Mr. Darcy Reding reports

PIERIDAE RELEASES Q2 2023 RESULTS

Pieridae Energy Ltd. has released its second quarter 2023 financial and operating results. Pieridae generated net operating income (NOI) (1) of $44-million and successfully refinanced its long-term debt, substantially reducing the company's cost of capital. The company's management's discussion and analysis (MD&A), and unaudited interim consolidated financial statements and notes, for the quarter ended June 30, 2023, are available on the company's website and on SEDAR+.

Q2 2023 highlights:

• Refinanced the company's long-term debt, resulting in new credit facilities of $150-million (U.S.), materially reducing the cost of capital while providing additional liquidity through the provision of a revolving credit facility and a delayed draw term loan;
• Generated funds flow from operations (1) of $35.4-million (22 cents per basic and fully diluted share), versus $43.5-million (28 cents per basic and $0.27 per fully diluted share) in Q2 2022;
• Generated quarterly NOI (1) of $43.8-million (28 cents per basic and 27 cents per fully diluted share), versus $56.0-million (36 cents per basic and 35 cents per fully diluted share) in Q2 2022;
• Generated net income of $4.2-million (three cents per basic and fully diluted share), versus $23.0-million (15 cents per basic and 14 cents per fully diluted share) in Q2 2022;
• Produced 31,087 barrels of oil equivalent per day (boe/d) (85 per cent natural gas), versus 36,378 boe/d in Q2 2022;
• Net debt (1) was $181.7-million at June 30, 2023, compared with $214.5-million at Dec. 31, 2022.

"Pieridae had strong financial results this quarter, despite operational challenges and weaker AECO natural gas prices, thanks to a favourable royalty credit and realized gains from our hedging program," said Pieridae's president and chief operating officer, Darcy Reding. "In the second quarter, we continued to execute our strategic plan with the successful refinancing of our long-term debt, which is a significant milestone for the company and provides Pieridae with a lower cost of capital and greater financial flexibility.

"Production has largely recovered from unscheduled downtime during the second quarter, with recent field production back to 35,600 boe/d. Wildfires in northeast B.C. continue to keep 900 boe/d shut in in the Ekwan area and approximately 750 boe/d remain voluntarily shut in in west-central Alberta until AECO natural gas prices are sustained at greater than $3 per mcf. Our focus as we move into fall is the safe and efficient execution of phase 1 of the Waterton maintenance turnaround in August and September, improving production and facility reliability, and ongoing operating and administrative cost reductions."

Highlights continued:

• Commodity prices continued to decline in Q2 2023 with AECO natural gas down 67 per cent and WTI (West Texas Intermediate) basis down 32 per cent versus Q2 2022.
• Lower commodity sales revenue was partially offset by the company's hedging program with Q2 2023 hedging gains of $13.6-million ($4.60 per boe).
• Pieridae benefited from an adjustment to the 2022 gas cost allowance (GCA) credit calculated annually by the Alberta Crown, which more than offset year-to-date royalty expense, resulting in $16.6-million of net royalty recovery for the quarter.
• Q2 production was impacted by unscheduled downtime and maintenance activities at the Caroline and Jumping Pound gas processing facilities (4,800 boe/d), as well as periodic non-operated production outages arising from wildfires in Alberta and British Columbia (1,550 boe/d).
• Q2 capital expenditures were $9.4-million, with spending focused on the Brown Creek development program ($4.0-million), and facility maintenance and turnaround costs ($4.2-million).
• The successful refinancing included a new $20-million (Canadian), 18-month bridge term loan and the issuance of 18.6 million warrants. The company's previous term loan was retired in advance of its Oct. 16, 2023, maturity.
• The company executed several new commodity hedge transactions as part of its risk management strategy to mitigate cash flow volatility in support of capital spending and debt service obligations, and in compliance with the requirements of the new credit facility.

Chief executive officer succession

Pieridae previously announced the retirement of CEO Alfred Sorenson, effective Aug. 31, 2023. The board of directors is currently engaged in a CEO succession process, the results of which will be disclosed when concluded.

Outlook and revised guidance

Forward natural gas and natural gas liquids prices have continued to experience downward pressure since March, 2023, through the typically lower-priced summer season. Pieridae's robust hedge position will partially mitigate the lower expected prices through the second half of 2023, although not to the same extent as the first half of the year.

Additionally, Pieridae's year-to-date production was lower than expected and, while second-half production is anticipated to remain within the original guidance range, annual guidance has been revised downward from 37,000 to 39,000 boe/d to 33,000 to 34,500 boe/d to reflect the production challenges in the first half of the year.

Lower forecast hedge-adjusted pricing and lower production have also put downward pressure on NOI, partially offset by diligent operating cost reduction efforts and the previously discussed GCA adjustment to royalties. NOI guidance has been lowered slightly to reflect management's current projections, from the previous range of $120-million to $150-million to $110-million to $130-million.

Following a detailed capital program review during the second quarter, management has decided to bifurcate the previously discussed Waterton maintenance turnaround into two separate phases in order to complete critical maintenance requirements, while prudently managing the pace of capital expenditures during a period of lower projected cash flow. The first phase will be initiated on Aug. 12, 2023, requiring a production outage of four to five weeks and capital expenditures of approximately $11-million. Following the completion of phase 1, detailed scoping and timing for the remaining required work will be finalized and included as phase 2 in the 2024 maintenance capital budget. As a result of this partial turnaround and other continuing capital maintenance activities, total 2023 sustaining capital expenditures are now projected to be in the range of $30-million to $40-million, an increase from the previous guidance range of $15-million to $20-million.

Pieridae's revised 2023 guidance is provided in the attached table.

Pieridae's priority remains improving financial flexibility by strengthening its balance sheet while sustaining production, implementing cost reduction initiatives, optimizing infrastructure and executing non-core asset dispositions in order to maintain profitability during the commodity cycle.

Hedge position

Pieridae hedges to mitigate commodity price, interest rate and foreign exchange volatility to protect the cash flow required to finance the company's maintenance capital requirements and debt service obligations, while allowing the company to participate in future commodity price upside. Pieridae continues to execute its risk management program governed by its hedge policy and in compliance with the thresholds required by the new senior loan facilities. During the second quarter of 2023, the company entered several new hedge contracts in support of the loan refinancing transaction and, as of June 30, 2023, is hedged in accordance with the requirements of the senior loan agreement.

The company had fixed-price physical commodity sales contracts and power contracts in place at June 30, 2023, as shown in the attached table.

Conference call details

A conference call and webcast to discuss the results will be held on Thursday, Aug. 10, 2023, at 8:30 a.m. MDT (10:30 a.m. EDT). To participate in the webcast or conference call, you are asked to register on-line.

About Pieridae Energy Ltd.

Pieridae is a Canadian energy company headquartered in Calgary, Alta. Through a number of corporate and asset acquisitions, the company has grown into a significant upstream and mid-stream producer with assets concentrated in the Canadian foothills, producing conventional natural gas, natural gas liquids (NGLs), condensate and sulphur. Pieridae's vision is to be a progressive leader in providing responsible, affordable natural gas and derived products to meet society's energy security needs. Pieridae's common shares trade on the Toronto Stock Exchange under the symbol PEA.

(1) Refer to the non-GAAP (generally accepted accounting principles) measures section of the company's MD&A.

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