Mr. Shawn Mehler reports

PROSPERA ENERGY INC. SECURES $3.5 MILLION IN DEVELOPMENT FINANCING AND ANNOUNCES STRATEGIC APPOINTMENTS TO STRENGTHEN LEADERSHIP TEAM

Prospera Energy Inc. is continuing to execute the horizontal transformation and is attaining the expected results. Seven horizontals have been drilled with three more expected prior to year-end. Prospera also drilled the light oil slanted well, encountering structure and pay as anticipated. Accordingly, Prospera anticipates achieving a year-end 2023 exit rate of 1,800 barrels of oil equivalent per day.

Gross overriding royalty financing

Prospera has completed a $3-million GORR financing. The GORR portion bears a 1-per-cent royalty on Prospera's revenue from its Cuthbert properties and is repurchasable in 12 months for $3.48-million. The funds from the transaction will be used to conduct the horizontal well development program on the company's Cuthbert properties.

The company signed an arm's-length purchase and sale overriding royalty agreement and an agreement to purchase royalty, all dated Nov. 17, 2023, for the sale of a 1-per-cent royalty on Prospera's revenue from its Cuthbert properties. Funds will be advanced as follows:

• $1-million upon closing;
• $1-million to be paid within 10 days;
• $1-million to be paid within 10 days from the first date of production of wells No. 8 and No. 9 in Prospera's drilling program located in Cuthbert, Sask.

The company has the right of first refusal to repurchase the royalty back for $3.48-million, subject to price adjustments, no later than Nov. 30, 2025. In the event that the company elects to purchase the GORR prior to Oct. 1, 2024, the purchase price shall be $3.48-million. If closing occurs after Nov. 30, 2024, and if royalty payments for any quarter do not exceed $250,000 per quarter prior to the closing date, the purchase price will increase by $139,200 for each of those quarters where the royalty payments were less than $250,000 per quarter.

The initial royalty rate of 1 per cent up to and including Nov. 30, 2024, jumps to 16 per cent after Nov. 30, 2024, up to and including May 31, 2025, and then to 22 per cent after May 31, 2025, if the royalty interest has not been repurchased. Failure to remit royalty payments will result in the company paying, in addition to those funds, interest at 18 per cent per annum, compounded monthly.

As a part of White Tundra's business development initiatives supporting Prospera, Shubham Garg assisted in co-ordinating the placement with the investor group. Neither White Tundra, nor Mr. Garg was paid any finder's fee or warrants in this transaction.

Debt financing

Additionally, Prospera announces a clarification to the closing of its private placement, as a total of $583,000 was raised (previously $580,000 was announced). Prospera intends to use the net proceeds of the debt financing with an equity bonus and the GORR financing for development capital (including covering default partner portion) for drilling, completion and tie-in, well abandonment, and reclamation costs, and continuing environmental, social and governance initiatives.

The debt financing with an equity bonus was previously announced in press releases dated Sept. 27, 2023, Nov. 1, 2023, and Nov. 9, 2023, with the below terms:

Debt term sheet

Issue:  low-dilutive offering of debt financing with equity bonus

Equity bonus:  The principal amount loaned will be granted an equity bonus: one share for every $1 of debt provided.

Interest:  14-per-cent interest, calculated and paid quarterly in cash starting after the third quarter (interest in the first quarter is compounded)

Term:  two years

Repayment:  principal repaid at the end of the term

Underlying equity bonus:  common shares of the company listed on the TSX Venture Exchange under the symbol PEI

Use of proceeds:  Prospera intends to use the net proceeds of the offering for development capital (covering default partner portion): drilling, completion and tie-in, well abandonment, and reclamation costs, and continuing ESG initiatives.

Finders' fees:  The corporation may pay qualified finders a fee of 7 per cent in cash and 7 per cent in warrants.

Insider Samuel David has participated in this private placement for a principal amount of $503,000, which results in this being a related-party transaction pursuant to TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101. The corporation is relying upon numerous exemptions under these policies with respect to minority approval and valuation requirements, including those found in Section 5.5(a), (b) and (c) and 5.7(a) and (b).

The corporation paid finders' fees to qualified finders totalling $23,310 in cash and issued 211,909 in brokers warrants. Each warrant will entitle the holder to acquire one common share of the corporation at a price of 13 cents per share for a period of two years from the date of closing. The corporation reserves the right to accelerate the expiry date of the warrants to 15 days, in the event the shares trade at 30 cents for 10 consecutive business days following the expiry of the four-month hold period.

Strengthen leadership team

Prospera is delighted to announce the appointment of Chris Ludtke, CPA, CMA, as chief financial officer, effective immediately. Mr. Ludtke, formerly the vice-president of finance and accounting at Prospera, brings over 20 years of experience in the oil and gas, clean energy, and renewables industries. His extensive expertise in finance, budgets, planning, accounting, economic evaluation and decision-making positions him as an invaluable asset for Prospera. Prospera extends sincere gratitude to Matthew Kenna for his exceptional service as CFO over the past two years, contributing his wealth of experience to Prospera. Therefore, Prospera is pleased to announce the appointment of Mr. Kenna to Prospera's board of directors.

Additionally, Prospera is pleased to announce the appointment of John McMahon as vice-president of operations. With over 35 years of engineering and operations experience in Western Canada, Mr. McMahon brings a wealth of knowledge to Prospera's leadership team. His extensive expertise aligns well with its organizational goals, and Prospera anticipates that his leadership will contribute to innovation and efficiency for Prospera to become a low-cost producer.

About Prospera Energy Inc.

Prospera (TSX Venture Exchange: PEI, OTC: GXRFF and Frankfurt Stock Exchange: OF6B) is a publicly traded energy company based in Western Canada, specializing in the exploration, development and production of crude oil and natural gas. Prospera is primarily focused on optimizing hydrocarbon recovery from legacy fields through environmentally safe and efficient reservoir development methods and production practices. Prospera was restructured in the first quarter of 2021 to become profitable and in compliance to regulation, environment, landowners and service providers.

The company is in the midst of a three-stage restructuring process aimed at prioritizing cost-effective operations while appreciating production capacity and reducing liabilities. Prospera has completed the first phase by optimizing low hanging opportunities and attaining free cash flow, while bringing operations to safe operating condition, all while remaining compliant. Currently, Prospera is executing phase 2 of the restructuring process, the horizontal transformation intended to accelerate growth and capture the significant remaining reserves (400 million barrels). These horizontal laterals allow Prospera to reduce its environmental and surface footprint by eliminating the numerous vertical well leases along the lateral path. Phase 3 of Prospera's corporate redevelopment strategy is to optimize recovery through enhanced oil recovery applications. Further, Prospera will pursue its acquisition strategy to diversify its product mix. Its goal is to attain 50 per cent light oil, 40 per cent heavy oil and 10 per cent gas.

Prospera continues to apply efforts to minimize its environmental footprint, and, also, efforts to reduce and eventually eliminate emissions, alongside pursuing innovative ESG methods to enhance API quality, thereby achieving higher margins and eliminating the need for diluents.

We seek Safe Harbor.