Mr. Stuart McDowall reports

SOFTROCK MINERALS ANNOUNCES PROPOSED RECAPITALIZATION TRANSACTION INCLUDING NEW MANAGEMENT TEAM, CORPORATE STRATEGY, FINANCING AND CHANGING OF NAME TO CRITERIUM ENERGY LTD.

Softrock Minerals Ltd. has entered into a definitive reorganization and investment agreement with Robin Auld, Matthew Klukas, Brian Anderson, Hendra Jaya and Henry Groen, which provides for: (i) a non-brokered private placement of units of Softrock at a price equal to four cents per unit for minimum gross proceeds of $3-million, with best efforts being used to obtain subscriptions for maximum gross proceeds of $5-million; and (ii) the appointment of a new management team and reconstitution of the board of directors of Softrock.

Concurrently with the completion of the transaction, it is expected that the name of the corporation will be changed to Criterium Energy Ltd., subject to receiving the necessary shareholder approvals and approval of the TSX Venture Exchange.

The new management team will be led by Mr. Auld as president and chief executive officer, Mr. Klukas as chief operating officer, Mr. Groen as chief financial officer, and Mr. Jaya as director, Indonesia. Upon completion of the transaction, Softrock has agreed that the board of directors will be reconstituted and shall initially consist of existing board member Michele Stanners and new directors Robin Auld and Brian Anderson. It is anticipated that additional independent directors will be appointed at the next annual general meeting of the corporation. Each member of the new management team and the new Softrock board, along with the current directors of Softrock, intends to participate in the non-brokered private placement.

New management team

The new management team has an extensive record of value creation in the energy sector and intends to execute a growth-and-income business model focused on upstream and transitional energies in Southeast Asia (ASEAN). Collectively, the new management team and the new Softrock board has a strong reputation of collaborative and ethical business within ASEAN, a reputation built upon over 100 combined years of experience with junior to intermediates (Jadestone Energy and Addax Petroleum), integrated oil companies (Talisman Energy and Repsol), national oil companies (Pertamina) and supermajors (Shell). In addition to its deep ASEAN experience, the new management team has also delivered value in the North American upstream, mid-stream and power generation sectors for many years, with a focus on methods and technologies that enhance reservoir performance and operational efficiencies.

Note: Southeast Asia refers to the ASEAN (Association of Southeast Asia Nations) nations, which consist of, in order of greatest population to least, Indonesia, the Philippines, Vietnam, Thailand, Myanmar, Malaysia, Cambodia, Laos, Singapore and Brunei.

Operating and technical staff in Canada and ASEAN have been identified and engaged to assist in the delivery of the vision and strategy outlined herein.

Vision and strategy

The new management team intends to build a large independent upstream energy company by executing an acquisition, development and optimization strategy targeting ASEAN upstream energy assets. This vision is underpinned by the new management team's technical and commercial capabilities, the region's high-yield energy market, and a strong M&A (merger and acquisition) pipeline in ASEAN that the new management team believes will result in scalable growth and sustainable cash generation.

Actively supporting the energy transition

By 2035, ASEAN's population is forecasted to be over 800 million and the middle-class population is expected to double, reaching approximately 350 million people, exceeding the entire U.S. population. This demographic emergence is the catalyst for world-leading economic growth with GDP (gross domestic product) forecasted to increase by 140 per cent and energy demand to keep pace with an increase of over 125 per cent. Various forms of energy will be required to support these growing economies and hydrocarbons will play a pivotal role as natural gas demand is expected to grow by at least 50 per cent by 2050 under the accelerated transition scenario limiting global temperature rise to 2 C. This demand growth is driven by coal-to-gas switching for power generation and underpinning intermittent renewables.

Executing upon strategic pillars

Upon completion of the transaction, the new management team intends to target upstream energy assets in ASEAN that can support a free cash flow operating model by realizing development growth, production optimization and economies of scale. The new management team will prioritize a combination of producing assets and energy developments near demand centres and exposure to premium-priced markets when compared with North America. The new management team intends to focus on total shareholder return by executing on three strategic pillars:

1. Successful and sustainable reputation:
   • Maximize access to M&A opportunities, including non-competitive processes, on favourable terms;
   • Provide social licence to operate and demonstrated ability to execute projects to governments and regulators in target jurisdictions;
   • Attract top talent for regional operations teams;
2. Innovation and technology arbitrage:
   • Introduce technologies that have been proven in Western Canada and elsewhere to undercapitalized ASEAN assets;
   • Examples include pressure maintenance, reservoir management, modular development concepts and carbon sequestration;
3. Operational excellence:
   • Improving efficiency and reducing the carbon footprint of the corporation's operations;
   • Introducing digital technologies to legacy assets and new developments;
   • Setting tangible emission reduction targets.

The corporation intends to target assets and jurisdictions where it holds a competitive advantage across all three strategic pillars.

Softrock's royalty assets

Softrock is a public company incorporated under the Alberta Business Corporations Act with its shares traded on the TSX-V. Since incorporation in 1994, the corporation has invested in oil, gas and mineral exploration and development globally. Recently, the corporation's assets have been consolidated and the new management team believes they now comprise a valuable foundation of cash-flow-generating royalties that can support the vision and strategy of the new management team outlined herein.

In addition to the cash on hand and international income tax pools, Softrock has no debt and holds royalty interests in five producing oil and gas wells located in the Charlie Lake and Grand Forks areas of Alberta, Canada. The royalties have been independently valued at approximately $1.9-million, effective Dec. 31, 2021. Softrock also holds a 2-per-cent net smelter return royalty on certain mineral claims in the Shatford Lake area of Manitoba that are prospective for lithium.

Private placement

The new management team, together with additional subscribers identified by them as well as each of the current directors of Softrock, will subscribe for a minimum of 75 million units at a price of four cents per unit for minimum gross proceeds of $3-million, with best efforts being used to obtain subscriptions for a maximum of 125 million units at a price of four cents per unit for maximum gross proceeds of $5-million, on a non-brokered private placement basis. Each unit will comprise one common share of Softrock and one common share purchase warrant. Each warrant will entitle the holder thereof to acquire one common share prior to the date that is five years from the date of issuance of the warrant at an exercise price of four cents. The warrants will vest and become exercisable as to one-third upon the 20-day volume-weighted average trading price of the common shares on the TSX-V equalling or exceeding 5.5 cents per common share, an additional one-third upon the market price equalling or exceeding 6.5 cents per common share, and the final one-third upon the market price equalling or exceeding eight cents per common share. Vesting of the warrants is subject to the completion of the consolidation (as defined herein), resulting in the postconsolidation exercise price of the warrants being equal to or greater than five cents. Closing of the private placement will occur concurrently with the change of management.

Proceeds from the private placement will be used to increase Softrock's working capital position, for general corporate purposes, for future acquisitions of upstream energy assets, and supporting the new management team's strategy of building a portfolio of free-cash-flow-generating assets with the ability to generate returns for shareholders.

The common shares and warrants issued in connection with the private placement, and the common shares issuable on exercise of the warrants, will be subject to a Canadian statutory hold period of four months plus one day from the closing of the private placement in accordance with applicable securities legislation.

Softrock options and warrants

In connection with the transaction, the resigning officers and directors of Softrock who hold options to purchase common shares will enter into option exercise and cancellation agreements, pursuant to which such holders will agree to exercise or surrender for cancellation their outstanding options at or prior to closing of the transactions.

Softrock's currently issued and outstanding share purchase warrants will continue to be outstanding following closing in accordance with their terms.

Severance payments

In connection with the transaction, the current executives of Softrock will receive severance payments that will include the issuance of a total of 1,786,324 common shares to be issued at a deemed price of four cents per share and a cash payment equal to the applicable withholding taxes on the severance shares, concurrent with the completion of the transaction and subject to the approval of the TSX-V. Softrock will not owe any further employee or director obligations other than these severance payments.

Approvals

Completion of the transaction is subject to a number of conditions and approvals, including, but not limited to, the approval of the TSX-V and shareholders of Softrock. It is expected that Softrock will hold a shareholder meeting in September, 2022, to approve among other items: (i) the change of management, as required by policies of the TSX-V; and (ii) the name change. The transaction is not expected to materially affect control of Softrock or create a new control person of Softrock.

Pursuant to the policies of the TSX-V, in order to be permitted to issue the units at less than the minimum issue price of five cents per unit, Softrock has also committed to seek shareholder approval of the consolidation of the common shares on the basis of one postconsolidation common share for up to every four preconsolidation common shares at a special meeting of shareholders no later than six months after the completion of the transaction and to effect the consolidation as soon as possible thereafter. Subscription agreements for the units issuable under the non-brokered private placement will include a covenant from the subscribers to vote in favour of the consolidation at the special meeting of shareholders.

Board recommendation

The board of directors of Softrock has unanimously approved the transaction and determined that the transaction is in the best interest of Softrock and recommends shareholders vote in favour of the change of management and the other transactions contemplated by the recapitalization agreement. Stuart McDowall, chair of Softrock, commented, "The board of directors of Softrock welcomes the new management team to Softrock and supports the ASEAN-focused vision and strategy."

Certain shareholders of Softrock who hold, in the aggregate, approximately 18.2 per cent of the issued and outstanding common shares have agreed to vote their common shares in favour of the change of management and the other transactions contemplated by the recapitalization agreement at the Softrock meeting.

The recapitalization agreement

The recapitalization agreement contains a number of customary representations, warranties and conditions. The complete recapitalization agreement will be accessible on Softrock's SEDAR profile on SEDAR.

We seek Safe Harbor.