Mr. Philip Hodge reports

PINE CLIFF ENERGY LTD. ANNOUNCES 2023 ANNUAL RESULTS, FILING OF DISCLOSURE DOCUMENTS, YEAR-END RESERVES, PROVIDES 2024 GUIDANCE, DIVIDEND DECLARATION AND EXECUTIVE UPDATE

Pine Cliff Energy Ltd. has released its 2023 annual results, filed its disclosure documents, filed its year-end reserves, provided 2024 guidance, declared its dividend and provided an executive update.

Q4 2023 and 2023 annual results are as follows:

• Generated $9.7-million (three cents per basic and fully diluted per share) and $58.7-million (17 cents per basic and 16 cents per fully diluted share) of adjusted funds flow for the three months and year ended Dec. 31, 2023, compared with $40.2-million (11 cents per basic and fully diluted share) and $163.2-million (47 cents per basic and 45 cents per fully diluted share) for comparable periods in 2022.
• Generated net income of $800,000 (zero cents per basic and fully diluted share) and $9.1-million (three cents per basic and fully diluted share) for the three months and year ended Dec. 31, 2023, compared with $24.7-million (seven cents per basic and fully diluted share) and $108.9-million (31 cents per basic and 30 cents per fully diluted share) for the comparable periods in 2022.
• Completed the acquisition of Certus Oil & Gas for total consideration of $108.9-million on Dec. 13, 2023, expanding Pine Cliff's operations in central Alberta and providing a new core area.
• Production averaged 21,454 Boe/d (barrels of oil equivalent per day) and 20,660 Boe/d during the three months and year ended Dec. 31, 2023, representing a 2-per-cent increase and 2-per-cent decrease from the comparable periods in 2022.
• Paid dividends of $11.6-million (three cents per basic and fully diluted share) and $46.0-million (13 cents per basic and fully diluted share) for the three months and year ended Dec. 31, 2023, compared with $10.8-million (three cents per basic and fully diluted share) and $23.6-million (seven cents per basic and fully diluted share) for the comparable periods in 2022.
• Entered into a three-year secured term debt facility in the amount of $56.3-million to finance a portion of the acquisition.
• Capital expenditures totalled $30.5-million in 2023, including development capital of $11.8-million to drill one gross (0.3 net) Caroline oil well, drill, complete and tie-in three gross (2.1 net) Pekisko oil wells and drill, complete, and tie-in one gross (0.2 net) non-operated natural gas well in Edson. Capital expenditures also included facilities optimization and maintenance capital of $9.2-million and abandonment and reclamation expenditures of $9.5-million.

Included in the filings were Pine Cliff's annual information form (AIF), which includes disclosure and reports related to reserves data and other oil and gas information pursuant to National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities and its consolidated financial statements and related management's discussion and analysis for the year ended Dec. 31, 2023.

Pine Cliff will host a webcast at 10 a.m. MT (12 p.m. ET) on Tuesday, March 5, 2024. Participants can access the live webcast through the links provided on the company's website. A recorded archive of the webcast will be available on the company's website following the live webcast.

Reserve report highlights

Pine Cliff's independent reserve report was prepared by McDaniel & Associates Ltd. in accordance with National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities with the effective date of Dec. 31, 2023.

Highlights of the report include:

• Net present value for proved plus probable (P+P) reserves of $476.8-million, discounted at 10 per cent, an increase of $65.3-million, or 16 per cent, from Dec. 31, 2022, primarily as a result of the acquisition, offsetting the impact of lower natural gas benchmark pricing.
• Pine Cliff increased its 2023 P+P reserves by 29.0 MMBoe (million barrels of oil equivalent) prior to adjusting for 2023 production, a reserve replacement ratio of 325 per cent of 2024 estimated production as a result of the 31.5 MMBoe added from the acquisition.
• Remaining P+P reserves of 89.2 MMboe (71 per cent conventional natural gas and coal bed methane) at Dec. 31, 2023, increased 31 per cent from 67.6 MMboe at Dec. 31, 2022 largely as a result of the acquisition.
• Approximately 70 per cent of total reserve volumes are classified as total proved reserves, 30 per cent are classified as probable reserves.

Pine Cliff's reserves

McDaniel has used a three-consultant average price (McDaniel, GLJ & Sproule) forecast, resulting in a price forecast of $2.20 and $3.37 per MMBtu (million British thermal units) for AECO natural gas and $73.67 (U.S.) and $74.98 (U.S.) per Bbl for WTI (West Texas Intermediate) oil in 2024 and 2025 respectively.

2024 guidance and dividend

Pine Cliff's board of directors has approved a 2024 capital expenditure budget of $17.5-million, including $7.0-million of abandonment and reclamation spending. Pine Cliff expects 2024 annual production volumes to range between 24,000 Boe/d and 25,000 Boe/d, representing 14-per-cent growth at the midpoint due to the acquisition.

Pine Cliff has declared a regular monthly dividend of 0.5 cent per common share (six cents per common share annualized) to be paid March 28, 2024, to shareholders of record on March 15, 2024. The reduced capital budget and monthly dividend represent a disciplined response to preserve financial flexibility while natural gas prices are weak. The dividend is designated as an eligible dividend for Canadian income tax purposes.

In response to weak natural gas prices, Pine Cliff has increased its AECO hedge position to approximately 22 per cent of gross natural gas production at an average price of $3.20/Mcf (thousand cubic feet) for 2024. Approximately 33 per cent of gross crude oil production has been hedged at an average price of $99.58/Bbl for 2024.

Executive update

Alan MacDonald will be retiring from his role as chief financial officer effective April 30, 2024. We are pleased to announce the promotion of Kristopher Zack to the role of chief financial officer and corporate secretary effective May 1, 2024. Mr. MacDonald will continue to work with the executive team to assist with the transition.

We seek Safe Harbor.