Mr. Darcy Reding reports

PIERIDAE RELEASES Q4 AND FULL YEAR 2023 FINANCIAL & OPERATING RESULTS AND 2023 RESERVES

Pieridae Energy Ltd. has released its fourth quarter and full-year 2023 financial and operating results and year-end reserves. Pieridae generated net operating income of $131-million and produced 32,772 barrels of oil equivalent per day (86 per cent natural gas) during 2023. The company posted Q4 NOI of $25-million and production of 33,340 boe/d, following the completion of the Waterton turnaround project in late October, while 2023 exit production was approximately 37,500 boe/d.

In addition, the company filed its annual information form for the year ended Dec. 31, 2023, containing Pieridae's 2023 independent oil and natural reserves evaluation as required under National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities). Pieridae's 2023 NI 51-101 proven developed producing PV102 value is $614-million, and total proven plus probable PV10 value is $1,372-million.

The company's AIF, management's discussion and analysis, and audited consolidated financial statements and notes for the year ended Dec. 31, 2023, are available at the Pieridae website and on SEDAR+.

"During 2023, we successfully refinanced and reduced our long-term debt, safely completed crucial facility maintenance, drilled two Foothills development wells, reduced our [general and administrative] costs, and generated strong [net operating income]," said Pieridae's president and chief executive officer, Darcy Reding. "Pieridae's results improved in the fourth quarter despite falling natural gas prices and unavoidable maintenance downtime. We safely brought the Waterton facility and production back on-line at the end of October, and recovered our production capability, exiting the year at approximately 37,500 boe/d. Our commodity hedging program continues to support the business, generating over $60-million in gains during 2023, and is expected to continue to mitigate the cash flow impact of low gas prices in 2024, should they persist."

Annual highlights:

• Generated NOI of $130.9-million (82 cents per basic and fully diluted share);
• Generated funds flow from operations of $85.7-million (54 cents per basic and 53 cents per fully diluted share);
• Generated net income of $9.0-million (six cents per basic and four cents per fully diluted share);
• Produced 32,772 boe/d (86 per cent natural gas), down 11 per cent from 2022, due to extended facility downtime related to the Waterton turnaround, coupled with unplanned outages at Caroline and Jumping Pound processing facilities, shut-ins related to wildfires, and natural production declines; 2023 exit production was approximately 37,500 boe/d;
• Completed $150-million (U.S.) long-term debt refinancing and reduced net debt by $10.5-million to $204.0-million at year-end 2023; the company's $25-million (U.S.) revolving loan was 59 per cent utilized at year-end, while the $10-million (U.S.) delayed-draw term loan was undrawn;
• Reduced G&A expense by 17 per cent to $23.4-million ($1.95 per boe) in 2023 as a result of successful cost savings initiatives undertaken during the year;
• Incurred capital expenditures of $58.7-million in 2023 focused on facility maintenance, well and facility optimization projects, and development drilling with 2.0 (net) wells drilled in the first half of 2023;
• Recorded 2023 National Instrument 51-101 TPP reserves of 252.5 million boe and TPP PV10 reserve value of $1,371.7-million at the Jan. 1, 2024, IC4 price forecast.

2023 reserves

Deloitte, Pieridae's independent, qualified reserves evaluator, performed reserves evaluations of the company's assets at Dec. 31, 2023, and 2022. An attached table summarizes Pieridae's reserves based on the Deloitte National Instrument 51-101 reserve report using the Jan. 1, 2024, IC4 price forecast.

Selected 2023 reserve highlights:

• Reserve life index increased from 19.8 years in 2022 to 20.4 years.
• Two thousand twenty-four forecasted PDP base decline has improved to 5.4 per cent from 8.5 per cent in 2022.
• Sales volumes and operating cost improvements reflected in 2024 and beyond recognize demonstrated fuel gas consumption reductions.

Refer to the company's annual information form for the year ended Dec. 31, 2023, for more information on Pieridae's 2023 reserves.

Fourth quarter 2023 highlights:

• Generated NOI of $25.4-million (16 cents per basic and fully diluted share);
• Incurred capital expenditures of $10.9-million weighted toward completion of the planned Waterton gas processing facility turnaround, which required the Waterton field to be shut in from mid-August to late October, 2023;
• Generated funds flow from operations of $14.3-million (nine cents per basic and fully diluted share);
• Generated net income of $7.4-million (five cents per basic and three cents per fully diluted share);
• Produced 33,340 boe/d (87 per cent natural gas);
• Initiated a sale process for the Goldboro liquefied natural gas subsidiary and associated lands, licences and permits, which is currently continuing.

Outlook

Pieridae's priority remains strengthening its balance sheet while safely sustaining production, increasing the utilization of the company's gas processing facilities by attracting incremental third party volumes, implementing cost reduction initiatives, optimizing infrastructure and executing non-core asset dispositions to maintain profitability throughout the commodity cycle.

The company's 2024 guidance remains unchanged.

Pieridae's specific priorities for 2024 are:

• Maximize processing facility reliability to meet production targets and maximize third party processing revenue by leveraging its available deep-cut natural gas processing capacity;
• Reduce operating expenses to improve corporate netback;
• Optimize fuel gas consumption to reduce raw gas shrinkage, lower greenhouse gas emissions and costs, and increase sales revenue;
• Reduce long-term debt to deleverage the balance sheet.

Forward natural gas prices have continued to weaken, particularly over the recent months, as global demand stagnates through a warmer-than-normal winter season resulting in record storage levels and oversupply. Pieridae's robust hedge position will continue to partially mitigate the lower expected natural gas prices through 2024.

Production in the Clearwater gas field was shut in during 2023 due to low natural gas prices and a high proportion of variable operating costs, reducing 2024 average sales volumes by approximately 500 boe/d. This field will remain shut in until there is a recovery of gas prices. The company continues to closely monitor market conditions and may restore or further reduce production as conditions warrant.

Pieridae has hedged approximately 65 per cent of its expected 2024 natural gas production at approximately $3.50 per thousand cubic feet, and approximately 59 per cent of its expected 2024 condensate production is hedged utilizing swaps and an $80 by $90.75 West Texas Intermediate collar. The discounted unrealized gain on the company's hedge portfolio at Dec. 31, 2023, was approximately $71-million using the Dec. 31, 2023, forward strip.

Sulphur prices have also fallen year to date, reflecting weakening global sulphur demand. Pieridae's exposure to the sulphur market is limited for the next 21 months as it sells approximately 80 per cent of its produced sulphur at a fixed price to a third party through the end of 2025.

Pieridae's 2024 capital budget is highlighted by low-cost well and facility optimization projects and the second and final phase of the maintenance turnaround at the Waterton deep-cut, sour gas processing facility, which is currently scheduled for the third quarter. The production outage in the Waterton field associated with the turnaround is planned for approximately four weeks and is accounted for in its 2024 production guidance estimates. Pieridae owns and operates three major gas processing facilities, which each require periodic maintenance turnarounds on a five- to six-year cycle.

The scope and timing of all capital projects continue to be scrutinized in the context of lower year-to-date natural gas prices. Pieridae does not intend to resume its foothills development drilling program until the natural gas price outlook improves.

While debt reduction remains a top priority for 2024, the ability to repay revolving debt in 2024 may be impacted by low commodity prices and non-discretionary maintenance capital projects. Pieridae expects to draw down the final $10-million (U.S.) delayed-draw tranche of the senior secured term loan during 2024 (undrawn during 2023) to support the final phase of the Waterton turnaround in third quarter of this year. The company's available liquidity also includes $12-million (U.S.) remaining undrawn capacity on the senior secured revolving loan as of March 20, 2024.

Pieridae's previously announced Goldboro sale process is continuing, and, if successful, any cash proceeds from the sale of Goldboro will be used to partially repay the company's $22-million convertible bridge term loan, which matures on Dec. 13, 2024. The Goldboro sale process is expected to conclude in the first half of 2024 and, once complete, will mark the conclusion of Pieridae's strategic pivot away from east coast LNG and toward an Alberta-focused natural gas production and processing business.

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 operations, 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 senior loan facilities. As of Dec. 31, 2023, the company is hedged in accordance with the requirements of the senior loan agreement. The discounted unrealized gain on the company's hedge portfolio at Dec. 31, 2023, was approximately $71-million using the forward strip on Dec. 31, 2023.

Conference call details

A conference call and webcast to discuss the results will be held on Thursday, March 21, 2024, at 8:30 a.m. MDT/10:30 a.m. EDT. To participate in the webcast or conference call, you are asked to register.

A replay of the webcast will be available two hours after the conclusion of the event.

About Pieridae Energy Ltd.

Pieridae is a Canadian energy company headquartered in Calgary, Alta., and a significant upstream producer and mid-stream operator with core assets concentrated along the foothills of the Rocky Mountains. Its business is focused on safely producing, processing and delivering to market treated natural gas, condensate, NGLs and sulphur. Pieridae's common shares trade on the TSX under the symbol PEA.

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