Mr. Dustin Hoffman reports

PIPESTONE ANNOUNCES THAT ISS AND GLASS LEWIS RECOMMEND SHAREHOLDERS VOTE "FOR" PROPOSED COMBINATION WITH STRATHCONA TO CREATE A LEADING CANADIAN ENERGY PRODUCER, AND SETS RECORD STRAIGHT ON FLAWED AND MISLEADING ARGUMENTS BY GMT

Leading proxy advisory firms Institutional Shareholder Services and Glass, Lewis & Co. LLC have both recommended that shareholders vote for Pipestone Energy Corp.'s proposed arrangement with Strathcona Resources Ltd. that would see Pipestone acquired by Strathcona to create one of Canada's largest energy producers.

Pipestone also wishes to set the record straight on the flawed assumptions and misleading arguments made by GMT Capital Corp., based in Atlanta, Ga., against this value-creating transaction. Shareholders of Pipestone should be wary that there is nothing new in GMT's speculative arguments in its dissident proxy circular, which focuses on short-term, cherry-picked data, nor does GMT have a value-enhancing plan for the stand-alone company. GMT's argument can be summarized as nothing more than "kill the deal, and hope for the best." Hope is not a strategy the directors of Pipestone and Pipestone can support. Neither should shareholders.

The determination of the independent committee of the board came after an extensive and robust strategic review process that considered all alternatives available to Pipestone, including the arguments and options put forward by GMT, and was supported by the advice of Pipestone's financial and legal advisers.

The 18-month review process that began in early 2022 evaluated over 75 potential counterparties. In February, 2023, Pipestone received an initial proposal from Strathcona. The terms of the Strathcona proposal were improved through several revised proposals. The definitive arrangement agreement with Strathcona was signed on July 31, 2023, and includes support agreements from management and Riverstone Holdings LLC, a significant and highly sophisticated shareholder in Pipestone. It was clear to the independent and unconflicted members of the special committee that the Strathcona proposal was in the best interests of the shareholders.

"We are pleased to see that sophisticated independent proxy advisers with no agenda but to provide objective investor guidance support our board's recommendation to shareholders," said Gord Ritchie, chair of the Pipestone board.

Pipestone believes the arrangement offers numerous advantages for shareholders. The all-share consideration will enable shareholders to fully participate in the upside of a much larger and more diversified producer that is expected to benefit from scale at 185,000 barrels of oil equivalent per day; a well-positioned reserves base and much longer life at over 38 years; better access and lower cost to capital; extending its tax shelter by over two years; a potential positive rerating by markets; and an ability for Pipestone shareholders to continue to participate in the upside of the combined company. The special committee and the board have determined the arrangement is in the best interests of Pipestone and the shareholders and has the full, signed backing of the management of Pipestone.

"Management's full support for the arrangement is a result of our detailed operational knowledge of Pipestone and its reserves, the upside of participating in a large, diversified producer, and the relative risk associated with being a stand-alone producer," said Dustin Hoffman, chief operating officer and interim president and chief executive officer.

Throughout Pipestone's thorough strategic review process, the special committee and the board consistently compared the Strathcona transaction with the status quo as a stand-alone single-asset producer and against other potential alternatives for the company. Those included alternatives surfaced by the long and robust strategic review process and included those put forward by GMT.

The recommendations that shareholders vote for the arrangement by the independent proxy advisory firms ISS and Glass Lewis underscore the board's recommendation. The job of ISS and Glass Lewis is to review transaction terms, process in detail, and offer proxy voting guidance to investment managers, mutual funds, pension funds and other institutional investors.

Responses to GMT's flawed and misleading arguments

Pipestone disagrees with GMT's arguments for many reasons, which are further detailed herein, but chiefly among them, GMT does not properly take into account the risks of Pipestone remaining a stand-alone entity, or the benefits of participating in the upside of a much larger, more diversified producer, and depends upon a series of flawed and unsupported assumptions to support its subjective beliefs, feelings and arguments.

1. Exchange ratio

GMT argues that the exchange ratio is dilutive. That assertion is based on flawed and inadequate analysis based on single-point estimates that fail to take into account long-term value and business sustainability. Independent reserve metrics are a more appropriate measure of relative value as they take into account longevity of reserve life and its economic viability. Based on proven plus probable net asset value, Pipestone contributes only 8.8 per cent to the pro forma company while Pipestone shareholders receive a larger 9.05 per cent of the pro forma company, making the exchange ratio attractive to Pipestone shareholders.

Further, even focusing on GMT's single-point estimates, GMT fails to take into account three important elements in its analysis. First, reserve life index (a measure of how long production can be sustained) for Strathcona is 38 years compared with 18 years for Pipestone stand-alone. Second, the pro forma company delivers significantly more profit for each barrel of oil equivalent as measured by Strathcona's operating netback of $35.30 per barrel of oil equivalent versus Pipestone stand-alone of $19.51 per boe (based on second quarter 2023 on an unhedged basis). Finally, oil sands peers like the pro forma company historically traded at approximately 2.0 times EV/DACF premium to Montney-based peers, delivering higher shareholder value for the same dollar of DACF.

In addition, GMT's estimated market value of Pipestone is based on GMT's internal estimates of Pipestone's 2025 earnings before interest, taxes, depreciation and amortization and is flawed in numerous respects: (1) This analysis ignores the fact that Pipestone will be a significant cash tax payer in 2025, which will likely influence its EBITDA multiple; (2) the assumed EBITDA multiple is significantly in excess of the trading multiple of Pipestone's small-capitalization Montney peers; and (3) Pipestone's multiple has historically lagged its Montney peers due to the technical challenges associated with its asset base and its concentrated shareholder ownership.

2. Opportunities as a stand-alone company

GMT argues that there are ways to increase the value of Pipestone as a stand-alone company. In fact, the board and management have examined all of these and determined that the Strathcona transaction is superior.

To take just one example, GMT argues that H2S is not a significant issue. In fact, contrary to GMT's speculation that significant reserves could be added with additional technical work, blending and building incremental sour gas processing are already incorporated into management's plan. Pipestone's independent reserves evaluator, McDaniel & Associates Consultants Ltd., has already assigned reserves to approximately 80 per cent of its acreage, negating GMT's assertion that the company has not properly delineated its lands.

The risks and capital expenditures inherent in building out significant infrastructure are better undertaken by companies of scale and a diversified asset base as opposed to a single asset company. Pro forma the combination, the business will have several decades of high-quality drilling locations across a diverse asset base, significantly reducing technical risk.

3. Combination is superior to a sale

Just like GMT, Pipestone management and board also believe there will be an improvement in the energy markets, and an all-equity combination, and not a sale for cash, allows Pipestone shareholders a full, continued participation in the market upside. However, unlike management and the board, GMT fails to provide any concrete solutions or account for any risks facing Pipestone as a stand-alone company, even in improved energy markets.

The combination allows Pipestone shareholders full exposure to improving energy markets but from a position of strength. First, the pro forma company will have a substantially more diversified asset base, significantly reducing Pipestone's single-asset risk. Second, Pipestone shareholders transition to being part of a company with substantial scale and significant relevance in capital markets and with institutional investors. Third, the pro forma company will have greater access to capital at lower cost to address Pipestone stand-alone challenges.

What is GMT's real agenda?

Shareholders should ask themselves:

• What is GMT's true agenda? Is it aligned with the interests of the other shareholders?
• Has GMT articulated an actionable vision and strategy for Pipestone?
• Why would GMT cherry-pick inadequate metrics to cast the transaction in the most unflattering light possible?

The special committee and the board have determined the arrangement is in the best interests of Pipestone and the shareholders and has the full support of management.

Pipestone thanks shareholders for the strong support they have shown so far by voting for the arrangement and encourages all shareholders to vote for the arrangement before 10 a.m. Calgary time on Monday, Sept. 25, 2023. Details on how to do so can be found below.

Pipestone special shareholder meeting

Shareholders must vote before 10 a.m. Calgary time on Monday, Sept. 25, 2023.

On Aug. 28, 2023, Pipestone filed a management information circular and related meeting materials in connection with the special meeting of shareholders. The meeting is scheduled to be held 10 a.m. Calgary time on Sept. 27, 2023, and will be held in a virtual-only format that will be conducted by live audio webcast.

The sole purpose of the meeting is for the shareholders to consider and, if deemed advisable, approve the arrangement. Further details regarding the meeting are set forth in the circular.

The board of Pipestone has approved the arrangement and recommends that shareholders vote for the arrangement at the meeting.

Copies of the meeting materials are available on the Pipestone-Strathcona website and under Pipestone's SEDAR+ profile.

How to vote

Pipestone has retained Kingsdale Advisors as its proxy solicitation agent and strategic shareholder and communications adviser in connection with the meeting. Shareholders with questions are encouraged to contact Kingsdale Advisors by e-mail or at one of the numbers below.

North America (toll-free):  1-877-659-1824

Outside of North America (collect calls):  416-623-2514

E-mail:  contactus@kingsdaleadvisors.com

Visit:  the Pipestone-Strathcona website

Vote for now

Details on how to vote can also be found in the circular under voting information. All shareholders are encouraged to vote in advance of the meeting by proxy, whether or not a shareholder is intending to attend the meeting in person (virtually).

About Pipestone Energy Corp.

Pipestone is an oil and gas exploration and production company focused on developing its large contiguous and condensate-rich Montney asset base in the Pipestone area near Grande Prairie. Pipestone is committed to building long-term value for its shareholders while maintaining the highest possible environmental and operating standards, as well as being an active and contributing member to the communities in which it operates. Pipestone has achieved certification of all its production from its Montney asset under the Equitable Origin EO100 Standard for Responsible Energy Development. Pipestone shares trade under the symbol PIPE on the Toronto Stock Exchange.

We seek Safe Harbor.