Mr. Ken Gray reports

PETRUS RESOURCES ANNOUNCES YEAR END 2023 FINANCIAL, OPERATING & RESERVES RESULTS

Petrus Resources Ltd. has released its financial and operating results as at and for the three and 12 months ended Dec. 31, 2023, and has provide 2023 year-end reserves information as evaluated by Insite Petroleum Consultants Ltd. The company's management's discussion and analysis (MD&A) and audited consolidated financial statements are available on SEDAR+.

An updated corporate presentation as well as the monthly activity update can be found on the company's website.

Q4 2023 highlights

• Dividends -- The company declared a regular monthly dividend of one cent per share, starting January, 2024, following its inaugural special dividend of three cents per share which was paid on Nov. 9, 2023. These dividends serve as a tangible reward allowing Petrus's shareholders to realize the value created by the company's continued success.
• Increased production -- Total production increased by 4 per cent to 9,474 boe/d (barrels of oil equivalent per day) in the fourth quarter of 2023, compared with 9,113 boe/d in the fourth quarter of 2022.
• Lower operating expense -- Operating expense in the fourth quarter of 2023 was $5.07/boe, a 26-per-cent decrease from $6.86/boe in the fourth quarter of 2022. The decrease is primarily due to the realization of the cost recovery on Petrus's North Ferrier gas plant interest.
• Infrastructure investment -- Construction of the North Ferrier pipeline was completed in the fourth quarter of 2023 and production started flowing to the company's Ferrier gas plant near the end of the quarter. This strategic infrastructure allows Petrus to expedite the development of its North Ferrier assets while providing the same low-cost structure as its core Ferrier area.
• Commodity price decline -- Total realized price of $30.60/boe decreased by 47 per cent in the fourth quarter of 2023 compared with the fourth quarter of 2022 ($57.81/boe) as a result of lower commodity prices across all products.
• Funds flow -- The company generated funds flow of $16.5-million in the fourth quarter of 2023, a 52-per-cent decline from the fourth quarter of 2022 due to lower commodity prices.

2023 annual highlights

• Increased production -- Total average annual production increased by 35 per cent to 10,301 boe/d in 2023, compared with 7,604 boe/d in 2022, in line with Petrus's 2023 production guidance.
• Commodity price decline -- Total realized price of $33.31/boe decreased by 39 per cent in 2023 compared with 2022 ($54.63/boe) as a result of lower commodity prices across all products.
• Funds flow -- Petrus generated funds flow of $78.0-million, only 11 per cent lower than the prior year despite a 39-per-cent lower total realized price per boe in 2023 and also within Petrus's 2023 guidance. The decrease in 2023 funds flow was due to lower commodity prices, which was partially offset by higher production volumes and the realized gain on financial derivatives.
• Net debt -- Net debt was $62.6-million at Dec. 31, 2023, or 0.8 times funds flow for 2023. The company targets a net debt to funds flow ratio of less than 1.0 times.

2024 outlook

Petrus's 2024 budget was announced in February and prioritizes its commitment to generating sustainable returns and maintaining a healthy balance sheet. To date, Petrus has successfully completed its planned first quarter 2024 drilling program, and the wells are scheduled to be completed and put on production over the next few months.

The 2024 capital budget targets:

• Capital spending of $40-million to $50-million -- 90 per cent allocated toward drilling new wells in Ferrier and North Ferrier areas;
• Annual average production of 9,000 to 10,000 boe per day;
• Annual funds flow of $55-million to $65-million;
• Free funds flow of $15-million to $20-million;
• Monthly dividend of one cent/share -- annually this represents approximately 9 per cent of the current share price;
• Net debt in the range of $55-million to $60-million.

The company remains optimistic on the long-term outlook for commodity prices and is strategically positioned to take full advantage of the next constructive pricing cycle. As always, Petrus will closely monitor changing market conditions and is ready to adjust its capital program accordingly, guided by its commitment to delivering sustainable returns to shareholders, which remains the foundation of the company's long-term strategy.

Operations update

Fourth quarter average production by area was as shown in the attached table.

Fourth quarter 2023 production averaged 9,474 boe/d compared with 9,113 boe/d in the fourth quarter of 2022. Production has increased as a result of the company's capital program that was executed in 2023. Two gross (2.0 net) wells were drilled during the fourth quarter of 2023. Completion activities of these wells is set to commence in late spring of 2024.

Reserves

Petrus's 2023 year-end reserves were evaluated by the independent reserves evaluator InSite Petroleum Consultants Ltd. in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and National instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities as of Dec. 31, 2023. Additional reserve information as required under NI 51-101 will be included in the company's annual information form for the year ended Dec. 31, 2023, which will be available under the company's profile on SEDAR+.

Petrus has a reserves committee, comprising a majority of independent board members, that reviews the qualifications and appointment of the independent reserves evaluator. The committee also reviews the procedures for providing information to the evaluators. All booked reserves are based upon annual evaluations by the independent qualified reserve evaluator conducted in accordance with the COGE Handbook and NI 51-101. The evaluations are conducted using all available geological and engineering data. The reserves committee has reviewed the reserves information and approved the 2023 Insite report.

The attached table provides a summary of the company's before tax reserves as evaluated by Insite.

In 2023, Petrus's development program generated proved developed producing (PDP) reserve volume additions of 4.4 mmboe (million barrels of oil equivalent). The company produced 3.8 mmboe and divested of 0.1 mmboe of PDP reserves resulting in a net increase of 0.6 mmboe to end the year with 18.4 mmboe of PDP reserves (31 per cent crude oil and liquids).

At Dec. 31, 2023, Petrus's PDP, total proved (TP) and proved plus probable (P+P) reserves were valued at $226.6-million, $408.4-million and $594.0-million, respectively, before tax, discounted at 10 per cent, based on the 2023 Insite report. In 2023, the company realized finding, development and acquisition (FD&A) costs of $19.67/boe for PDP reserves.

Based on the 2023 Insite report, the company's PDP reserve value before tax, discounted at 10 per cent is $1.68 per share (134,501,972 fully diluted common shares outstanding at Dec. 31, 2023). On the same basis, the P+P reserve value before tax, discounted at 10 per cent, is $4.42 per share.

Future development cost

Future development cost (FDC) reflects Insite's best estimate of what it will cost to bring the P+P undeveloped reserves on production. The attached table provides a summary of the company's FDC as set forth in the 2023 Insite report.

Performance ratios

The attached table highlights annual performance ratios for the company from 2019 to 2023.

Net asset value

The company estimates its net asset value to be $562.0-million or $4.18 per fully diluted common share as at Dec. 31, 2023, based on the present value of its P+P reserves before tax, discounted at 10 per cent. The components of the company's net asset value are set forth in the attached table.

The attached table shows the company's net asset value (NAV), calculated using the 2023 Insite report and Insite's Dec. 31, 2023, price forecast.

Fourth quarter and year-end 2023 conference call

Date:  March 27, 2024

Time:  9 a.m. MT

Annual general meeting

The company's annual general meeting will be held at 240FOURTH (previously BP Centre), Conference Room A, 240, 4th Ave. SW Calgary, Alta., on Wednesday, May 29, 2024, at 1 p.m. MT.

We seek Safe Harbor.