Bonterra Energy Corp. Announces Fully-Funded 2023 Annual Capital Program

“2023 represents a new era for Bonterra as we advance forward with new leadership, a refreshed vision, and a more supportive debt structure that affords us flexibility to freely allocate capital across our high-quality, oil-weighted Cardium asset base,” said Patrick Oliver, President and CEO of the Company. “We are very pleased to outline this fully-funded 2023 capital program and guidance, designed to expand production and reserves while generating Free Funds Flow² that can support further growth initiatives, continued strengthening of the balance sheet, and pursuing strategic acquisitions that enhance our production base and add quality drilling inventory. Our 2023 budget supports Bonterra’s ultimate goal of restoring a returns-based business model that is structured to deliver sustainable dividends to shareholders by the end of 2023.”

Fully Funded 2023 Capital Budget

The Company’s 2023 budget is designed to provide optionality around the capital program’s execution, and provide a base level of stability to support modest growth in 2023, which is expected to build momentum for growth in 2024. Through 2023, a primary goal for Bonterra is to generate meaningful funds flow² net of development capital and decommissioning expenditures settled (“Free Funds Flow²“), and ramp up production through the year with a targeted exit rate between 14,100 and 14,400 BOE per day³, representing approximately 10 percent growth in exit rate volumes year-over-year, setting the Company up for continued growth through 2024. Focusing on the generation of Free Funds Flow² supports Bonterra’s strategy to revert to a shareholder returns-based model that balances continued debt repayment, sustainable dividends for shareholders and modest production growth.

Through 2023, the Company intends to invest $120 to $125 million in high rate-of-return, lower-risk light oil opportunities across Bonterra’s extensive drilling inventory and direct the pace of the capital program to maintain flexibility throughout the year, while optimally responding to a shifting commodity price environment. Consistent with 2022, Bonterra expects to direct Free Funds Flow¹ to ongoing bank debt reduction, further improving leverage metrics and enhancing long term sustainability.

Approximately 85 percent of the 2023 budget is expected to be allocated to the drilling and completion of new wells, and recompletions of existing wells, in the Pembina Cardium and Willesden Green areas with the balance directed to land, expanded facilities to support future growth and pipeline integrity programs. In addition, the Company will continue to advance abandonment and reclamation activities with a robust program targeting inactive wells with no further potential, along with pipelines and facilities, further supporting Bonterra’s commitment to environmental, social and governance (“ESG”) initiatives.

In the interests of maintaining prudent risk management, Bonterra has hedges on approximately 30 percent of its expected crude oil and natural gas production to the end of Q3 2023. Primarily through the use of costless collars, the Company has established downside protection by establishing floors of approximately $70 USD WTI on 30 percent of its forecast light oil production and $3 per GJ on its anticipated natural gas production. This risk management position enables Bonterra to benefit from upward price movement while retaining the certainty of a floor price on a portion of production.

Budget Highlights (Forecasts based on the pricing and production assumptions outlined below)

• Year-over-year exit rate growth of approximately 10 percent reflecting planned 2023 exit volumes between 14,100 and 14,400 BOE per day;
• Average annual production of 13,500 to 13,700 BOE per day, weighted approximately 60 percent to oil and liquids;
• $45–$50 million of Free Funds Flow⁴ generated from $170–$175 million in corporate funds flow⁴;
• 25–30 percent reduction in forecast year end 2023 net debt⁴ which is expected to range between $120–$125 million and drive a year-end net debt⁴ to EBITDA ratio⁴ of 0.7 times; and
• $5.0–$6.0 million allocated to abandonment and reclamation obligations (“ARO”) related to inactive wells with no further potential, along with pipelines and facilities in 2023.

Bonterra will regularly review the program and may elect to adjust the amount and timing of capital spending to ensure growth is aligned with the broader commodity pricing environment, while continuing to prioritize sustainability in the interests of maximizing Free Funds Flow⁴.

2023 Guidance Summary and Sensitivities