Mr. Leonard Jaroszuk reports

CHRONOS RESOURCES LTD. AND SAMOTH OILFIELD INC. ANNOUNCE TRANSFORMATIVE BUSINESS COMBINATION AND $65.0 MILLION EQUITY FINANCING

Chronos Resources Ltd. and Samoth Oilfield Inc. have entered into a definitive agreement dated Nov. 7, 2022, providing for a business combination transaction.

Pursuant to the transaction:

1. Chronos will complete an equity private placement for maximum aggregate gross proceeds of $65-million.
2. Chronos and Samoth will complete a business combination, which will result in the reconstitution of the management team and board of directors of Samoth with the current management team and board of directors of Chronos. The new management team will be led by Dave Burton as president and chief executive officer, Lindsay Goos as chief financial officer, Jamie Conboy as vice-president, exploration, Kyle Boon as vice-president, operations, and Jeff Rideout as vice-president, land. The new board will comprised of Dave Burton, Kevin Olson, Ian Atkinson, Ali Horvath, Bruce Beynon, Don Cowie and Kel Johnston. Sanjib (Sony) Gill, a partner in the Calgary office of the national law firm Stikeman Elliott LLP, will act as corporate secretary. In addition, Neil Roszell will serve as a special adviser to the new board.
3. The resulting issuer created from the combination of Samoth and Chronos will be renamed Lycos Energy Inc. and is expected to trade on the TSX Venture Exchange under the new stock symbol LCX as a Tier 1 oil and gas issuer.
4. Each issued and outstanding common share in the capital of Chronos will be acquired by Samoth in exchange for 20 common shares in the capital of Samoth at a deemed price of 3.5 cents per Samoth share, with the final number of Samoth shares to be issued being determined based on the size of the financing.
5. Samoth will complete a consolidation of the Samoth shares on the basis of one postconsolidation Samoth share for every eight preconsolidation Samoth shares, representing an exchange ratio, on a postconsolidation basis, of 2.5 resulting issuer shares at a deemed price of 28 cents per resulting issuer shares for every Chronos share.

The transaction is expected to be completed on or about Dec. 12, 2022, subject to the completion of the financing and customary closing conditions, including approval by the TSX-V.

Chronos overview

Chronos is an oil-focused, exploration, development and production company based in Calgary, Alta., operating high-quality, heavy-oil development assets in the Gull Lake area of southwest Saskatchewan and heavy-oil assets in the Lloydminster area of Saskatchewan and Alberta.

Pretransaction corporate highlights:

• Successful leadership team:
  • Extensive experience drilling and completing multistage horizontal wells in unconventional resource plays;
  • Management team has previously led drilling programs in the Sparky, Shaunavon and Viking;
  • Experienced board of directors ensures highest standards of corporate governance and capital stewardship;
• Compelling emerging development asset development inventory of more than 100 risked locations:
  • Wells are low cost versus deeper plays in basin, reducing event risk and increasing economics of program;
  • Optimized drilling and completion techniques are leading to improved initial rates and lower costs;
• Strong financial position:
  • Low-decline production base provides stable free cash flow with limited maintenance capital or liability management;
  • Strong balance sheet with no debt and forecast 2022 end Q4 annualized EBITDA (earnings before interest, taxes, depreciation and amortization) of greater than $11.7-million;
  • Positive working capital of $2.2-million;
  • 2022 capital program of $6.7-million fully financed with cash flow;
  • 2023 capital program to be expanded to include increased drilling, new facilities and acquisition capital;
• Low-decline production base:
  • Heavy oil production of 1,050 barrels of oil equivalent per day (99 per cent oil) in southwest Saskatchewan and Lloydminster;
    • Lloydminster-Mannville stacked sands and channels -- Colony, Mclaren, Waseca, Sparky, GP, Rex, Lloyd and Cummings -- 99 per cent operated with average working interest of 98 per cent;
    • Southwest Saskatchewan -- Cantuar, Success, Roseray and Upper Shaunavon formations;
  • Stable production with low decline rate (less than 10 per cent):
    • Decline from Q1 to Q2 2022 was 0 per cent with no drilling;
    • Enhanced by a waterflood program and continuous field optimization.

New management team

The resulting issuer will be led by the existing management team of Chronos: Dave Burton (president and chief executive officer); Lindsay Goos (vice-president, finance, and chief financial officer); Jamie Conboy (vice-president, exploration); Kyle Boon, (vice-president, operations); Jeff Rideout (vice-president, land); and Sony Gill (corporate secretary).

Dave Burton, president and chief executive officer (Calgary, Canada)

Mr. Burton has more than 27 years of experience in the upstream oil and gas industry in all facets of petroleum engineering work, including reservoir engineering, evaluations, secondary and tertiary recovery, unconventional oil and gas, area development, and acid gas projects, including work on CO2 (carbon dioxide) sequestration in coals. He has had numerous executive roles and been involved in founding multiple successful start-up energy companies. Prior to founding Chronos, Mr. Burton was a co-founder at Raging River Exploration Inc. and Wild Stream Exploration Inc.

Mr. Burton is a professional engineer and a member of the Alberta Association of Professional Engineers and Geoscientists of Alberta. Mr. Burton holds degrees in petroleum engineering from the University of Alberta (BSc) and a master of engineering in chemical and petroleum engineering from the University of Calgary.

Lindsay Goos, vice-president, finance, and chief financial officer (Calgary, Canada)

Ms. Goos has 20 years of experience in the oil and gas industry in the disciplines of finance, financial reporting, budgeting, accounting, management, treasury, tax and business development. Previously, she was founder, vice-president, finance, and chief financial officer of Imaginea Energy Ltd. and, prior thereto, controller of BlackShire Energy Ltd. Ms. Goos began her professional career with KPMG LLP and has held progressively senior roles at various other oil and gas companies.

Ms. Goos is a member of the Chartered Professional Accountants of Alberta and is a chartered professional in human resources in Alberta. Ms. Goos holds a bachelor of commerce and arts from the University of Saskatchewan.

Jamie Conboy, vice-president, exploration (Calgary, Canada)

Mr. Conboy is professional geologist, most recently working as subsurface lead with Bison Low Carbon Ventures (CCS) and formerly as founding member of the Storm Group of companies for 20 years in capacities of vice-president, geoscience, and chief geologist. In his previous 12 years in the industry, Mr. Conboy has worked on a variety of properties and play types at Canadian Hunter Exploration Ltd., Renaissance Energy Ltd. and Pinnacle Resources Ltd., among others.

Mr. Conboy is a registered professional geologist and responsible member of APEGA (Association of Professional Engineers and Geoscientists of Alberta) in the province of Alberta and holds a BSc (honours) in geology from Queen's University (1992).

Kyle Boon, vice-president, operations (Calgary, Canada)

Mr. Boon has 20 years of experience in the Western Canadian oil and gas sector. Mr. Boon most recently was a founder and the drilling and completions manager of Raging River and, prior thereto, held the role of senior production technologist at Wild Stream.

Mr. Boon holds a petroleum engineering technology diploma from the Northern Alberta Institute of Technology and is a member of the Association of Science & Engineering Technology Professionals of Alberta (ASET).

Jeff Rideout, vice-president, land (Calgary, Canada)

Mr. Rideout has over 20 years of experience in the oil and gas industry in the disciplines of commercial negotiations, acquisitions and divestitures in private, public and service companies. Mr. Rideout was previously a Senior Land/Commercial Negotiator with Whitecap Resources Inc., TORC Oil and Gas Ltd, and prior thereto Founder and Vice President Elkhorn Resources Inc.

Jeff holds his Professional Landman (P.Land) designation and earned a Master of Business Administration (MBA) degree from The Haskayne School of Business, and a Bachelor of Arts (B.A.) degree from the University of Calgary.

Sony Gill, Corporate Secretary (Calgary, Canada)

Mr. Gill is a partner at Stikeman Elliot LLP in the Capital Markets and Mergers & Acquisitions Groups. His practice focuses on public and private company creation, growth, restructuring and value maximization. He has extensive experience in the negotiation, structuring and consummation of a broad range of corporate finance, securities and M&A transactions, including public and private debt and equity financings, strategic investments, joint ventures, recapitalizations, restructurings, takeover bids, reverse takeovers, asset acquisitions and divestitures, share purchases and dispositions, plans of arrangement, spin-outs and other forms of business combination and corporate activity.

New Board

Upon completion of the Transaction, the New Board will be comprised of Dave Burton and the following independent directors: Kevin Olson (Chair), Ian Atkinson, Ali Horvath, Bruce Beynon, Don Cowie and Kel Johnston. In addition, Neil Roszell will serve as a Special Advisor to the New Board. The members of the New Board have strong track records and distinguished careers in both the oil and gas industry and capital markets, each having held prominent lead positions within a range of successful companies. Their combined experience and expertise will provide the New Management Team with invaluable advice, guidance and support.

Kevin Olson, Chair (Calgary, Canada)Mr. Olson has over 27 years of industry experience and is currently a director of Headwater Exploration Inc. ("Headwater"). Mr. Olson is a former board member of Raging River, Wild Stream, Wild River Resources Inc. ("Wild River") and Prairie Schooner Petroleum Ltd. Mr. Olson has managed four early stage energy funds and served as a director of a variety of exploration and production companies and petroleum services companies. Formerly Mr. Olson was Vice-President, Corporate Finance at FirstEnergy Capital Corp. and Vice-President, Corporate Development for Northrock Resources Ltd. Mr. Olson holds a Bachelor of Commerce degree majoring in finance and accounting from the University of Calgary.

Ian Atkinson (Calgary, Canada)

Mr. Atkinson has been the founder of several private and public oil and gas companies, with over 27 years of technical, executive and board of director experience. Mr. Atkinson has been President and CEO of Southern Energy Corp. (formerly Gulf Pine Energy Partners LP) since 2014. Prior thereto, Mr. Atkinson was a founder and Senior Executive Officer of Athabasca Oil Corporation.

Ali Horvath (Calgary, Canada)Ms. Horvath is the Vice President, Finance and Chief Financial Officer of Headwater. Ms. Horvath was previously a founder and the Controller of Raging River and prior thereto was a Senior Financial Accountant with Wild Stream. Ms. Horvath is a Chartered Professional Accountant and holds a Bachelor of Management degree from the University of Lethbridge.

Kel Johnston (Calgary, Canada)Mr. Johnston is currently CEO of Wylander Crude Corp, a firm that provides consultancy services to oil and gas and private equity clients in Canada and the USA. He is also a Technical Advisor to Carbon Infrastructure Partners.

Mr. Johnston has forty years of technical/financial/ ESG experience in the Canadian and Northern USA oil and gas sector, and capital markets experience from public companies to the oversight of private equity investments to leading edge carbon Capture and Storage knowledge. He has been directly involved in the conceptualization, discovery and exploitation of numerous oil and gas pools from the foothills of Alberta, BC and Montana to the plains of SE Saskatchewan. Mr.Johnston has maintained technical skills through ownership/active technical role in a private E&P company that holds interests in 2 CCUS projects. He has over thirty years of experience as a founder, executive and board member of numerous public and private oil and gas companies. Direct experience in a wide range of corporate activities including capital markets, private equity, ESG, mergers, sales/acquisition/strategic processes and IPOs.

Mr. Johnston is a Professional Geologist and holds a Bachelor of Science (Hons.) degree in Geology from the University of Manitoba and a Masters degree in Economics from the University of Calgary.

Bruce Beynon (Calgary, Canada)Mr. Beynon is a professional geologist with over 30 years of oil and gas industry experience. Mr. Beynon is currently the President of Tiburon Exploration Corp., a private consulting company. Prior thereto, Mr. Beynon was Executive Vice President, Exploration and Corporate Development at Baytex Energy Corp. Prior to the merger between Baytex and Raging River, Mr. Beynon held several positions with Raging River including President, Executive Vice President and Vice President, Exploration. Mr. Beynon graduated with a Bachelors and Masters of Science degree in Geology from the University of Alberta. Mr. Beynon serves on the Board of Southern Energy Corp., a TSX-V listed company with focused operations in the southeast Gulf States of the US.

Don Cowie (Calgary, Canada)Mr. Cowie was the founding Partner of JOG Capital in 2002 and was the President of the firm from its inception until his retirement in December 2017. JOG raised over $1 Billion dollars in upstream oil and gas capital during his tenure. Prior to founding JOG, Mr. Cowie was the head of Energy Investment Banking for Bank of America in Calgary, and prior thereto was one of the founders and directors of two junior oil and gas companies.

Special Advisor to the New Board

Neil Roszell (Calgary, Canada)Mr. Roszell is the CEO & Chairman of Headwater and has been a founder of six successful oil and gas companies. His roles have included Director, President and Chief Executive Officer of Raging River, Wild Stream and Wild River. Prior thereto he was President and Chief Operating Officer of Prairie Schooner Petroleum Ltd. and Vice-President of Engineering of Great Northern Exploration Ltd. Mr. Roszell has a Bachelor of Applied Science degree in Engineering from the University of Regina.

Corporate Strategy

The New Management Team has extensive experience in creating shareholder value through a focused full-cycle business plan and believes the current market environment provides an excellent opportunity to reposition Samoth through the consolidation of high-quality assets at attractive acquisition values. Following the completion of the Transaction, the New Management Team expects to focus on predominantly heavy oil opportunities in Alberta and Saskatchewan, growing through a targeted acquisition and consolidation strategy complemented by development and exploration drilling. The recapitalized corporate structure will allow the Resulting Issuer to exploit its opportunity suite through internally generated prospects and strategic acquisitions. The New Management Team will focus on maintaining a clean balance sheet while targeting high quality, oil weighted assets with sustainable cash flow under current commodity prices.

The New Management Team expects to acquire and develop underexploited, undercapitalized and distressed assets and corporates. In addition, the New Management Team intends to implement cost reduction strategies and focus on efficient capital allocation to enhance investor returns. The recapitalized Company will invest in the highest tier drilling inventory while generating free cash flow to fund further acquisitions and potential dividends.

Upon completion of the Transaction, the Resulting Issuer is expected to have a net cash position of approximately $63.2 million, assuming the Private Placement is fully subscribed. The New Management Team believes that this starting point will provide it with a platform for aggressive growth through strategic acquisitions and internally generated prospects. Upon completion of the Transaction and subject to all regulatory and shareholder approvals, it is anticipated that the New Management Team will change the name of Samoth from "Samoth Oilfield Inc." to "Lycos Energy Inc.".

The acquisition

Completion of the acquisition is subject to the satisfaction of a number of conditions, including, but not limited to: (i) receipt of the approval of shareholders of Chronos; (ii) receipt of conditional approval from the TSX-V for the transaction and the issuance of Samoth shares pursuant to the transaction; (iii) completion of the financing, which shall be deemed to occur once the net proceeds of the sale of the subscription receipts (as defined as follows) are released to Chronos and the subscription receipts of Chronos are exchanged for Chronos shares, which shall occur upon the escrow release conditions (as defined as follows) being satisfied, as described as follows; (iv) all conditions under the agreement (other than the issuance of Samoth shares necessary to complete the transaction) having been satisfied or waived; and (v) receipt of all other required regulatory, governmental and third party approvals.

Pursuant to the acquisition:

1. All of the outstanding Chronos shares, including the 31,399,439 Chronos shares currently issued and outstanding and such number of Chronos shares as may be issued pursuant to the financing, including in exchange for the subscription receipts, shall be exchanged for resulting issuer shares by the holders thereof, on the basis of 2.5 resulting issuer shares for every one Chronos share held (as per a deemed value of 70 cents per Chronos share);
2. All of the Chronos share purchase warrants to be issued pursuant to the financing, shall be adjusted in accordance with the previous paragraph.

The financing

In conjunction with the completion of the acquisition, Chronos will complete:

1. A private placement of subscription receipts at a price of 70 cents per subscription receipt for maximum aggregate gross proceeds of up to $53-million;
2. A private placement of units of Chronos at a price of 70 cents per unit for maximum aggregate gross proceeds of up to $12-million to certain members of the new management team and the new board, together with certain additional subscribers identified by such persons, with each unit comprising one Chronos share and one Chronos warrant.

The completion of the financing is expected to occur on or about Nov. 28, 2022.

Gross proceeds from the sale of subscription receipts will be held in escrow pending the satisfaction of the escrow release conditions set out in the subscription receipt agreement to be entered into between Chronos and the subscription receipt agent. Gross proceeds from the sale of the units will also be held in escrow pending the satisfaction of the escrow release conditions set out in the subscription agreements to be entered into in respect of the unit private placement. The escrow release conditions for both the subscription receipts and the units include the satisfaction of all conditions precedent to completing the transaction as set forth in the agreement and, in the case of the subscription receipts only, the subscription receipt agreement. Upon the satisfaction of the escrow release conditions, net proceeds from the sale of the subscription receipts and units will be released from escrow to Chronos and for no additional consideration and without any further action on the part of the holder thereof: (i) common shares will be issued to holders of subscription receipts; and (ii) common shares and warrants will be released to holders of units. If the escrow release conditions are not satisfied or the agreement is terminated in accordance with its terms, the purchase price for the subscription receipts and the units will be returned pro rata to subscribers, together with a pro rata portion of interest earned on the escrowed funds, if any.

Each Chronos warrant will entitle the holder thereof to purchase one Chronos share for a period of five years following the date of issuance at an exercise price of 70 cents per Chronos warrant and shall vest and become exercisable as to one-third upon the 10-day weighted average trading price of the Chronos shares equalling or exceeding $1.05, an additional one-third upon the market price equalling or exceeding $1.23, and a final one-third upon the market price equalling or exceeding $1.40 (which Chronos warrants, upon completion of the transaction, shall represent a right to acquire resulting issuer shares, as adjusted to reflect the transaction and the consolidation).

The net proceeds of the financing will be used to finance the resulting issuer's operations and for working capital and general corporate purposes. Completion of the financing is a condition precedent to the completion of the acquisition. In the event Chronos is unable to complete the financing on satisfactory terms, Chronos and Samoth will be unable to complete the acquisition.

Name change and consolidation

On Aug. 11, 2022, at an annual general and special meeting, the shareholders of Samoth approved the name change and the consolidation.

Contemporaneous with the closing of the Acquisition (subject to TSX-V acceptance), the name of the Resulting Issuer will change from "Samoth Oilfield Inc." to "Lycos Energy Inc." and the Consolidation will be completed on the basis of one (1) post-Consolidation Resulting Issuer Share for every eight (8) pre-Consolidation Samoth Shares.

No fractional shares will be issued. Any fractional interest in Resulting Issuer Shares that is less than 0.5 resulting from the Consolidation will be rounded down to the nearest whole Resulting Issuer Share and any fractional interest in Resulting Issuer Shares that is 0.5 or greater will be rounded up to the nearest whole Resulting Issuer Share.

Chronos and Samoth expect that the trading of the Resulting Issuer Shares on the TSX-V under the name "Lycos Energy Inc." and symbol "LCX" will commence two or three trading days after the closing date of the Transaction.

Completion of the Transaction

The resignation of the current board of directors and management team of Samoth and the appointment of the New Management Team and the New Board will occur contemporaneous with the closing of the Acquisition.

Upon completion of the Acquisition, assuming gross proceeds of the Financing of $65.0 million, the Resulting Issuer is expected to have a net cash position of approximately $63.2 million.

The Acquisition and the Financing will not materially affect control of Samoth and will not result in the creation of a new "control person", as such term is defined by the policies of the TSX-V. In addition, the Transaction will not result in a "change of control" of Samoth, as such term is defined by the policies of the TSX-V.

The Acquisition is expected to constitute a "fundamental acquisition" pursuant to the policies of the TSX-V and is subject to the acceptance of the TSX-V.

Sponsorship of the Transaction may be required by the TSX-V unless exempt therefrom in accordance with the TSX-V's policies or unless the TSX-V provides a waiver. Samoth has applied for a waiver from the sponsorship requirements pursuant to the policies of the TSX-V. If the waiver is not granted by the TSX-V, then Samoth would be required to engage a sponsor or will seek an exemption from the sponsorship requirement.

Samoth is at arm's length to Chronos. The Transaction is not a related party transaction.

About Samoth

Samoth is an exploration-focused corporation pursuing opportunities in the natural gas business in the Alberta. As of the date hereof, there are 34,312,055 Samoth Shares issued and outstanding.

About Chronos

Chronos was incorporated in the province of Alberta in 2012. Chronos is an oil-focused, exploration, development and production company based in Calgary, Alberta, operating high-quality, heavy-oil, development assets in the Gull Lake area of southwest Saskatchewan and heavy-oil assets in the Lloydminster area.

The current directors and officers of Chronos are: Dave Burton (President, Chief Executive Officer and a Director); Ian Atkinson (Director); Tyson Birchall (Director); Don Cowie (Director); Kel Johnston; (Director); Lindsay Goos (Vice President, Finance and Chief Financial Officer); Jamie Conboy (Vice President, Exploration); Kyle Boon, (Vice President, Operations); and Jeff Rideout (Vice President, Land).

As of the date of this press release, there are 31,399,439 Chronos Shares issued and outstanding, which, for greater certainty, does not include any Chronos Shares or Chronos Warrants to be issued pursuant to the Financing. Should an aggregate Financing amount of $65.0 million be subscribed for, Chronos will have 124,256,582 Chronos Shares and 17,142,857 Chronos Warrants outstanding.

As a group, as at the date hereof, the directors and senior officers of Chronos currently own or control (directly or indirectly) 3,292,771 Chronos Shares, representing approximately 9.54% of the outstanding Chronos Shares.

Financial Information

The table below presents selected financial information for Chronos (on a consolidated basis).

Advisors

National Bank Financial Inc., DeltaCap Partners Inc. and Everleaf Capital Corp. are acting as Financial Advisors to Chronos with respect to the Transaction and the Subscription Receipt Private Placement.

Chronos will be paying advisory fees to National Bank Financial Inc., DeltaCap Partners Inc. and Everleaf Capital Corp. in connection with the Transaction and the Subscription Receipt Private Placement, as applicable.

Stikeman Elliott LLP is acting as legal counsel to Chronos in respect of the Acquisition and the Financing and will act as counsel to the Resulting Issuer upon completion of the Transaction.

We seek Safe Harbor.