Mr. Mohammad Fazil reports

SABA ENERGY ENTERS INTO SETTLEMENT AGREEMENT FOR ITS OIL AND GAS ASSETS IN BRITISH COLUMBIA

Saba Energy Ltd. has entered into a settlement agreement dated June 10, 2026, with the court-appointed receiver and manager of Blue Sky Resources Ltd. regarding the B.C. oil and natural gas assets that Saba purchased in 2024 and 2025, from BSR, a related party of the company. BSR is owned directly or indirectly by the significant shareholder and control person of Saba. BSR was petitioned into receivership on March 23, 2026. At the time of the receivership proceedings, BSR owed Saba approximately $2.8-million in connection with revenue from the B.C. assets, which were payable to Saba.

By way of background, Saba acquired the B.C. assets pursuant to a number of agreements as follows:

• An agreement between BSR and Saba made effective Jan. 1, 2024, whereby BSR agreed to sell to Saba 50 per cent of BSR's interest in certain petroleum and natural gas assets in British Columbia and 100 per cent of the shares of Blue Sky Paus Ltd., for consideration in the form of Saba common shares valued at $27.5-million, representing approximately 85 per cent of the then issued share capital of Saba;
• An agreement between BSR and Saba dated June 25, 2025, and made effective as of Aug. 15, 2025, whereby BSR agreed to sell to Saba 100 per cent of BSR's assets known as the Taber properties, 100 per cent of BSR's assets known as the Columbia properties, the remaining 50 per cent of BSR's Alberta heavy oil and natural gas assets known as the Cold Lake properties which were not then owned by Saba, and the remaining 50 per cent of BSR's B.C. assets for an original purchase price of $21-million payable in cash;
• An amending agreement dated effective July 14, 2025: the purchase price under the 2025 PSA was reduced from $21-million to $13-million, and the scope of the second licensed assets was redefined to: (i) include the remaining 50 per cent of BSR's B.C. assets not then owned by Saba; (ii) the remaining 50 per cent of BSR's interest the Cold Lake assets which were not then owned by Saba; and (iii) to exclude 100 per cent of BSR's assets known as the Taber properties and 100 per cent of BSR's assets known as the Columbia properties which were originally included;
• A second amending agreement dated effective Oct. 7, 2025: the payment terms under the 2025 PSA were further amended such that the purchase price of $13-million would be satisfied over time from production revenue generated by the second licensed assets, with no obligation on Saba to make cash payments at closing.

The transactions were approved by shareholders in accordance with Multilateral Instrument 61-101 (Protection of Minority Securityholders in Special Transactions) at meetings held on April 29, 2024, and Aug. 22, 2025, and accepted by the TSX Venture Exchange. By virtue of the receivership proceedings, a dispute arose over the ownership of the B.C. assets which were originally owned and operated by BSR.

Following extensive negotiations, Saba entered into settlement agreements whereby the following will occur on an effective date, conditional upon a number of factors, including approval of the court, completion or waiver of certain conditions. In the event that the settlement conditions are not met on or before July 16, 2026, upon notice to Saba from the receiver, the settlement agreement shall terminate and be of no further force or effect.

Also, in connection with the transaction, the principals of BSR agreed to return 50,353,694 Saba common shares issued in May, 2024, as partial consideration for the acquisition of the B.C. assets. The returned shares represent 85 per cent of the shares issued by Saba as consideration for the B.C. assets. The shares will be returned to treasury for cancellation. Saba's significant shareholder will receive no collateral benefits in connection with the settlement agreement. Due to the receivership proceedings, Saba will not receive any of the $2.8-million owed to it by BSR.

The steps under the settlement agreement initially involve a reversion of Saba's entire interest in and to the B.C. assets. Upon the effective time, the B.C. assets and associated interests shall be transferred on an as is, where is basis to, and vest in, BSR absolutely, effective as of June 12, 2026.

After the effective time, Saba shall have the right to elect to have the gas producing assets located in northeastern British Columbia, consisting of 58 natural gas wells and related interests transferred by BSR back to Saba on an as is, where is basis for nominal consideration. Saba will be required to provide written notice to BSR of its election within 30 days from the effective date. However, if the required security deposit or other conditions required by the B.C. Energy Regulator or any other applicable government authority are not acceptable to Saba, in its sole discretion, Saba can reject the Laprise assets. Saba only intends to proceed with the acquisition of the Laprise assets if the conditions required by the B.C. Energy Regulator or any other applicable government authority are acceptable.

In addition, the receiver has agreed to provide Saba with immediate access to the BSR accounting records in the receiver's possession for Saba to complete its audit. Saba has agreed to compensation the receiver $20,000 to facilitate this access. This will enable Saba to complete its audited financial statements for the year ended Dec. 31, 2025, which were due to be filed April 30, 2026. Saba was unable to complete the audit as the receiver refused to allow BSR, as operator, to provide Saba with the information necessary to complete its audit. Saba obtained a management cease trade order on May 1, 2026, due to the difficulty in obtaining the information. Saba intends to apply for an extension to the MCTO and expects to be in a position to file its audited financial statements by July 31, 2026.

The receiver and Saba have agreed to co-operate and take all reasonably necessary steps to convey the B.C. assets to BSR and to effect the transfer of any leases, rights, permits or approvals to give effect to this settlement agreement, including transfer of the Laprise assets to Saba, as applicable.

Concurrently with the settlement and transfers, the recipients of the Saba common shares pursuant to the transactions have agreed to tender an aggregate 50,353,694 of the shares received pursuant to the transactions (85 per cent of the aggregate Saba common shares received in the transactions) back to the Saba for cancellation. Pursuant to TSX Venture Exchange Policy 5.3, consent to the disposition has been received in writing from shareholders holding greater than 50 per cent of the aggregate voting shares of Saba following the share cancellation.

About Saba Energy Ltd.

The company is a publicly traded entity listed on the TSX Venture Exchange under the symbol SABA with oil and natural gas assets in northeastern British Columbia and Alberta.

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