Mr. Alfred Sorensen reports

PIERIDAE ANNOUNCES SUCCESSFUL REFINANCING, LOWER COST OF DEBT, ADDITION OF COMMODITY HEDGES AND ISSUE OF WARRANTS

Pieridae Energy Ltd.'s wholly owned subsidiary Pieridae Alberta Production Ltd. (PAPL or the borrower) has successfully completed a debt refinancing transaction, resulting in new credit facilities with Prudential Private Capital and Voya Investment Management (together, the noteholders), totalling $150-million (U.S.). The financing retires Pieridae's existing debt in advance of its coming maturity and materially reduces the company's cost of capital while providing significant flexibility and liquidity to enable execution of the company's strategic objectives. The financing consists of:

• A $120-million (U.S.), 45-month senior secured credit facility that bears interest at secured overnight financing rate (SOFR) plus 6.75 per cent, consisting of (i) a $25-million (U.S.) revolving loan; (ii) a $85-million (U.S.) amortizing term loan; and (iii) a $10-million (U.S.)delayed-draw amortizing term loan;
• A $30-million (U.S.), 51-month subordinated term loan that bears interest at a 13-per-cent fixed rate.

PEL has also secured a $20-million senior secured 18-month term loan from Third Eye Capital Corp. (TEC), the proceeds of which have been contributed to PAPL for general corporate purposes and repayment of indebtedness.

Concurrent with completion of the financing and the bridge term loan, the company fully extinguished its previous 15-per-cent fixed rate senior secured term loan, also held by TEC, in advance of its October, 2023, maturity date. PAPL settled these outstanding obligations for $184.7-million, including principal and accrued interest.

"Pieridae is pleased to have completed this refinancing transaction with our new lenders Prudential and Voya," said Adam Gray, chief financial officer. "The terms of this new loan structure will materially benefit Pieridae by lowering our cost of capital, adding flexible repayment features, improving liquidity and providing credit for a commodity price hedging strategy aligned with our risk management program. The successful conclusion of this transaction is a key step in our previously announced strategy to improve financial flexibility and reduce leverage."

Alvarez & Marsal Canada Securities ULC acted as exclusive financial adviser to Pieridae.

Structure of the financing

$120-million (U.S.), 45-month senior facility:

• Borrower: PAPL;
• Noteholders: Prudential and Voya;
• $25-million (U.S.) revolving loan ($12-million (U.S.) drawn at close);
• $85-million (U.S.) amortizing term loan (fully drawn at close);
• $10-million (U.S.) amortizing delayed-draw term loan (undrawn at close) available between Q3 2023 and Q4 2024 to partially financing the coming Waterton plant turnaround;
• Maturity date: March 13, 2027;
• Variable interest: SOFR plus 6.75 per cent, per annum, payable monthly or quarterly;
• Amortization: 2 per cent quarterly ($1.7-million (U.S.) to $1.9-million (U.S.) per quarter), plus excess cash sweep (after capex) to accelerate debt repayment.

$30-million (U.S.), 51-month subordinated notes:

• Borrower: PAPL;
• Noteholder: Prudential;
• Maturity date: Sept. 13, 2027;
• Fully drawn at close;
• Fixed interest: 13 per cent, per annum, payable quarterly;
• Amortization: none;
• Includes: 18,596,322 common share purchase warrants issued by PEL at exercise price of 49 cents per common share with a term of seven years.

Key senior facility financial covenants (PAPL):

• Ratio of senior debt: EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration expense) less than two times;
• Ratio of total debt: EBITDAX less than 2.5 times;
• Ratio of adjusted proved developed producing value: total debt greater than two times;
• Ratio of EBITDAX: interest expense greater than two times.

Senior facility rolling hedge requirement

Percentage forecast proved developed producing (PDP) natural gas and condensate production, net of annualized royalties.

• 75 per cent months 1 to 24;
• 65 per cent months 25 to 36;
• 45 per cent months 37 to 48.

Bridge term loan

$20-million, 18-month bridge term loan:

• Borrower: PEL (no recourse against PAPL);
• Lender: TEC affiliated entities;
• Maturity date: Dec. 13, 2024;
• Fixed interest: 18 per cent per annum, accrued and payable at maturity;
• Amortization: none;
• Optional prepayment: 30-day notice without penalty;
• Optional conversion right: convertible to common shares of PEL, subject to required regulatory and shareholder approvals.

It is intended that proceeds from the disposition of certain non-core assets of the company will be sufficient to satisfy the repayment of the bridge term loan; however, to provide increased flexibility, PEL has agreed, pursuant to a letter agreement with TEC dated June 13, 2023, to seek disinterested shareholder approval to amend the bridge term loan credit agreement to permit the conversion of the bridge term loan into common shares of PEL. Disinterested shareholder approval of the amendment will be sought at a special meeting of shareholders of the company to be held within six months of the bridge term loan. If disinterested shareholder approval is obtained, and subject to receipt of required regulatory approvals and opinions, the bridge term loan credit agreement will automatically be amended to provide for the option of PEL or TEC, on behalf of the bridge term loan lenders, to convert the outstanding principal amount and accrued and unpaid interest thereon and a conversion fee equal to 20 per cent of the principal amount still outstanding, into common shares in the capital of PEL, at any time after such shareholder approval and prior to the maturity date of the bridge term loan, at a conversion price equal to the five-day volume-weighted average trading price prior to the date of the notice of conversion. If disinterested shareholder approval is not obtained, the bridge term loan will continue to be repayable in cash in accordance with its original terms, and along with the subordinated notes, will be subject to an interest premium.

Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions

An affiliate of TEC currently controls 23,255,813 common shares of PEL, representing approximately 14.6 per cent of the issued and outstanding common shares of PEL, and five million common share purchase warrants of PEL, with an exercise price of 70 cents. As a result of TEC's participation, the bridge term loan constitutes a related party transaction within the meaning of MI 61-101. The company was exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the bridge term loan in reliance on sections 5.5(c) and 5.7(1)(f) of MI 61-101, as the bridge term loan was obtained by the company from a related party, which: (i) involved only cash consideration in the nature of a loan on reasonable commercial terms that are not less advantageous than if the loan were obtained from an arm's-length person; and (ii) the bridge term loan is not convertible into, or repayable (as to principal or interest) in, directly or indirectly, equity or voting securities of the company or its subsidiaries. The company did not file a material change report 21 days before completion of the financing and the bridge term loan as the final terms and provisions of the financing and the bridge term loan were not known at that time.

Warrant issuance

Pieridae has issued 18,596,322 common share purchase warrants to Prudential (the holder) as additional consideration for the subordinated notes. Each warrant shall be exercisable to purchase one common share in the capital of the company at an exercise price of 49 cents per common share. As an alternative to payment of the aggregate exercise price of the warrants upon exercise, the warrants permit the holder to exercise on a net basis without the exchange of any funds. The expiration date of the warrants is June 13, 2030. The warrants represent 9.9 per cent of the issued and outstanding common shares of PEL on a fully diluted basis and 11.7 per cent of basic shares currently outstanding. Prior to the financing, the holder did not own any of Pieridae's share purchase warrants.

An early warning report relating to this warrant issuance will be filed by the holder on SEDAR, under the company's profile. A copy of that report may be obtained by contacting William H. Bulmer at william.bulmer@prudential.com, by telephone at 214-720-6204 or by mail at PCEP Canadian Holdco LLC, 2200 Ross Ave., suite 4300W, Dallas, Tex., 75201.

Repayment of previous term loan

On Oct. 16, 2019, PAPL entered a senior secured fully drawn non-revolving long-term loan facility with a fixed interest rate of 15 per cent per annum, repayable in full on Oct. 16, 2023. The company may repay the principal at any time prior to Oct. 16, 2023, upon 90 days written notice, without penalty. The outstanding principal, accrued interest and deferred fee due at maturity on the previous term loan were repaid in full on June 15, 2023, in the amount of $184.7-million, fully extinguishing these obligations.

Hedge position

The company continues to execute a risk management program governed by its hedge policy and in compliance with the thresholds required by the financing. Pieridae hedges to mitigate commodity price, interest rate and foreign exchange volatility to protect the cash flow required to finance the company's maintenance capital requirements and debt service obligations, while allowing the company to participate in future commodity price upside.

PAPL has already satisfied the minimum hedging requirements of the financing and entered several new senior secured financial commodity hedge contracts with terms ranging from five to 48 months, augmenting the company's previously disclosed physical and financial hedge positions. PAPL's consolidated hedge position as at June 15, 2023, is summarized herein.

Long-term debt and liquidity

With the success of this refinancing, Pieridae's balance sheet has been significantly improved and the company expects to benefit from a lower cost of capital, greater financial flexibility, lower revenue volatility and enhanced overall stability. The attached table summarizes the debt obligations of the company as of June 15, 2023, as compared with March 31, 2023, its most recently reported fiscal quarter.

As a result of the financing, Pieridae's liquidity is significantly improved, with access to a revolving credit facility (48 per cent utilized) and a delayed-draw term loan. The attached table summarizes the available liquidity of the company as of June 15, 2023, as compared with March 31, 2023, its most recently reported fiscal quarter.

About Pieridae Energy Ltd.

Pieridae is a Canadian energy company headquartered in Calgary, Alta. Through corporate and asset acquisitions, it has grown into a significant upstream and mid-stream producer with assets concentrated in the Canadian foothills, producing conventional natural gas, natural gas liquids, condensate and sulphur. Pieridae provides the energy to fuel people's daily lives while supporting the environment and the transition to a lower-carbon economy. Pieridae's common shares trade on the Toronto Stock Exchange under the symbol PEA.

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