Mr. Donald Benson reports

AVILA ENERGY CORPORATION ANNOUNCES FULLY SUBSCRIBED RIGHTS OFFERING CLOSING AND EARLY WARNING DISCLOSURE

Avila Energy Corp. closed, on May 25, 2026, its rights offering, previously announced on April 17, 2026. The company received 7,797,639 subscriptions for units pursuant to the basic subscription privilege and an additional 49,632,273 subscriptions pursuant to the additional subscription privilege. As such, a total of 57,429,912 units were purchased for gross proceeds of $430,724.34. The net proceeds of the offering will be used toward payment to creditors and other liabilities not addressed under the company's amended proposal (as defined and further discussed below), inspection and repair of the natural gas processing equipment (which will restore 16 natural gas wells to production), and repair of two oil wells, and for working capital and general corporate purposes.

Each unit consists of one common share and one common share purchase warrant. Each warrant entitles the holder to acquire one additional common share at an exercise price of: (i) five cents per common share for the period of 120 days following the date of issuance of the warrant; and (ii) 10 cents per common share following the end of the initial period, until the expiration of the period of five years following the date of issuance of the warrant. The warrants are currently listed on the Canadian Securities Exchange under the trading symbol VIK.WT.

The offering constitutes a related party transaction as defined in Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, as certain directors and officers subscribed, directly and indirectly, 604,300 units. Pursuant to MI 61-101, related party transactions are subject to formal valuation and minority shareholder approval requirements, however, the offering is exempt from such requirements in reliance on Section 5.1(k) of MI 61-101.

Following the closing of the offering, the company will have 114,859,824 common shares issued and outstanding, before exercise of the warrants.

Early warning disclosure

Immediately prior to the offering, AI Artificial Intelligence Ventures Inc. (AI Ventures) owned 1,525,500 common shares, representing 2.66 per cent outstanding as of such date. Following the closing of the offering, AI Ventures beneficially owns or exercises control or direction over an aggregate of 10,950,500 common shares and 9,425,000 warrants, representing approximately 9.53 per cent of the common shares outstanding as of the date hereof on a non-diluted basis and 16.39 per cent on a partially diluted basis.

AI Ventures acquired the units for investment reasons. Subject to applicable law, AI Ventures may, from time to time, acquire or dispose of beneficial ownership of or control or direction over additional common shares, and/or other equity, debt, or other securities or instruments of the company, in the open market or otherwise, and reserve the right to dispose of any or all of its securities, including the common shares, in the open market or otherwise at any time and from time to time, depending on market conditions, the business and prospects of the company, and other relevant factors.

This news release is issued pursuant to National Instrument 62-103, The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which also requires a report to be filed with regulatory authorities in each of the jurisdictions in which the company is a reporting issuer containing information with respect to the foregoing matters. A copy of the early warning report will appear with the company's documents on SEDAR+.

About Avila Energy Corp.

Avila is a company that is engaged in the business of acquiring, exploring and developing crude oil, natural gas and natural gas liquids in Western Canada.

The company's assets consist of the west-central Alberta assets located 50 kilometres southwest of Edmonton, Alta., and the east-central Alberta assets located 90 kilometres east of Red Deer, Alta. The company exists under the laws of the Province of British Columbia, with its principal place of business located at Suite 201, 2750 3rd Ave. NE, Calgary, Alta., T2A 2L5, Canada. Avila's common shares trade on the Canadian Securities Exchange under the trading symbol VIK, the Frankfurt Stock Exchange under the symbol 6HQ and OTC Markets Group under the symbol PTRVF.

On Nov. 14, 2025, the company filed an amended proposal under the Bankruptcy and Insolvency Act (Canada) with FTI Consulting Canada Inc., in its capacity as proposal trustee. The amended proposal has been approved by the requisite majority of unsecured creditors and is subject to court approval, which was initially expected to be sought in late January, 2026, but has now been extended until after the closing of the rights offering as of the date hereof. Under the amended proposal, the company will satisfy the claims of affected creditors through the issuance of common shares at a deemed price of five cents per common share or such other price as may be determined, subject to the policies of the CSE. Accordingly, the total number of common shares to be issued will be equal to the aggregate dollar amount of affected creditor claims divided by five cents or such other price as may be determined, subject to final reconciliation of claims and court approval. The share-for-debt transaction is separate from the offering but will result in material dilution to existing shareholders, including shareholders who participate in the offering.

We seek Safe Harbor.