An anonymous director reports

PRAIRIE PROVIDENT RESOURCES ANNOUNCES STRATEGIC ASSET SALES

Prairie Provident Resources Inc. has entered into a definitive agreement with a private oil and gas company to sell the company's Evi cash-generating unit located in Northern Alberta for a base purchase price of $27.0-million payable in cash, subject to effective date adjustments based on an effective date of Aug. 1, 2023. Upon completion of the Evi sale, the purchaser will become responsible for all future abandonment and reclamation obligations (ARO) pertaining to the Evi assets, with Alberta Energy Regulator deemed liabilities of approximately $48.1-million gross ($43.5-million net).

In a separate transaction, the company has entered into a definitive agreement with another private oil and gas company to sell certain non-core assets located in the Provost area of central Alberta for a base purchase price of $1.8-million payable in cash, subject to effective date adjustments based on an effective date of July 1, 2023, and potential future payments of up to $720,000 in aggregate based on the price of oil and production from the Provost assets during the 24-month period following closing. Both transactions are currently expected to close on or before Jan. 31, 2024, and are subject to regulatory approval, customary closing conditions and purchase price adjustments. Completion of the Evi sale and the Provost sale will build upon the recapitalization initiated in May, 2023, by streamlining the company's asset portfolio through the disposition of undercapitalized legacy assets, in turn allowing Prairie Provident to focus on higher return development opportunities in central and Southern Alberta. Proceeds of the completed transactions will allow the company to achieve a material reduction in debt and associated interest expense. Additionally, a portion of the proceeds will be directed to a development program designed to increase production, cash flow and reserves value from Prairie Provident's core areas located in central and Southern Alberta, including Princess, Provost and Michichi.

Evi sale

The properties included in the Evi sale comprise the company's entire asset base in the Northern Alberta region. The company is selling the Evi assets for a base purchase price of $27.0-million payable in cash, subject to effective date adjustments based on an effective date of Aug. 1, 2023. In addition, the purchaser will upon completion become responsible for all future ARO pertaining to the Evi assets, which carry annual equivalent rate deemed liabilities of approximately $48.1-million gross ($43.5-million net). The purchase price (before adjustments) represents a prior 12-month operating net income multiple of 3.5 times. For the quarter ended Sept. 30, 2023, the production attributed to the Evi properties averaged 874 barrels of oil equivalent per day in sales volumes.

Provost sale

The properties included in the Provost sale comprise a portion of the company's asset base in the region. The company is selling the Provost assets for a base purchase price of $1.8-million payable in cash, subject to effective date adjustments based on an effective date of July 1, 2023. In addition, the purchaser will upon completion become responsible for future ARO pertaining to the Provost assets, which carry AER deemed liabilities of approximately $2.6-million. The Provost sale also provides for future contingent payments to the company of up to $720,000 in aggregate based on the price of oil and production from the Provost assets during the 24-month period following closing as follows: (i) $10,000 for any month that WTI Cushing averages between $80.00 (U.S.) and $89.99 (U.S.); (ii) $20,000 for any month that WTI Cushing averages between $90.00 (U.S.) and $99.99 (U.S.); and (iii) $30,000 for any month that WTI Cushing averages $100 (U.S.) or more, prorated for any month in which production from the assets is less than 70 boe/d. Production currently attributed to the Provost properties is approximately 70 boe/d.

Adviser

National Bank Financial Inc. acted as financial adviser to Prairie Provident with respect to the Evi sale.

About Prairie Provident Resources Inc.

Prairie Provident is a Calgary-based company engaged in the exploration, development and production of low decline, long-life oil reserves in Alberta. The company maintains a significant portfolio of low-risk production enhancement and drilling opportunities.

We seek Safe Harbor.