Mr. Joel MacLeod reports

HIGHWOOD ASSET MANAGEMENT LTD. ANNOUNCES OPERATIONAL UPDATE: SPRUCE LAKE SAGD UPDATE, CURRENT PRODUCTION, AND THREE-WELL DRILLING PROGRAM

Highwood Asset Management Ltd. has provided an operational update. Following the sale of Wilson Creek, Highwood is a focused, oil-weighted company with a strong balance sheet, an active three-well drilling program in eastern Alberta Pekisko and Mannville stack formations, an expanding water flood at its core Brazeau asset, and an emerging steam-assisted gravity drainage thermal opportunity in the Spruce Lake area, Saskatchewan.

Highlights:

• Oil production strong -- current oil production of approximately 1,500 barrels per day, with total production of approximately 2,900 barrels of oil equivalent per day (approximately 52 per cent oil);
• Pekisko and Bonnyville drilling -- Highwood recently finished drilling its first well within the Twining area of Alberta in the Pekisko formation; further, the company anticipates spudding two wells within the Mannville stack in eastern Alberta in the coming 45 days;
• Brazeau water flood expanding -- Highwood continues to increase water flood activity at Brazeau, ultimately reducing sustaining capital by reducing corporate base declines;
• Spruce Lake area/St. Walburg: 1,030 hectares of Colony oil sand, 100-per-cent working interest -- Highwood acquired four contiguous sections at Spruce Lake (St. Walburg), Saskatchewan, at the April 7, 2026, Crown sale for $2.45-million (approximately $2,375 per hectare); the 16-17 well in the centre of the block shows approximately 13 metres of net oil pay with 32-per-cent porosity, estimated greater-than-70-per-cent oil saturation and five darcies of permeability, in line with control wells in producing SAGD projects in the area;
• Spruce Lake area activity continues to increase with proven production in close proximity to Highwood's project -- 13 industry SAGD producers within approximately 10 kilometres of Highwood's lands have reached peak monthly rates of 2,000 to 3,140 bbl/d and have together produced 14.5 million barrels; in the past 12 months, industry licensed or spudded 60 wellbores within 10 km of Highwood's block;
• 3-D seismic planned -- Highwood plans to shoot 3-D seismic over its Spruce Lake block late in the fourth quarter of 2026 and is evaluating financing alternatives to advance a first SAGD phase;
• Normal course issuer bid active -- Highwood has purchased and cancelled 119,242 common shares under its normal course issuer bid since the first purchase on July 14, 2026, to Sept. 30, 2026.

Production and Brazeau water flood

Highwood's current production is approximately 2,900 boe/d, including approximately 1,500 bbl/d of oil, based on field estimates for the period of Oct. 8 to Oct. 22, following the completion of Highwood's planned maintenance turnaround and a third party turnaround.

Third quarter 2026 production averaged approximately 2,400 boe/d, reflecting Highwood's planned Brazeau turnaround and the third party Keyera Brazeau gas plant turnaround in September, 2026. Both turnarounds are complete, and there is no major planned maintenance for the rest of 2026.

Highwood continues to increase water flood activity at Brazeau, ultimately reducing sustaining capital by reducing corporate base declines.

Drilling update

Pekisko -- Highwood recently drilled its first Pekisko horizontal in the Twining area of central Alberta over the course of approximately 10 days, encountering good reservoir quality throughout the lateral. Completion is planned within the next 30 days.

Bonnyville Mannville -- Highwood anticipates spudding two Mannville wells in the Bonnyville area of eastern Alberta in the coming 45 days, including the company's first circulating string horizontal.

Spruce Lake SAGD opportunity

On April 7, 2026, Highwood acquired two Crown petroleum and natural gas leases covering four contiguous sections (sections 16, 17, 20 and 21 of Township 54, Range 21 W3M; approximately 1,030 hectares) in the Spruce Lake (St. Walburg) area of west-central Saskatchewan, for $2.45-million, or approximately $2,375 per hectare. Highwood holds a 100-per-cent working interest.

The 16-17 well, in the centre of the block, shows approximately 13 metres of net oil pay in the Colony sand, with average porosity of 32 per cent, oil saturation estimated at greater than 70 per cent and permeability estimates at greater than 5.0 darcies. Highwood applied the same log interpretation to industry control wells inside four producing thermal projects: Paradise Hill North, Bolney North, Pikes Peak and Spruce Lake. The 16-17 well ranks similarly in net pay and estimated oil saturations and permeability to offsetting Waseca and Colony pools.

The most proximal SAGD development (fewer than 10 kilometres away) is the Spruce Lake thermal complex, which is currently producing at an oil rate of approximately 25,000 bbl/d with cumulative recovery in excess of 37.5 million barrels. This adjacent SAGD development has approximately 10 new well pairs with initial production rates as high as 3,100 bbl/d per well pair. Activity levels have been high for the development with over 50 new well licences logged over the past 12 months suggesting near- and long-term development will remain robust. Further, the operator has sanctioned a solvent-assisted expansion expected to add 5,000 to 10,000 bbl/d by 2028. The Highwood land block is positioned to utilize existing gas infrastructure for steam generation in addition to benefiting from regulatory approvals established in the area.

Industry interest in the area continues to build. At the government of Saskatchewan's Oct. 6, 2026, Crown public offering, the 2,324-hectare exploration licence adjacent to Highwood's position was awarded for a bonus bid of $9,995,200, approximately $4,300 per hectare. That is 1.8 times the price per hectare Highwood paid six months earlier, for a shorter two-year term, and was the highest bonus bid of the sale.

Highwood plans to shoot a 3-D seismic program over its Spruce Lake block late in the fourth quarter of 2026 to map the extent of the Colony channel and support the design of a first SAGD phase. Consistent with its prior disclosure, Highwood intends to leverage its long-standing industry relationships and energy infrastructure experience to finance its first SAGD phase with project-level capital financed alongside strategic industry partnerships and/or marketing offtake agreements -- all structured to limit equity dilution to existing Highwood shareholders. There can be no assurance that definitive agreements will be entered into or that the project will be financed on acceptable terms.

Shareholder returns

Highwood's NCIB remains active. From the first purchase on July 14, 2026, to Sept. 30, 2026, the company has purchased and cancelled 119,242 common shares at an average price of $5.73 per share.

Outlook

With net debt of $16.4-million at June 30, 2026, approximately $230-million of tax pools and strong oil production, Highwood is positioned to expand free cash flow per share while advancing Spruce Lake and other SAGD opportunities. The company expects to release its third quarter 2026 results before market open on Nov. 10, 2026.

We seek Safe Harbor.