Mr. Pat Carlson reports

KIWETINOHK PROVIDES THIRD QUARTER 2023 FINANCIAL AND OPERATIONAL RESULTS, COMPLETES GAS PROCESSING PLANT EXPANSION, ADVANCES PRIORITY POWER PROJECTS, AND ISSUES ESG REPORT

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

Message to shareholders

"Kiwetinohk continues to focus on building a highly profitable upstream oil and gas business as a foundation for its leading energy transition business," said Pat Carlson, president and chief executive officer. "In the third quarter, our upstream division, under the leadership of Mike Backus, made significant strides as Kiwetinohk expanded gas processing infrastructure to support future production growth. The previously announced 30 MMcf/d expansion of the Simonette 10-29 gas plant was completed ahead of schedule, providing Kiwetinohk a pathway to grow production to 40,000 boe/d by drilling within currently owned leases. Two new wells in our oil-weighted Tony Creek development area successfully came on line in September contributing to strong production in the quarter and we are currently completing a four-well pad in our core Duvernay land to finish up the calendar year. As we approach the conclusion of our first two years of development of our upstream assets, I am pleased to note we now own about one-third of the top 100 (first year production) and seven of the top 10 producing Duvernay wells in Alberta with Kiwetinohk having drilled four of these seven.

"In our power business, we achieved a major milestone by executing an engineering, procurement and construction (EPC) contract with PCL Construction (PCL) for our Homestead solar project. We also progressed Homestead to stage 4 of the Alberta Electrical System Operator's (AESO) regulatory process. In addition, we received confirmation during the quarter that all seven of our currently announced power development projects will not be subjected to the AESO's new cluster study review process. This provides an elevated level of regulatory predictability for our significant power development portfolio in Alberta. As we approach the end of the year, the power business, under the direction of Fareen Sunderji, will focus activities on the Homestead solar and the Opal peaker plant projects, which are currently the most advanced and highest-priority opportunities in our power portfolio. While Kiwetinohk awaits further regulatory clarity from both the federal and provincial governments, we continue to maintain and optimize expenditures while advancing development of one of Alberta's largest greenfield development portfolios which has resiliency to both regulatory environments.

"Kiwetinohk is committed to the belief that all projects within its power portfolio could play a crucial role in supporting Alberta's successful transition to clean energy. Our projects are designed to use leading proven equipment expected to provide a competitive advantage in the Alberta power market. If constructed, the company believes the portfolio will contribute to more efficient and cleaner power generation while supporting industry and government goals for stable and sustainable power supply, with reduced energy costs for Albertans. Through its project portfolio, which has taken multiple years of expertise and less than $40-million of capital and general and administrative expenditures to develop, we are uniquely positioned to be able to deliver additional value to shareholders.

"Being an early mover in the energy transition enabled Kiwetinohk to capture attractive opportunities in the upstream and power business many of which cannot be recreated in the current environment. As a result, our opportunities far exceed our ability to finance the entire portfolio. The best thing to do is to sell interests or entire projects to finance remaining projects and maximize shareholder value."

Third quarter financial highlights

• Corporate guidance remains unchanged other than an optimization in power capital to $15-million to $18-million. With the completion of a non-core disposition, Kiwetinohk has accelerated debt reduction, further strengthening its balance sheet, with the ratio of net debt to adjusted funds flow from operations now expected to exit 2023 at the low end of previously published guidance of 0.7 times to 0.9 times.
• Adjusted funds from operations during the third quarter of 2023 were $55.3-million, or $1.26/share. This represents a 19-per-cent increase over the second quarter of 2023 as a result of increased production, a recovery in commodity prices and reduced expenses, all of which contributed to an increased operating netback during the quarter.
• Free adjusted funds flow from operations were a deficit of $7.8-million (before acquisitions and dispositions) primarily due to significant investments in the continued growth and development of the upstream business, including the expansion of gas plant infrastructure required to grow future production to 40,000 boe/d.
• Net debt to annualized adjusted funds flow from operations of 0.67 times at quarter-end continues to be below the corporate target ceiling of 1.0 times and maintains a strong balance sheet and liquidity position.
• Available credit facility capacity was 46 per cent of the $375.0-million borrowing base or $171.9-million at Sept. 30, 2023. Kiwetinohk used a separate facility provided by Export Development Canada (EDC) to post letters of credit for $51.7-million to backstop Generating Unit Owners Contributions (GUOC) payments required to advance the power portfolio. In doing so, the company met all conditions required to ensure the entire portfolio was not subject to the new AESO cluster study approval process. At Sept. 30, 2023, the company had $8.9-million of available LC capacity under the EDC facility.

Upstream operational results

Production for the third quarter of 2023 averaged 21,218 boe/d (barrels of oil equivalent per day), about 800 boe/d higher than the previous quarter. New production that came on stream from a two-well pad in Simonette at the end of the quarter made only a modest impact to average production in the third quarter but will make a meaningful contribution going forward. Initial well results are slightly ahead of expectations, with production from each well of approximately one MMcf/d (million cubic feet per day) of natural gas and 900 to 1,000 bbl/d of condensate. During the third quarter of 2023 Kiwetinohk derived 43 per cent of its production from liquids (30-per-cent oil and condensate and 13-per-cent NGLs) with the company focusing its liquids marketing efforts on extracting maximum value from the Alberta market.

Kiwetinohk spent $60.1-million of upstream capital during the third quarter, bringing year to date investment to $221.9-million. Spending during the third quarter was focused on:

• DCET expenditures of $41-million comprising the completion and tie-in of the two-well 11-24 Duvernay pad and the drilling of its four-well Duvernay pad at 14-29.
• Simonette gas plant expansions on the Simonette 10-29 facility which underwent a temporary shutdown to initiate construction of the 30 MMcf/d expansion, including two additional compressors which are now commissioned. Other spending in the quarter was on additional infrastructure, and included pipeline, lease and road construction.

Upstream activity in the fourth quarter remains steady with drilling ongoing on the 8-23 Simonette pad where three Duvernay wells are under way with plans to complete and bring them on-stream in Q1 2024. Completion activities are well advanced on the current 14-29 Simonette pad where four Duvernay wells are expected to come on production in the coming weeks. The drilling rig will move to the next Simonette Duvernay pad toward the end of the year, with associated spending largely part of the 2024 development program.

On Nov. 1, 2023, the company disposed of non-core assets in the Rimbey area for estimated proceeds of $17.6-million subsequent to closing adjustments, above the estimated proved developed reserves net present value at forward strip pricing. The Rimbey assets were not considered core to Kiwetinohk's upstream strategy and were undercapitalized within the portfolio as the company is focused on the long-term development of its liquids-rich Simonette and Placid assets. They represented less than 1 per cent of total proved plus probable reserves as at Dec. 31, 2022, and contributed approximately 1 per cent of corporate production in the nine months ended Sept. 30, 2023.

Power update

Capital spending and optimization during the third quarter of 2023, totalled $3.0-million across all power projects, bringing year-to-date investment to $8.7-million as of Sept. 30, 2023. Power project development is currently being managed to focus development expenditures primarily on the Homestead and Opal projects, which are the most advanced and currently considered the highest priority.

Kiwetinohk is also actively deferring expenditures on the remaining power projects within its development project portfolio, where possible, as it awaits further clarity from provincial and federal governments on pending electricity regulations. However, the company expects to continue to incur costs required to maintain the competitive position of all its projects within the AESO queue.

Renewable energy regulatory developments were announced by the Alberta government on Aug. 3, 2023, directing the AUC to pause approvals of new renewable electricity projects until Feb. 29, 2024. Kiwetinohk's Homestead solar project has already received AUC power plant approval and is unaffected by this pause. In addition, the company understands, based on disclosure from the regulator, the AUC will continue to review power plant applications as they are filed and Kiwetinohk will continue with planned submissions of power plant applications during the pause period for Phoenix and Granum solar.

During the third quarter, Kiwetinohk received confirmation that none of the projects in its power portfolio are affected by the new AESO cluster study assessment process thereby enhancing regulatory clarity for the company's projects. Multiple power projects have been cancelled from the AESO's Connection Project List following the introduction of the cluster study assessment process. Kiwetinohk continues to advance its significant development portfolio and remains competitively well positioned within the Alberta market.

Homestead solar project's regulatory approval has advanced to stage 4 of the AESO process. The transmission line approval is expected to require an AUC hearing which has resulted in the delay of an earliest FID to the second half of 2024. Kiwetinohk, working with PCL, has continued to optimize the design and development plan for Homestead resulting in estimated savings of $25.0-million when compared with previous capital cost estimates. Capital costs for this project are now estimated at $725.0-million. The company exercised land lease options on its Homestead project to secure its position for future development and retains the ability to terminate these leases upon providing notice to landowners and satisfaction of certain reclamation requirements.

Opal firm renewable project continues to advance detailed engineering and is currently in stage 3 of the AESO regulatory review process. The company has delayed the earliest FID for Opal to the second half of 2024 as it awaits transmission line approval and continues to review and assess the implications of the federal government's draft Clean Electricity Regulation.

Kiwetinohk is not in a position to update FID and COD dates on further dated projects until clarity is provided on pending electricity regulations from provincial and federal governments and regulators.

Sustainability update

Kiwetinohk today released its 2023 environment, social and governance (ESG) report (for the 2022 reporting year) in alignment with Task Force on Climate-related Financial Disclosure and Sustainability Accounting Standards Board requirements. Highlights include a target to reduce vented methane emissions by 50 per cent by 2025, Kiwetinohk's goal to eliminate inactive asset retirement obligations within five to seven years, and its $2.8-million commitment to Little Smoky Caribou habitat rehabilitation.

This year's report includes climate scenario analysis to better assess the opportunities and challenges arising from Kiwetinohk's energy transition business model depending on how energy transition unfolds. The company's goal is to maximize its resiliency to energy transition by exposing Kiwetinohk to increasing power prices while reducing GHG emissions associated with its natural gas production and its large electric generation facilities through deployment of new, more efficient technology and development of carbon capture and sequestration (CCS) facilities. Kiwetinohk is already significant solar power developer with projects aggregating about one gigawatt of generation capacity in its current portfolio.

As Kiwetinohk advances its portfolio of natural gas-fired and solar renewable electrical generation projects, and its two CCS hubs, the company will continue to evolve its ESG reporting in line with international ESG and sustainability accounting frameworks.

Conference call and 2023 annual reporting date

Kiwetinohk management will host a conference call on Nov. 9, 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 and area). A replay of the call will be available until Nov. 16, 2023, at 1-888-390-0541 (North America toll-free) or 416-764-8677 (Toronto and area) by using the code 135965.

Kiwetinohk plans to release its fourth quarter 2023 results prior to Toronto Stock Exchange opening on March 7, 2024.

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.

We seek Safe Harbor.