Mr. Robin Auld reports

CRITERIUM ENERGY ANNOUNCES UPSIZED C$18.9 MILLION FINANCING IN CONNECTION WITH TRANSFORMATIVE ACQUISITION OF MONT D'OR PETROLEUM LTD., LED BY A STRATEGIC INVESTOR

Due to strong investor demand, Criterium Energy Ltd. is increasing the size of its financing for aggregate gross proceeds of approximately $18.9-million, led by Research Capital Corp., in connection with the acquisition of all the issued and outstanding shares of Mont D'Or Petroleum Ltd. (MOPL) pursuant to a sale and purchase agreement (SPA).

The increased size of the financing consists of:

• An underwritten offering of 60.91 million equity subscription receipts of the company at a price of 11 cents per equity subscription receipt for gross proceeds of approximately $6.7-million by way of a short form prospectus; the company will enter into an underwriting agreement with Research Capital as the sole underwriter and sole bookrunner for the public offering. Each equity 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 unit of the company upon satisfaction of certain escrow release conditions (as defined below) prior to the escrow release deadline (as defined below); each unit will consist of one common share in the capital of the company and one common share purchase warrant; each warrant will entitle the holder to purchase one common share at an exercise price of 14 cents per warrant share until the date that is 60 months following the satisfaction or waiver of the escrow release conditions;
• A convertible loan in the principal amount of $12.2-million.

The financing is anchored by a strategic investor participating for an aggregate of $14.7-million, including the entirety of the $12.2-million convertible loan and $2.5-million in the public offering. Certain directors, officers and employees of the company have provided indication of interests to participate in the public offering alongside other investors.

Financing details

The company has entered into a letter of intent, and the company intends to enter into a loan agreement prior to the closing of the acquisition in connection with the convertible loan pursuant to which the strategic investor will agree to advance $12.2-million in principal amount to the company. In addition, the company will issue to the strategic investor 76.25 million warrants. The convertible loan will be issued on or before the closing of the acquisition, and is subject to a number of conditions, including the closing of the public offering and the approval of the TSX Venture Exchange.

The convertible loan shall bear interest at a rate of 14.75 per cent per annum from the date of issue, accrued daily and payable monthly in cash. The principal amount of the convertible loan shall be convertible, for no additional consideration, into common shares at the option of the holder at any time prior to the close of business on the third business day preceding the date that is 60 months from the date following the satisfaction or waiver of the escrow release conditions at a conversion price equal to 16 cents per common share, subject to customary adjustments.

The convertible loan will be subordinated in right of payment of principal and interest to all senior obligations of the company and will be secured by a general charge over the company's assets. The outstanding principal amount of the convertible loan will be repaid in full on the maturity date in cash. On and following the date that is the second anniversary of the satisfaction of the escrow release conditions, the company shall have the right to partially or fully repay the outstanding principal amount of the convertible loan in cash at a premium of 14.75 per cent to the outstanding principal amount at the time of repayment, plus any unpaid accrued interest, by giving 30 days written notice to the strategic investor.

The company intends to use the net proceeds from the financing for: (i) drilling activities in 2023/2024 to ramp up oil production focused on the Tungkal production-sharing contract; (ii) planning associated with the Tungkal PSC gas monetization tie-in project; and (iii) repaying a portion of debt with certain of MOPL's existing lenders in connection with the acquisition to reduce the total debt.

Upon closing of the public 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 underwriter receiving a certificate from the company prior to the termination time (as defined below) to the effect that:

• The completion, satisfaction or waiver of all conditions precedent to the acquisition in accordance with the SPA (save and except for those conditions precedent which 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 underwriter, acting reasonably) has certified to the underwriter that, to the best of his information, knowledge or belief, no event, circumstance or condition exists which 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 underwriter, acting reasonably;
• The receipt of all required shareholder and regulatory approvals, including, without limitation, the conditional approval of the TSX Venture Exchange for the acquisition;
• The strategic investor having completed satisfactory due diligence on the company in its sole discretion;
• The company obtaining shareholder approval for the strategic investor to become a control person of the company;
• The issuance of the convertible loan and the loan warrants on before the closing of the acquisition;
• The representations and warranties of the company contained in the underwriting agreement to be entered into in connection with the public offering being true and accurate in all material respects, as if made on and as of the escrow release date;
• The company and the underwriter having delivered a joint notice and direction to the escrow agent, confirming that the conditions set forth above 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 public offering (or such later date as the underwriter may consent in writing); (ii) the acquisition is terminated in accordance with its terms; or (iii) the company has advised the underwriter or the public that it does not intend to proceed with the acquisition, the company would then be responsible to refund the gross proceeds of the public offering (including the amount of the underwriter's commission and the underwriter's expenses) to the holders of equity subscription receipts.

The public offering is expected to close on or about the week of Oct. 16, 2023, or such other date as the company and the underwriter may agree. Closing of the public 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 convertible loan and warrants issuable pursuant to the convertible loan will be subject to a statutory hold period lasting four months and one day following the closing of the convertible loan pursuant to Canadian securities laws. The equity subscription receipts will be offered by way of a short form prospectus to be filed in each of the provinces of Canada (other than Quebec) and 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. An amended and restated preliminary short form prospectus will be available on SEDAR+ shortly. The company will make commercially reasonable efforts to list the warrants issuable underlying the subscription receipts.

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

About Criterium Energy Ltd.

Criterium 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.