Mr. Robin Auld reports

CRITERIUM ENERGY ANNOUNCES TRANSFORMATIVE ACQUISITION OF MONT D'OR PETROLEUM LTD. AND C$22 MILLION PUBLIC OFFERING

Criterium Energy Ltd. executed a sale and purchase agreement (SPA) on June 14, 2023, to acquire all the issued and outstanding shares of Mont D'Or Petroleum Ltd. (MOPL). MOPL holds 100-per-cent operating working interests in two production-sharing contracts (PSCs) in Indonesia -- the Tungkal PSC located onshore South Sumatra, which produces 1,030 barrels per day and contains 2P reserves of 4.6 million barrels, and the West Salawati PSC, located in southwest Papua, which produces 20 barrels per day and contains 2P reserves of 100,000 barrels. Collectively, Tungkal and West Salawati have been independently valued at $58-million (U.S.) NPV10 (net present value discounted at 10 per cent) after tax.

This transformative acquisition will establish Criterium as an operator in Southeast Asia while providing immediate production and operating cash flow. The acquisition is aligned with Criterium's strategy of building a balanced portfolio of low-risk producing assets with tangible reinvestment opportunities in the form of production optimization, infill drilling and stepout developments.

The company has filed and has been receipted for a preliminary short-form prospectus in connection with a marketed agency equity public offering of subscription receipts of the company at a price per subscription receipt to be determined in the context of the market, for aggregate gross proceeds of up to $22-million ($16-million (U.S.) equivalent). The offering is being led by Research Capital Corp., as lead agent and sole bookrunner, on behalf of a syndicate of agents, including Canaccord Genuity Corp. and Stifel FirstEnergy.

Acquisition highlights:

• Immediate cash flow and production -- collective production of approximately 1,050 barrels per day;
• Significant upside identified -- production optimization through workovers and infill drilling to achieve expected production of 1,400 barrels per day to 1,600 barrels per day by Q4 2023/Q1 2024 and fiscal year-end 2024 expected production of 2,200 barrels per day to 2,600 barrels per day, financed from cash flow, with the expectation to generate $25-million (U.S.) EBITDA (earnings before interest, taxes, depreciation and amortization) in 2024;
• Mature development and exploration inventory -- 2C resource of 6.5 million barrels of oil equivalent, including 20 billion cubic feet of natural gas and a mature prospect inventory near infrastructure; total prospective resources of 29 million barrels of oil equivalent;
• Established operating business -- MOPL has a strong 15-year record of safe operations in Indonesia and provides Criterium with a reputable and talented operating and technical team from which to expand operations;
• Assumption of favourable debt -- acquiring MOPL in consideration of assuming $32.5-million (U.S.) of outstanding debt, which Criterium will reduce to $19.7-million (U.S.) after closing through cash payments ($7.9-million (U.S.)) and conversion to equity ($2.5-million (U.S.) of common shares at closing and $2.4-million (U.S.) converted in 2025); favourable weighted average interest rate of 7.9 per cent;
• Strong cash position -- upon closing of the acquisition, MOPL will hold a cash balance of approximately $17-million (U.S.) (approximately $8-million (U.S.) cash from the offering and $9-million (U.S.) of MOPL cash), creating a resilient balance sheet that will utilize cash to execute drilling and workover campaigns while ensuring the debt amortization is met;
• Strategic shareholder -- upon closing of the acquisition, Criterium will issue $1-million (U.S.) common shares of the company to Tourmalet Holdings Ltd., a company owned by the founding partners of Provident Capital Partners, a leading Southeast Asia focused investment firm that has successfully built multiple billion-dollar businesses in Indonesia; current MOPL shareholders, which includes Tourmalet, will receive contingency payments upon certain price and production thresholds.

Robin Auld, chief executive officer of Criterium Energy, stated: "Mont D'Or is a foundational acquisition for Criterium and establishes our company as a reputable operator in Indonesia and Southeast Asia. By acquiring MOPL, we integrate a seasoned team which safely operates over 1,000 barrels per day that generates a stable and scalable cash flow base which we intend to grow rapidly. With the recently announced 2042 Tungkal PSC extension, we intend to execute annual drilling programs to fully realize MOPL's potential to deliver long-term sustainable production growth within cash flow.

"As we bring the Mont D'Or team into Criterium, this is an energizing period for our expanding team and our shareholders. The financing arrangements we announce today strengthen our balance sheet and provide flexibility to execute our ambitious growth objectives with MOPL and future acquisitions in the region. We have the experienced team to capture these opportunities and deliver significant value for our shareholders.

"We are excited to be working with Research Capital, Canaccord and Stifel to broaden our global shareholder base and to further enhance global exposure and liquidity. To support this expanded shareholder base, we may consider a dual listing on the London Stock Exchange's AIM [Alternative Investment Market] market, alongside the current listing on the TSX-V [TSX Venture Exchange] in Canada."

Gavin Caudle, founding partner of Provident Capital Partners, stated: "This transaction is aligned with our core principle of partnering with strong management teams in good businesses. We are confident that the Criterium team will build upon MOPL's strong reputation established from over 15 years of operations to realize significant value creation. We invest for the long term, and, as a shareholder of Criterium, we will support the team and push them to build an industry-leading business to align with the other companies within our portfolio. I look forward to working with the Criterium team to optimize MOPL as they springboard to other accretive transactions."

Acquisition

Criterium Energy will purchase all outstanding and issued shares of MOPL under the terms of the SPA. As set forth in the SPA, Criterium has committed to the following payments and issuance of securities upon closing:

1. A nominal fee of $1 (U.S.) payable to the current MOPL shareholders;
2. The issuance of common shares equivalent to $1-million (U.S.) to Tourmalet;
3. A cash payment of $7.9-million (U.S.) to MOPL to be distributed to current MOPL lenders;
4. The issuance of common shares and/or convertible notes equivalent to $5.75-million (U.S.) to select MOPL lenders;
5. A working capital injection into MOPL of approximately $8-million (U.S.).

Equity financing

The company has filed and has been receipted for a preliminary short form prospectus in connection with a marketed agency equity public offering of subscription receipts at a price per subscription receipt to be determined in the context of the market for aggregate gross proceeds of up to $22-million. The offering is led by Research Capital as lead agent and sole bookrunner, on behalf of a syndicate of agents, including Canaccord Genuity and Stifel FirstEnergy.

Certain directors, officers and employees of the company have provided indication of interests to participate in the offering alongside other investors.

Each subscription receipt will entitle the holder thereof to receive, without payment of any additional consideration and with no further action on the part of the holder thereof, one common share upon satisfaction of certain escrow release conditions prior to the escrow release deadline (as defined as follows).

The company intends to use the net proceeds of the offering for: (i) drilling activities in 2023; (ii) front-end engineering and design (FEED) studies for gas processing, transportation and carbon sequestration at Bulu; and (iii) a portion for repaying certain debt with MOPL's existing lenders to reduce the total debt balance outstanding following completion of the acquisition.

In connection with the offering, the company has granted the agents an option, exercisable in whole or in part, at the sole discretion of the agents, at any time, from time to time, for a period of 30 days from and including the closing of the offering, to purchase from the company up to an additional 15 per cent of the subscription receipts sold under the offering, on the same terms and conditions of the offering to cover overallotments, if any, and for market stabilization purposes.

Upon closing of the offering, the net proceeds will be placed in escrow with an escrow agent and will be released to the company (together with the interest thereon) upon satisfaction of certain escrow release conditions and the agents receiving a certificate from the company prior to the termination time (as defined as follows) to the effect that:

1. The completion, satisfaction or waiver of all conditions precedent to the acquisition in accordance with the SPA (save and except for those conditions precedent that are contingent upon and/or will be completed, satisfied or waived concurrent with or as part of the closing of the acquisition, provided that the chief executive officer of the company (or such other officers as may be acceptable to the lead agent, acting reasonably) has certified to the agents that, to the best of his information, knowledge or belief, no event, circumstance or condition exists that could reasonably be expected to result in any of the concurrent conditions precedent not being completed, satisfied or waived concurrent with or as part of the closing of the acquisition; it being understood and agreed that certain of the concurrent conditions precedent may be completed or satisfied pursuant to the giving and acceptance of solicitors' undertakings, as applicable, to the satisfaction of the agents, acting reasonably;
2. The receipt of all required shareholder and regulatory approvals, including, without limitation, the conditional approval of the TSX Venture Exchange for the acquisition;
3. The representations and warranties of the company contained in the agency agreement to be entered into in connection with the offering being true and accurate in all material respects, as if made on and as of the escrow release date;
4. The company and the lead agent having delivered a joint notice and direction to the escrow agent, confirming that the conditions set forth in (1) to (3) herein have been met or waived.

If: (i) the escrow release conditions are not satisfied or waived on or prior to 5 p.m. Toronto time on the date that is 90 days following the closing of the offering (or such later date as the lead agent may consent in writing); (ii) the acquisition is terminated in accordance with its terms; or (iii) the company has advised the agents or the public that it does not intend to proceed with the acquisition (in each case, the earliest of such times being the termination time), the company will be responsible to refund the gross proceeds of the offering (including the amount of the agents' commission and the agents' expenses) without penalty or deduction to the subscribers of the offering, such that it would be the company's responsibility to return the full amount of the gross proceeds of the offering to the holders of subscription receipts, together with such holders' pro rata portion of the interest earned thereon, if any.

The offering is expected to close on or about the week of July 19, 2023, or such other date as the company and the lead agent may agree. Closing of the offering is subject to customary closing conditions, including, but not limited to, the receipt of all necessary regulatory approvals, including the approval of the securities regulatory authorities and the TSX-V.

The subscription receipts may be offered in the United States on a private placement basis pursuant to an appropriate exemption from the registration requirements under applicable U.S. law and outside of Canada and the United States on a private placement or equivalent basis. The preliminary short form prospectus is available on SEDAR.

Debt financing

Criterium and the sellers have negotiated interest adjustments with select MOPL lenders to reduce the total debt outstanding upon closing of the acquisition to $32.5-million (U.S.). Immediately following the closing of the acquisition, Criterium will pay $7.9-million (U.S.) in cash and $4.9-million (U.S.) in common shares and convertible notes to select MOPL lenders to reduce total debt upon closing of the acquisition to $19.7-million (U.S.). Criterium has amended the lender agreements to reflect an amortization schedule that results in all debt being fully paid by 2026 with funds from operations. The debt has a favourable weighted average interest rate of 7.9 per cent.

Overview of the Tungkal PSC

MOPL holds a 100-per-cent working interest in the Tungkal PSC, which covers an area of 2,285 square kilometres and contains the Mengoepeh and Pematang Lantih oil fields, which collectively produce 1,030 barrels per day and contain 4.6 million barrels 2P reserves as of Dec. 31, 2022. MOPL secured an extension to the PSC to August, 2042, and the extension is in the form of the gross split PSC, which has a favourable contractor take and income tax rate of 40 per cent on net profits. Under the new PSC term, MOPL has committed to execute firm work commitments over the next five years, which include G&G (geophysical and geological) studies, seismic acquisition, and two exploration wells.

Mengoepeh field

The Mengoepeh field was discovered in January, 1997, and commenced production in 2004, reaching a peak rate of 2,500 barrels per day. In 2022, two infill wells were drilled, bringing the total development well count to 40, with 12 wells currently producing 430 barrels per day and four non-producing natural gas wells. The main reservoir is the Talang Aker formation, and, as of Dec. 31, 2022, the Mengoepeh field has produced 4.7 million barrels, an estimated 6-per-cent recovery factor. Criterium recognizes additional potential above 2P estimates, which only equate to an 11-per-cent ultimate recovery and intends to focus its efforts on workovers of bypassed pay, infill drilling and secondary recovery techniques. Acting immediately, Criterium intends to drill three to four wells in Q4 2023/Q1 2024 and commence an annual drilling program thereafter.

Pematang Lantih field

The Pematang Lantih field was discovered in 1939 with first production in 2015 and reached its peak rate of 2,000 barrels per day in June, 2018. In 2022, two wells were drilled, bringing the total development well count to six with current production of 600 barrels per day. As of Dec. 31, 2022, the field had produced 1.8 million barrels, representing an estimated 10-per-cent recovery factor. As with Mengoepeh, Criterium recognizes significant potential above current 2P estimates, resulting in an additional ultimate recovery of 19 per cent. Criterium has identified potential upside in converting former-producing wells into water injectors to increase ultimate recovery from the relatively simple-faulted anticline structure.

Oil produced from the Tungkal PSC is trucked to either the Gemah terminal (95 kilometres away) or the Tempino terminal (120 kilometres). Average operating costs, including transportation, in 2022 were $25 (U.S.) per barrel, a large portion of which are fixed. As production increases, unit operating costs are expected to decrease.

Gas aggregation

The Tungkal PSC contains 20 billion cubic feet of 2C contingent gas resource within the Mengoepeh SE and Macan Gedang structures. Additional prospects are identified on 2-D seismic, which contain prospective resource (best case) of 34 billion cubic feet. Criterium intends to conduct technical and commercial feasibility studies to determine the potential for producing gas for internal use and sales to third parties.

West Salawati PSC

MOPL holds a 100-per-cent-operated working interest in the West Salawati PSC located onshore Salawati Island covering an area of 970 square kilometres and containing the Balladewa-A (BLL-A) oil field, which currently produces approximately 20 barrels per day from one well. The West Salawati PSC is a cost recovery PSC that expires in 2033. MOPL has outstanding work commitments, which include two exploration wells to be drilled prior to 2026. Fortunately, the prospectivity within the block is mature and contains the BLL-B, BLL-C and BLL-F structures, which can utilize existing infrastructure from the BLL-A field. In addition, the PSC contains large prospects located in the shallow water portion of the PSC, most notably Prospect-3X.

BLL-A field

The BLL-A1 well was drilled in 2015 and encountered 67 metres of net oil pay in the Kais reef. It was brought onto production in 2018 at an initial rate of 350 barrels per day of oil and water cut of 70 per cent to 80 per cent. The source of water is unknown but may have been caused by a failure of the cement plug. The well currently produces approximately 20 barrels per day. Criterium is planning a workover in Q4 2023 to add new perforations and limit water production.

Prospect inventory

West Salawati contains mature prospects in both the onshore and offshore areas of the PSC. The BLL cluster located onshore has well pads prepared for drilling and, if successful, production can be handled at the BLL production facility, which is located one kilometre away and has capacity in excess of 5,000 barrels of fluid per day. The offshore area of the PSC contains 15 prospects/leads and Criterium intends to conduct a detailed prospect and lead review and ranking in Q4 2023/Q1 2024.

The contingent resources within the Mengoepeh field, consisting of development-pending locations, will utilize infill well drilling with a total capital cost estimate of $5-million (U.S.), and it is estimated that first production will occur in 2025. The development-pending locations will utilize conventional technology, and the project is based on a predevelopment study.

Note: Resources categorized as contingent resources means there is uncertainty that it will be commercially viable to produce any portion of the resources. Resources categorized as prospective means that there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Sustainability and human capital

How the company achieves results is important, and Criterium's strategy is underpinned by its commitment to support growing economies and communities by responsibly producing and developing reliable energy. Through the acquisition, Criterium will gain over 50 new team members and contractors that are aligned with the company's values and have demonstrated a commitment to creating a positive impact within the communities they work and live. A key element of the transition will be the integration of environmental, social and governance initiatives, including discussing how best to track and record Scope 1 and Scope 2 emissions from the company's operations, continuing the strong commitment MOPL has to community engagement, and preparing annual ESTMA (Extractive Sector Transparency Measures Act) reports.

Management team and directors

Datuk Brian Anderson -- non-executive chairman

Mr. Anderson brings to Criterium Energy five decades of operating experience, including 16 years in Asia Pacific. He has led large multidisciplinary operations and successfully executed safe growth strategies in developing markets. He is the former chair for the Shell Companies in Northeast Asia, and, prior to that, he was the chair for Shell Nigeria, where he was responsible for managing over one million barrels per day of oil production and 6.4 million tonnes per annum of LNG (liquefied natural gas) export. Within Asia Pacific, Mr. Anderson previously held the roles of managing director for Shell's E&P (exploration and production) companies in Malaysia and was general manager, development, for Woodside Petroleum in Australia. After retiring from Shell, amongst other activities, he was a director at Toronto Stock Exchange listed Addax Petroleum Ltd., acquired by Sinopec International Petroleum Exploration and Production Corp. for $8.27-billion. He holds a BSc in metalliferous mining engineering and an MSc in petroleum reservoir engineering.

Michele Stanners -- non-executive director

Ms. Stanners is a strategic adviser and result-orientated board member bringing corporate governance, audit and financial oversight for TSX-listed, private and not-for-profit entities. She has held executive leadership roles, including business and policy development with extensive experience working with indigenous peoples. Ms. Stanners holds a master in theological studies from Harvard University and an MBA and a law degree from the University of Alberta, and she is an active member of the International Women's Forum and past board member for Softrock Minerals from 2015 to 2022 and Mount Royal University from 2017 to 2020.

David Dunlop -- non-executive director

Mr. Dunlop is currently senior manager, controller, of the transmission business unit at Pembina Pipeline. His prior roles include vice-president, finance, at Veresen Inc. and vice-president, controller, and vice-president, planning and process improvement, at Talisman Energy. Mr. Dunlop has a comprehensive understanding of financial controls and procedures required for a listed Canadian international energy company operating in Southeast Asia. Further, he has successfully led global finance teams through business acquisitions and integrations. Mr. Dunlop is a chartered accountant (CA) and a certified financial analyst (CFA) charterholder, and he holds an MBA from Kellogg Schulich School of Business, along with an ICDD designation from the Institute of Corporate Directors.

Robin Auld -- chief executive officer and director

Mr. Auld is the founder of Criterium Group and, for over 20 years, has specialized in leading organizations through mission-critical initiatives and periods of transformational change. Mr. Auld will apply decades of strategic advisory and capital market experience to execute Criterium Energy's strategy and maintain the access to capital necessary to realize the company's objectives. His energy experience is rooted in strategic, commercial and operational advisory services to several of Canada's largest upstream and mid-stream companies, including three years with Talisman Energy Asia Pacific. He holds an engineering degree from the Royal Military College of Canada and an MBA from Queen's University and is a registered engineer with APEGA (Association of Professional Engineers and Geoscientists of Alberta). Mr. Auld is former chairman and chief executive officer of North American Gem and former chief technology officer of TransAKT.

Matthew Klukas -- chief operating officer

Mr. Klukas has worked Asia Pacific upstream energy since his career began as a geophysicist in 2008 with Talisman Energy. Since then, he has held technical, business development, asset management and operational roles within the energy sector in ASEAN (Association of Southeast Asian Nations) and Canada with large multinational companies, junior transitional energy companies and power generators. Within Criterium Energy, he will bring asset-specific knowledge and leadership to the company's operations and strong relationships in ASEAN. Mr. Klukas holds a BSc in geophysics from the University of Alberta and an MBA from University of Calgary and is a registered geoscientist with APEGA.

Dr. Henry Groen -- chief financial officer

Dr. Groen is the former vice-president and deputy general manager for Talisman Vietnam and Truong Song Joint Operating Company and assistant general manager for Talisman Asia Ltd. He has held various managerial and financial roles in ASEAN and brings a first-hand understanding of the financial and accounting controls required for a Canadian company operating in ASEAN. He holds a doctorate in business administration from the University of Newcastle, New South Wales, with a thesis based on corporate social responsibility within the energy sector in ASEAN and an MBA from Athabasca University. He is a chartered professional accountant (CMA).

Hendra Jaya -- president, director, Indonesia

Mr. Jaya is the former president director for PT Pertamina Gas, president director of PT Nusantara Regas and general manager for JOB Pertamina-Medco Tomori. After a distinguished 30-year career with Pertamina, he will now be responsible for Criterium Energy's operations in Indonesia, which will benefit from his strong leadership and technical skills as it relates to managing multidisciplinary and multinational teams in both onshore and offshore operating environments. Mr. Jaya holds a BEng in mining engineering from the Bandung Institute of Technology and an MBA from Prasetiya Mulya Business School and completed the Stanford School of Business Leadership and Development Program.

Andrew Spitzer -- vice-president, corporate development

Mr. Spitzer has 15 years of progressive oil and gas experience beginning his career at Talisman Energy. He has held roles in asset operations, business development and corporate planning teams, leading Talisman/Repsol as the manager of North American special projects, with a focus on opportunities to improve natural gas margins throughout the value chain. He has led teams responsible for capital budgeting, reserves/impairment valuations, process implementations and strategic planning across North America. Mr. Spitzer holds a BComm in finance from the University of Calgary.

Approvals and conditions to closing

The acquisition constitutes a transfer of shares, which causes changes in the indirect control, and, under MEMR Regulation 48/2017, Criterium will subsequently notify MEMR through SKK MIGAS upon closing of the transaction. MOPL has submitted notification of the proposed indirect change of control as required under the terms of the Tungkal PSC.

The acquisition is subject to Criterium successfully completing the offering and receiving TSX-V approval for the acquisition.

About Criterium Energy Ltd.

Criterium Energy is an upstream energy company focused on the acquisition and sustainable development of assets in Southeast Asia that can deliver scalable growth and cash generation. The company focuses on maximizing total shareholder return by executing on three strategic pillars, namely: (1) successful and sustainable reputation; (2) innovation and technology arbitrage; and (3) operational and safety excellence.

We seek Safe Harbor.