 [million cubic feet per day] of processing capacity, beginning with 10-29 plant expansion expected to be operational in the third quarter. These plants will provide needed processing capacity to continue growth in our profitable Simonette asset. Since embarking on the development of our upstream asset base in 2022, the company has generated five consecutive quarters of net income (Q2 2022 to Q2 2023) indicating the positive free cash generation capability of these assets as the company transitions from growth to maintenance capital investment.

"In our green energy business, we continue to advance the early-stage development of seven Alberta-based power projects totalling 2,145 megawatts of nameplate capacity. We are seeking [power purchase agreements] for Homestead solar project, our most advanced project, with current interest in contracts of over two times the nameplate capacity of 400 [megawatts]. Our three solar projects are well positioned to minimize future curtailment risk. The overall portfolio has advanced to a level where we believe five to seven of our projects will remain outside the Alberta Electrical System Operator's upcoming cluster study, which increases uncertainty for future projects. Since inception, we have invested capital of approximately $28-million in our green energy power portfolio, creating significant value based on recent market transactions in Alberta.

"With two quarters behind us, we are adjusting annual production forecasts to a tighter range and reducing our forecasted midpoint to account for the impact from fires and production data from the new wells. We have also shifted some of our capital expenditures for the remainder of the year to better match expenditures to cash flow and maintain a strong financial and debt to cash flow position."

Second quarter financial highlights:

• Adjusted funds from operations during the second quarter of 2023 were $46.3-million, or $1.05 per share. This represents a significant decline from the first quarter of 2023 due to reduced production resulting from Alberta wildfires and an 18-per-cent decline in realized commodity prices quarter over quarter (10 per cent after hedging gains of $6.64 per boe).
• Free adjusted funds flow from operations was a deficit of $12.5-million (before acquisitions) due to significant investments in the continued growth and development of upstream and green energy assets.
• Net debt increased to $174.3-million at quarter-end as Kiwetinohk continued to utilize borrowing base capacity to execute on the planned capital expenditure program during the quarter while managing lower production and commodity prices.
• Net debt to annualized adjusted funds flow from operations of 0.64 times at quarter-end continues to be below the corporate target ceiling of 1.0 times.
• Available credit facility capacity was 45 per cent of the borrowing base or $168.4-million at June 30, 2023. Kiwetinohk completed its annual borrowing base redetermination during the quarter with the borrowing base confirmed at $375.0-million. In addition, Kiwetinohk increased the EDC letter of credit facility from $15.0-million to $75.0-million. At June 30, 2023, the company had $60.6-million of available LC capacity.
• The normal course issuer bid in the first half of 2023 resulted in a repurchase of 278,459 shares at an average price of $12.34 per share for a total cost of approximately $3.4-million year to date (Q2 2023: $2.6-million). The company has seen value in the NCIB program and will continue to monitor the use of the NCIB program throughout the rest of the year depending on share price, commodity prices and overall budget projections.

Upstream operational results:

• Production for the second quarter of 2023 averaged 20,432 boe/d. Approximately 4,000 boe/d or 17 per cent of first quarter production levels was shut in due to the Alberta wildfires. Since coming back on stream, operations have been steady with rates of approximately 24,000 BOE/d.
• At the end of April, four new Placid West Montney wells came on stream and were shut in for much of May due to the wildfires. Early production rates ranging between 1.0 million and 2.5 million cubic feet per day of natural gas and 200 to 800 bbl/d of condensate have been below initial expectations. These wells were drilled lower than previous wells into the middle Montney zone. The Montney formation is thicker, deeper and higher pressure to the west. The company has significant inventory to exploit, and will use these results to help maximize economic recovery and optimize the future development throughout the area.
• Since acquiring the Simonette and Placid assets, new wells drilled by Kiwetinohk account for approximately 49 per cent of the company's total production. Strong base production relative to guidance has offset the impacts of the wildfires and recent well results.
• Operating costs of $8.82 per boe during the second quarter were within Kiwetinohk's annual guidance range of $8.25 to $9.25 per boe. Operating costs trended toward the low end of guidance levels during the quarter while incurring approximately 45 cents per boe of incremental operating costs associated with the wildfires. The company is reiterating its annual guidance as the wildfire cost and production impacts have been offset by strong efficiency and cost management across the assets.

Kiwetinohk incurred $55.4-million of upstream capital during the second quarter, bringing the year-to-date investment to $161.7-million. Spending during the second quarter was focused on:

• DCET expenditures of $37-million. This was largely composed of the completion and tie-in of four Montney wells in Placid (two wells each at pad 2-20 and pad 15-5). At Simonette, Kiwetinohk commenced drilling the two-well 11-24 Duvernay pad, which is expected to be brought on stream late in the third quarter.
• Simonette gas plant expansions: The company continued the advancement of engineering and procurement in the quarter, incurring approximately $10.0-million in the second quarter and bringing total 2023 spending to $21.6-million as of June 30, 2023. The project's estimated total costs remain forecasted as $45-million to $55-million. This will increase the area's processing capacity by approximately 40 per cent or 45 MMcf/d of inlet capacity. The 10-29 facility was shut down on July 26, 2023, to commence construction of the larger 30 MMcf/d expansion with production expected to be back on stream in the coming days.

Green energy update

Key updates during the quarter on its power project portfolio include:

• Green energy capital spending during the second quarter of 2023 totalled $3.5-million across all power projects, including engineering, consultations, regulatory, environmental studies, AESO processes, legal, risk reduction and contracting activities. This includes posting letters of credit to the AESO in advance of generator unit owner contribution (GUOC) payments on key projects that are in advanced stages of development.
• Power purchase agreement process for the Homestead solar project progressed with continuing negotiations with a number investment-grade counterparties. This PPA process launched during the first quarter with the engagement of Urica Energy Management Corp. in support.
• AUC transmission line approvals for the 400-megawatt Homestead solar and 101-megawatt Opal Firm renewable projects are targeted to be received during the fourth quarter of 2023. Kiwetinohk may experience delays in the AESO interconnection approval processes and continues to address stakeholder concerns.
• Engineering, procurement and construction (EPC) bid evaluation selection process is complete for the Homestead solar project with selection of a large, world-class EPC. The Opal Firm renewable project EPC selection process continues ahead of a potential final investment decision as early as the fourth quarter of 2023. As part of this process, Kiwetinohk is putting comprehensive plans and processes in place to address construction schedule and cost risks.
• Capital optimization on green energy project development is being carefully managed to allocate development expenditures to highest-priority projects, where possible in 2023, while ensuring that overall project schedules are maintained for all projects within the AESO process. Green energy 2023 expenditures are expected to be between $18-million and $22-million.

Sustainability update

Kiwetinohk's Q2 sustainability priorities focused on employee, contractor and community safety around the Alberta wildfires with no injuries sustained during this incident response. Kiwetinohk shut in production as required to ensure personal safety and asset integrity. Operating area communities such as Fox Creek, Valleyview and the Sturgeon Lake Cree Nation were also evacuated, with the Sturgeon Lake Cree Nation suffering significant damage to homes. The company continues to support local communities in their wildfire recovery through the Red Cross and initiating an industry fundraiser to support continuing recovery efforts at Sturgeon Lake.

Significant progress was also made in Q2 on stakeholder engagement around Kiwetinohk's energy projects, including continuing engagement with environmental non-governmental organizations, think tanks and the government of Canada as it prepares to publish its draft clean electricity regulations in the coming weeks. As part of its program to continuously reduce emissions from upstream operations, Kiwetinohk installed additional methane abatement equipment and received approval from the Alberta Energy Regulator to deploy continuous monitoring at all facilities and multiwell padsites.

Conference call and third quarter 2023 report date

Kiwetinohk management will host a conference call on Aug. 2, 2023, at 8 a.m. MT (10 a.m. ET) to discuss results and answer questions. Participants will be able to listen to the conference call by dialling 1-888-664-6383 (North America toll-free) or 416-764-8650 (Toronto area). A replay of the call will be available until Aug. 9, 2023, at 1-888-390-0541 (North America toll-free) or 416-764-8677 (Toronto area) by using the code 984955.

Kiwetinohk plans to release its third quarter 2023 results prior to Toronto Stock Exchange opening on Nov. 9, 2023.

About Kiwetinohk Energy Corp.

The company, at Kiwetinohk, is passionate about addressing climate change and the future of energy. Kiwetinohk's mission is to build a profitable energy transition business providing clean, reliable, dispatchable, affordable energy. Kiwetinohk develops and produces natural gas and related products, and is in the process of developing renewable power, natural-gas-fired power, carbon capture and hydrogen clean energy projects. It views climate change with a sense of urgency, and it wants to make a difference. Kiwetinohk's common shares trade on the Toronto Stock Exchange under the symbol KEC.

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