Mr. Darcy Reding reports

PIERIDAE OBTAINS SHAREHOLDER APPROVAL FOR BRIDGE LOAN CONVERSION

Pieridae Energy Ltd. has obtained the requisite shareholder approval to (i) issue the common shares issuable to its lender, Prudential, pursuant to the share purchase warrants granted to Prudential in June, 2023, and (ii) repay in full the remaining principal amount, accrued interest and conversion fee owing to Erikson National Energy Inc. under the $20-million bridge loan provided by Erikson on June 13, 2023, via the issuance of common shares of the corporation, at any point prior to maturity of the bridge loan on Dec. 13, 2024. Pieridae intends to repay a portion, or all, of the amounts drawn under the bridge term loan with cash proceeds arising from potential non-core divestitures. Following the conclusion of any such divestitures, the company plans to repay the remaining residual principal amount, if any, via the conversion of such amount into common shares, such conversion to occur at some point prior to maturity in December, 2024.

As previously announced on June 13, 2023, Pieridae Energy's wholly owned subsidiary, Pieridae Alberta Production Ltd. (PAPL or the borrower), successfully completed a debt refinancing transaction, resulting in new credit facilities with Prudential Private Capital and Voya Investment Management, totalling $150-million (U.S.). The financing consisted of (1) a $120-million (U.S.) 45-month senior secured credit facility that bears interest at secured overnight financing rate (SOFR) plus 6.75 per cent, consisting of (i) a $25-million (U.S.) revolving loan, (ii) an $85-million amortizing term loan, and (iii) a $10-million (U.S.) delayed-draw amortizing term loan; and (2) a $30-million (U.S.) 51-month subordinated term loan that bears interest at a 13-per-cent fixed rate.

In addition, at the time of completion of the financing, Pieridae issued 18,596,322 common share purchase warrants to Prudential (the holder) as additional consideration for the subordinated notes. Each warrant is exercisable to purchase one common share in the capital of the corporation at an exercise price of 49 cents per common share (the exercise price being equal to the market price of the common shares at the time of issuance of the warrants). As an alternative to payment of the aggregate exercise price of the warrants upon exercise, the warrants permit the holder to exercise the warrants, on a net basis without the exchange of any funds (the cashless exercise), such that the holder receives, in lieu of the number of common shares purchasable upon exercise of warrants otherwise than pursuant to a cashless exercise (the total share number), the total share number less the number of common shares equal to the quotient obtained by dividing (a) the product of the total share number and exercise price by (b) the five-day volume weighted average trading price of the common shares on the Toronto Stock Exchange prior to but excluding the date of the cashless exercise of the warrants. The expiration date of the warrants is June 13, 2030. The warrants represent 9.9 per cent of the issued and outstanding common shares of PEL on a fully diluted basis and 11.7 per cent of basic shares currently outstanding. Prior to the financing, the holder did not own any of Pieridae's common shares; following exercise of the warrants, the holder will become an insider of the corporation, owning more than 10 per cent of the corporation's issued and outstanding common shares.

Concurrently with the completion of the financing, the corporation also secured a $20-million senior secured 18-month term loan (the bridge term loan) from Erikson National Energy Inc., an affiliate of Third Eye Capital Corp. (TEC), the proceeds of which were contributed to PAPL for general corporate purposes and repayment of indebtedness. As disclosed at the time the bridge term loan was obtained, the corporation agreed with TEC to seek disinterested shareholder approval to amend the bridge term loan credit agreement to permit the conversion of the bridge term loan into common shares of the corporation.

As at the date hereof, the full $20-million has been drawn by the corporation under the bridge term loan. However, neither Erikson nor the corporation is obligated to deliver the conversion notice at any prescribed time, and thus, the total amount owing to Erikson to repay the bridge term loan will continue to increase until the maturity date of the bridge term loan on Dec. 13, 2024, as interest will continue to accrue, reflecting a total amount due and owing to Erikson, at maturity, of $30,058,521 (the maximum conversion amount), inclusive of accrued interest and conversion fee. The number of common shares required to be issued to satisfy the payment in full of the maximum conversion amount, at the expiration of the bridge term loan, should a notice of conversion be issued by Erikson or the corporation at such time, depends on the five-day volume weighted average price of the common shares (the conversion price) at the time the notice of conversion is issued. Thus, based on a sensitivity analysis reflecting a range of conversion prices from 40 cents to a low of 15 cents, the corporation has obtained shareholder approval to issue the number of common shares required to repay, in full, the maximum conversion amount of the bridge term loan on Dec. 13, 2024, such maximum conversion amount comprised the sum of (i) the principal amount of $20-million, (ii) accrued interest thereon of $6-million and (iii) the conversion fee of $4-million. For illustrative purposes only, attached is a table that sets forth the number of common shares that would be needed to settle the maximum conversion amount based on a range of volume weighted average prices of the corporation's common shares.

In addition, the terms of the bridge term loan provide that the corporation has up to 60 days to issue the common shares required to repay the maximum conversion amount, which exceeds the 45 days permitted by the policies of the Toronto Stock Exchange (TSX).

As the bridge term loan could not have been completed without the completion of the financing, and vice versa, under the policies of the TSX, both are viewed as connected transactions, notwithstanding the fact that TEC and Prudential are arm's-length parties. Accordingly, since the issuance of the 18,596,322 common shares issuable under the warrants and the issuance of the common shares to Erikson, under all of the sensitivity analyses referenced herein, to satisfy payment of the maximum conversion amount, will exceed 25 per cent of the issued and outstanding common shares, shareholder approval was required. Shareholder approval was also required to permit the issuance of the common shares to occur 60 days after the conversion notice is submitted.

In addition, the issuance of the common shares to Erikson to satisfy the maximum conversion amount (i) is expected to exceed TSX insider participation limits (calculated as 10 per cent of issued and outstanding shares prior to the issuance) and (ii) will result in Erikson beneficially owning more than 20 per cent of the issued and outstanding common shares of the corporation, resulting in Erikson becoming a control person of the corporation, ranging from Erikson owning, if the maximum conversion amount is settled, 42 per cent of the issued and outstanding shares (on a fully diluted basis) at a conversion price of $0.40 to 62 per cent of the issued and outstanding shares (on a fully diluted basis) at a conversion price of 15 cents. Creation of a new control person also requires shareholder approval, on a disinterested basis, under the policies of the TSX.

Lastly, as Erikson was an insider of the corporation at the time the bridge term loan was completed, payment of the 20 per cent conversion fee to Erikson was required under Part V of the TSX Company Manual. The board of directors of the corporation reviewed the conversion fee payable to Erikson and concluded that it was in the best interests of the corporation to complete the refinancing, including the bridge term loan (which included the conversion fee).

Pieridae has received permission from the TSX to rely on the exemption provided in Section 604(d) of the TSX Company Manual that allows shareholder approval to be obtained by written consent executed by holders of more than 50 per cent of Pieridae's outstanding common shares, excluding common shares held, directly or indirectly, by Erikson, rather than at a meeting of shareholders.

Pieridae has received written consent from holders of more than 50 per cent of its issued and outstanding common shares, excluding common shares held by Erikson, approving (i) the issuance of common shares in excess of 25 per cent dilution, (ii) the creation of Erikson as a control person, (iii) the payment of the conversion fee of 20 per cent to Erikson in connection with the conversion of the bridge term loan and (iv) the issuance of the common shares to satisfy the maximum conversion amount occurring up to 60 days after the delivery of the notice of conversion.

Accordingly, Pieridae has satisfied all shareholder approval requirements required by the TSX in connection with the financing and the repayment of the bridge term loan via the issuance of common shares.

About Pieridae Energy Ltd.

Pieridae is a Canadian energy company headquartered in Calgary, Alta. The company is a significant upstream producer of conventional natural gas, NGLs (natural gas liquids), condensate and sulphur from the Canadian Foothills of Alberta and northeast British Columbia. Pieridae's vision is to provide responsible, affordable natural gas and derived products to meet society's energy security needs. Pieridae's common shares trade on the TSX under the symbol PEA.

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