Mr. Garrett Soden reports

SHAMARAN REPORTS SECOND QUARTER 2023 RESULTS

Shamaran Petroleum Corp. has released its financial and operating results and related management's discussion and analysis for the three and six months ended June 30, 2023.

Garrett Soden, president and chief executive officer of Shamaran, commented: "The continued closure of the Iraq-Turkey pipeline and delayed payments for past oil sales materially impacted all Kurdistan oil producers during the second quarter of 2023. Discussions are ongoing between Ankara, Baghdad and Erbil to find a political solution. We believe the various governments should be aligned to reopen the pipeline and to resolve the outstanding payment issues with international oil companies. In the meantime, Shamaran is focused on cost reduction and cash preservation, as well as encouraging our operating partners to increase oil sales to local refineries to improve liquidity. With our cash on hand, recent bond waiver, accounts receivable and own bonds held in treasury, we have significant flexibility while we seek a resolution to the production, export and payment situation."

Corporate highlights:

• The closure of the Iraq-Turkey pipeline on March 25, 2023, had a material impact on Shamaran's operations and financial results. The company is actively engaging in discussions with the relevant parties for reopening the ITP to Kurdistan oil exports.
• While Atrush is shut in due to a lack of storage and trucking facilities, Sarsang oil production has continued at a reduced rate since late April, 2023, with additional oil storage capacity secured off-site and sales to local refineries on an ad hoc weekly basis. Sarsang local sales vary in price and volume from week to week, but are expected to continue on an ad hoc basis until the ITP exports resume and payment issues are resolved.
• Excluding non-recurring general and administrative costs, Shamaran achieved a cash-neutral quarter from an operating cash flow perspective due to local sales revenues and pro-active cost-cutting at both the asset and corporate level.
• The recent passage of the Iraq federal budget for 2023 to 2025, including a production commitment from the Kurdistan regional government (KRG), should enable regular monthly budget transfers from Iraq to the KRG, as well as normalization of relations between the region and the federal government of Iraq.

• Q2 2023 Sarsang oil sales went to the Kurdistan local market at an average net back price of $41.47 per barrel, and generated net revenues and cash payments to the company of $6.5-million.
• Since the ITP shutdown, Shamaran and its operating partners have cut costs (both operating and capital expenditures) at the asset level. This resulted in reduced cash calls to Shamaran in Q2 2023 versus the original budget. The company is actively pursuing further cost reduction initiatives and encouraging its operating partners to pursue additional local sales to improve liquidity.
• Shamaran has also revised its corporate G&A spend and implemented cost reduction initiatives to preserve cash. If non-recurring costs of approximately $1.1-million were excluded from the quarter's G&A costs, Q2 2023 results would have shown positive cash flow from operations. This adjusted G&A better reflects the expected run-rate going forward.
• The company continues to engage with the KRG regarding the $96.7-million of overdue receivables for oil sales from October, 2022, to March, 2023 (on the basis of the KBT pricing mechanism). Since payment timing is uncertain, Shamaran has reassessed the credit loss provision in Q2 2023, resulting in an increase to the provision by $11.6-million in the quarter.
• At June 30, 2023, the company had cash of $92.5-million (including restricted cash of $59.3-million), receivables from past oil sales of $96.7-million (before any provision for credit risk on overdue invoices) and gross debt of $315.6-million (including the $300-million bond and $15.6-million related-party loan). Net debt was $192.4-million (including $30.7-million in Shamaran bonds held by the company).

Operational highlights:

• Since the ITP shutdown, Atrush has been shut in due to a lack of storage and trucking facilities. Sarsang production has been limited by storage capacity and the local sales market in Kurdistan, but production has continued at an average gross rate of 18,000 barrels of oil per day during Q2 2023. As reported by HKN Energy Ltd., Sarsang local sales during Q2 2023 averaged 13.7 Mbopd.
• HKN completed one water disposal well (ST-AW1) on the Sarsang block, and Taqa Atrush BV completed one production well (CK-20) on the Atrush block during Q2 2023. Both wells are expected to be in operation after the resumption of pipeline exports, field operations and regular payments for oil sales.
• The 2023 capital programs associated with further drilling activity and processing capacity expansion at both the Sarsang and Atrush blocks have been reduced and/or deferred completely.
• Due to the reduced activity levels following the ITP closure, Shamaran has suspended guidance for 2023. The company is working with the KRG and its operating partners to address the challenges in Kurdistan, and will update the market as appropriate.

Subsequent events:

• On July 26, 2023, the company announced that it had requested and received bondholder approval for a waiver to release cash from the 2025 bond debt service retention account (DSRA). The waiver allowed the company to use restricted cash in the DSRA to pay the bond interest and amortization obligations due on July 30, 2023.
• At July 31, 2023, the company had cash of $56.9-million (including restricted cash of $19.8-million), receivables from past oil sales of $96.7-million and gross debt of $293.1-million (including the $277.5-million bond and $15.6-million related-party loan). Net debt was $207.8-million (including $28.4-million in Shamaran bonds held by the company).
• Shamaran plans to publish its financial statements for the nine months ending Sept. 30, 2023, on Nov. 8, 2023. Except as otherwise indicated, all currency amounts indicated as dollars in this news release are expressed in U.S. dollars.

About Shamaran Petroleum Corp.

Shamaran is a Canadian independent oil and gas company focused on the Kurdistan region of Iraq. The company holds a 27.6-per-cent working interest in the Atrush block through its wholly owned subsidiary General Exploration Partners Inc. and an 18-per-cent interest (22.5-per-cent paying interest) in the Sarsang block through its wholly owned subsidiary Shamaran Sarsang AS. The company is listed in Toronto on the TSX Venture Exchange and in Stockholm on the Nasdaq First North Growth Market (ticker SNM). Shamaran is part of the Lundin group of companies.

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