Mr. Cameron Taylor reports

ROK RESOURCES INC. CONFIRMS CLOSING OF STRATEGIC SOUTHEAST SASKATCHEWAN ASSET ACQUISITION, CREDIT FACILITY AND PROVIDES FIRST-HALF 2023 GUIDANCE

Rok Resources Inc. has successfully closed the acquisition previously announced on Dec. 19, 2022, of the assets (1,400 boepd (barrels of oil equivalent per day) at closing) located in Rok's core operating area of southeast Saskatchewan, in exchange for total consideration of approximately $23-million in cash consideration after closing adjustments and approximately 400 boepd of non-core, southwest Saskatchewan assets.

The acquisition was financed through the previously announced $75-million senior loan facility, which comprises a $52.5-million term facility carrying a two-year term and interest rate of BA plus 6.25 per cent and a $22.5-million syndicated facility with a sliding-scale interest rate, currently set as BA plus 3.75 per cent. The term loan carries a monthly principal payment requirement of $2-million and has no prepayment penalty. The company's previous loan facility with Anvil Channel Energy Solutions has been repaid in full and replaced with the senior loan facility, resulting in an interest cost reduction in excess of 30 per cent.

Highlights and strategic rationale

The acquisition is aligned with Rok's long-term business strategy of responsible exploration and development, complemented by strategic acquisitions of diversified and sustainable assets in favorable operating areas. Additional highlights include:

• All-cash transaction provides debt adjusted accretion of greater than 15-per-cent 2023 cash flow per share and greater than 75-per-cent TPP reserves per share.
• High-quality land positions (48,720 net acres) located in the Pinto, Steelman and Gainsborough areas of southeast Saskatchewan.
• Significant booked reserve base (65-plus net drilling locations) and long-term resource development upside, adding 18 years of reserve life, not including secondary recovery from future water flood applications.
• Stable base production, currently producing approximately 1,400 boepd (69 per cent liquids).
• Integrated operations enable low-cost structures (80 per cent of acquired assets are operated).

First-half 2023 guidance

Current corporate production is approximately 4,400 boepd (69 per cent liquids), of which 3,200 boepd is producing from Rok's core operating area in southeast Saskatchewan. Over the first six months of 2023, Rok intends to focus on increasing shareholder value through well optimization and integration of the acquired assets, debt reduction and a $10-million capital program that includes three gross (2.63 net) wells drilled in southeast Saskatchewan and Kaybob.

Over this period, the company expects to average 4,200 to 4,300 boepd and generate $25-million to $27-million in funds from operations, of which $10-million will be allocated directly to principal reduction on the term facility. Net debt at June 30, 2023, is expected to be $53-million to $55-million.

Rok will provide second half 2023 guidance in the second quarter of 2023. The second half of 2023 is expected to include a robust drilling program aimed at expediting growth in core operating areas. Across the southeast Saskatchewan core area, the company expects to balance drilling between conventional Frobisher and unconventional Midale, two of the most economic plays in the basin. Within the Kaybob south core area the company will further develop the Cardium oil and Montney gas development on its 100-per-cent working interest lands. The company will also evaluate the sale of additional non-core, non-operated assets to reduce debt and further focus operations on properties that align with management's expertise and Rok's growth strategy.

About Rok Resources Inc.

Rok is engaged in exploring for petroleum and natural gas development activities in southeast Saskatchewan and the Kaybob area of Alberta. Its head office is located in both Regina, Sask., Canada, and Calgary, Alta., Canada, and Rok's common shares are traded on the TSX Venture Exchange under the trading symbol ROK.

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