File: '\\swfile\EmailIn\20260527 141206 Attachment Avila - PR re _ Closing Rights Offering(32858107.5).docx'

201-2750 3rd Ave NE Calgary, Alberta T2A 2L5, Canada

NEWS RELEASE

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

CALGARY, AB May 27, 2026 - Avila Energy Corporation (CSE: VIK, OTCM: PTRVF and FRA: 6HQ) ("Avila" or the "Company") is pleased to announce the closing on May 25, 2026 of its previously announced rights offering 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 (the "Offering"). As such, a total of 57,429,912 units (the "Units") were purchased for gross proceeds of $430,724.34. The net proceeds of the Offering will be used towards 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), repair of two oil wells and for working capital and general corporate purposes.

Each Unit consists of one (1) common share (a "Common Share") and one (1) Common Share purchase warrant (a "Warrant"). Each Warrant entitles the holder to acquire one (1) additional Common Share at an exercise price of (i) CAD $0.05 per Common Share for the period of one hundred twenty (120) days following the date of issuance of the Warrant (the "Initial Period"); and (ii) $0.10 per Common Share following the end of the Initial Period, until the expiration of the period of five (5) 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 ("MI 61-101"), 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.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities within the United States, and such securities may not be offered or sold in the United States, or to or for the account or benefit of any person in the United States or any "U.S. person" (as defined in Regulation S under the U.S. Securities Act of 1933, as amended), unless registered under the U.S. Securities Act and applicable state securities laws, or pursuant to an exemption from such registration requirements.

Early Warning Disclosure

Immediately prior to the Offering AI Artificial Intelligence Ventures Inc. ("AI Ventures") owned 1,525,500 Common Shares, representing 2.66% 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% of the Common Shares outstanding as of the date hereof on a non-diluted basis and 16.39% 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 (collectively, "Securities") 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 press 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 (the "Early Warning Report"). A copy of the Early Warning Report will appear with the Company's documents on the System for Electronic Document Analysis and Retrieval Plus at www.sedarplus.ca.

About Avila Energy Corporation

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, Alberta and the East Central Alberta assets located 90 kilometres east of Red Deer, Alberta. The Company exists under the laws of the Province of British Columbia, with its principal place of business located at 201-2750 3rd Ave NE Calgary, Alberta T2A 2L5, Canada. Avila's Common Shares trade on the CSE under the trading symbol "VIK", the Frankfurt Stock Exchange under the symbol "6HQ" and OTC Markets Group under the symbol "PTRVF".

On November 14, 2025, the Company filed an amended proposal under the Bankruptcy and Insolvency Act (Canada) (the "Amended Proposal") 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 $0.05 per Common Share or such other price as may be determined (the "Shares-for-Debt Transaction"), 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 $0.05 or such other price as may be determined, subject to final reconciliation of claims and court approval. The Shares-for-Debt Transaction is separate from the Offering but will result in material dilution to existing shareholders, including shareholders who participate in the Offering.

ON BEHALF OF THE BOARD

Donald Benson

Director, President & CEO

Further information regarding the Company can be found on SEDAR at www.sedarplus.ca, or by contacting the Company directly at (403) 451-2786 or by e-mail at info@avilaenergy.com. Neither the CSE nor its Regulation Services Provider (as that term is defined in policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.

Caution Regarding Forward-Looking Information

This news release contains statements that constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information involves known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements, or industry results, to differ materially from those expressed or implied by such forward-looking information. All statements herein, other than statements of historical fact, are forward-looking information.

Forward-looking information in this news release includes, but is not limited to, statements regarding: the intended use of proceeds; court approval of the Amended Proposal and the expected timing of seeking such approval; completion of the Shares-for-Debt Transaction and CSE approval thereof; the issuance of Common Shares to affected creditors and the deemed price and dilutive effect of the Shares-for-Debt Transaction; and Avila's ability to continue as a going concern and execute its current business objectives.

Forward-looking information is based on a number of assumptions and estimates, including, without limitation, assumptions regarding the general stability of the economic and political environment in which Avila operates; the Company's ability to obtain all required approvals and consents, including court approval of the Amended Proposal and CSE approval of the Shares-for-Debt Transaction and of the listing of the rights and the warrants; investor interest and participation in the Offering; Avila's ability to access capital on acceptable terms; the Company's future growth potential and operating performance; the final reconciliation of affected creditor claims; and that general business and economic conditions will not change materially adversely. Although the Company considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

Actual results may differ materially from those currently anticipated due to a number of risks and uncertainties, including, but not limited to: the potential that the Offering will not be completed on the terms described herein or at all; the risk that the Amended Proposal may not receive court approval or may not be approved on the terms described herein; the risk that the Shares-for-Debt Transaction may not be completed or may not receive CSE approval; the Company's inability to obtain other required regulatory approvals; fluctuations in general market conditions and the trading price of the Common Shares; dilution resulting from the Offering, the Shares-for-Debt Transaction, or other future financings; the Company's ability to continue as a going concern; the availability of financing; the final amount of affected creditor claims and corresponding number of Common Shares to be issued; the Company's ongoing financial difficulties and insolvency proceedings; operating and financial risks

inherent in the oil and gas industry; the condition and operability of the Company's natural gas processing equipment; political and regulatory risks; changes in laws or regulations; and other factors beyond the control of Avila.

Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive. Additional information identifying risks and uncertainties that could affect the Company's operations and financial results can be found in Avila's filings with Canadian securities regulators, available under the Company's profile on SEDAR+ at www.sedarplus.ca.

The forward-looking information contained in this news release is made as of the date hereof, and Avila disclaims any obligation to update or revise such information, whether as a result of new information, future events, or otherwise, except as required by applicable law.