Mr. Jim Evaskevich reports

YANGARRA ANNOUNCES FINANCIAL AND OPERATIONS UPDATE & YEAR END CORPORATE RESERVES INFORMATION

Yangarra Resources Ltd. has released its financial and operations update and the results of its 2022 year-end oil and gas reserves evaluation.

2022 fiscal year update highlights (financial numbers are unaudited and approximate):

• Production increased 23 per cent to 11,022 barrels of oil equivalent per day (boe/d);
• Net debt was reduced by 32 per cent to $134-million;
• PDP (proved developed producing) NAV (net asset value) per share increased 158 per cent to $4.15 per share;
• PDP additions replaced 267 per cent of 2022 production;
• Proved reserves value increased by 38 per cent to $1.4-billion;
• 32 per cent of future drilling locations are booked in the reserve report;
• Added 2.4 future locations for every location drilled.

Operations update

January, 2023, production averaged approximately 12,000 boe/d. Production for the month was negatively impacted by a turnaround at a Yangarra facility. As part of this turnaround, a debottlenecking project was completed which increased facility capacity from 25 million cubic feet per day (mmcf/d) to 35 mmcf/d. The company is also constructing a facility of 15 mmcf/d in Chambers to coincide with the future development of the new Chambers acreage.

The company completed six wells in mid-January that had been drilled in Q4 of 2022. These wells are currently being tested and are expected to be on stream in February. The Q1 2023 program remains on course and Yangarra expects to drill eight wells and complete 14 wells. Three wells will be drilled in the new Chambers area as part of the Q1 capital program.

ESG (environmental, social and governance) report

The company's 2022 ESG report is available on-line.

From 2019 to 2022:

• Vent emissions decreased by 64 per cent to 15,212 carbon dioxide equivalent (CO2e) tonnes;
• Methane emissions decreased by 57 per cent to 701 tonnes;
• Fuel CO2e emissions decreased by 18 per cent to 66,365 CO2e tonnes;
• Scope 1 CO2e emissions reduced by 30 per cent to 90,848 CO2e tonnes.

In 2022:

• Reduced CO2e intensity per boe produced by 30 per cent;
• Increased year-over-year water recycling by 24 per cent;
• Reduced year-over-year freshwater usage by 10 per cent;
• Spent 0.14 per cent of cash flow on abandonment and reclamation, with $1-million of spending remaining to abandon all standing wells.

Reserve report highlights

Summary

All reserves information contained in this press release are based on the company's 2022 National Instrument 51-101 oil and gas reserve report as prepared by Deloitte LLP.

Proved developed producing reserves:

• 26.3 million boe (34-per-cent increase from 2021);
• Net present value before tax discounted at 10 per cent (NPV10) of $522-million (51-per-cent increase from 2021);
• Yangarra's PDP F&D (finding and development) is $10.16 per boe, resulting in a recycle ratio of 4.7 times;
• PDP net asset value per fully diluted (FD) common share of $4.15;
• PDP reserve life index (RLI) of 6.1 years;
• PDP additions replaced 267 per cent of 2022 production.

Total proved reserves (1P):

• 86.5 million boe (5-per-cent increase from 2021);
• NPV10 of $1.4-billion (38-per-cent increase from 2021);
• 1P future development costs of $405-million;
• Yangarra's 1P F&D is $9.12 per boe, resulting in a recycle ratio of 5.3 times;
• 1P NAV per FD share of $13.68;
• RLI of 20.2 years;
• 1P additions replaced 194 per cent of 2022 production.

Proved plus probable reserves (2P):

• 144.8 million boe (3-per-cent increase from 2021);
• NPV10 of $2-billion (35-per-cent increase from 2021);
• 2P future development costs of $608-million;
• Yangarra's F&D is $7.78 per boe, resulting in a recycle ratio of 6.2 times;
• 2P NAV per FD share of $19.92;
• RLI of 33.9 years;
• 2P additions replaced 190 per cent of 2022 production.

Oil and gas reserves

The attached tables summarize certain information contained in the 2022 reserve report. The 2022 reserve report encompasses 100 per cent of Yangarra's oil and gas properties and was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities) by Deloitte.

Reconciliations of changes in reserves

An attached table sets out a reconciliation of the changes in the corporation's reserves as at Dec. 31, 2022, against such reserves at Dec. 31, 2021, based on forecast prices and cost assumptions.

Forecast prices used in estimates

The forecast price and market forecasts prepared by Deloitte are based on information available from numerous government agencies, industry publication, oil refineries, natural gas marketers and industry trends. The prices are Deloitte's best estimate of how the future will look, based on the many uncertainties that exist in both the domestic Canadian and international petroleum industries. Deloitte considers the current monthly trends, the actual and trends for the year to date, and the prior year actual in determining the forecast. The crude oil and natural gas forecasts are based on yearly variable factors weighted to higher per cent in current data and reflecting a higher per cent to the prior year historical. These forecasts are Deloitte's interpretation of current available information and, while they are considered reasonable, changing market conditions or additional information may require alteration from the indicated effective date.

Inflation forecasts and exchange rates, an integral part of the forecast, have also been considered.

Oil, NGL (natural gas liquid) and natural gas base case prices utilized by Deloitte in the Deloitte reserve report were as shown in an attached table.

Finding and development costs

Yangarra's F&D costs for 2022, 2021 and the five-year average are presented in an attached table. The costs used in the F&D calculation are the capital costs related to land acquisition and retention; drilling; completions; tangible well site; tie-ins; and facilities, plus the change in estimated future development costs as per the independent reserve report. Acquisition costs are net of any proceeds from dispositions of properties. Due to the timing of capital costs and the subjectivity in the estimation of future costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year. The reserves used in this calculation are company net reserve additions, including revisions.

Year-end disclosure

The audited financial statements for the year ended Dec. 31, 2022, are scheduled to be released on March 2, 2023.

Additional reserve information as required under NI 51-101 will be included in the company's annual information form which will be filed on SEDAR on or before March 31, 2023.

We seek Safe Harbor.