Mr. Anthony Marino reports

TENAZ ENERGY CORP. ANNOUNCES Q1 2023 RESULTS

Tenaz Energy Corp. has released its financial and operating results for the three months ended March 31, 2023.

The unaudited interim condensed consolidated financial statements and related management's discussion and analysis (MD&A) are available on SEDAR and on Tenaz's website. Selected financial and operating information for the three months ended March 31, 2023, appear herein, and should be read in conjunction with the related financial statements and MD&A.

A webcast presentation to accompany this release is available on Tenaz's website.

Highlights

First quarter operating and financial results:

• Production volumes averaged 2,337 boe/d (barrels of oil equivalent per day) in Q1 2023, up 54 per cent from Q4 2022 and 132 per cent from Q1 2022. The production increase was due to the acquisition of Netherlands assets at the end of 2022 and continued organic growth in the company's Canadian assets.
• Funds flow from operations (FFO) for the first quarter was $7.3-million, up 125 per cent from Q4 2022 and 633 per cent from Q1 2022. Higher 2023 funds flow from operations resulted from contributions from the new Netherlands assets.
• Free cash flow in Q1 2023 was $6.6-million, compared with negative free cash flow of $1.8-million in Q4 2022. The improvement was driven by contributions from both the company's Netherlands and Canadian assets.
• Net income for Q1 2023 was $2.9-million, as compared with $700,000 in Q4 2022, an increase that was the result of both higher operating netback and higher production. Q1 2023 net income was lower than net income of $3.5-million in Q1 2022, due to a $4.2-million impairment reversal which occurred in Q1 2022.
• Tenaz ended the quarter with positive adjusted working capital of $18.8-million, an increase of $4.7-million over year-end 2022 as a result of the free cash flow generated in Q1 2023.
• The company's normal course issuer bid (NCIB) program retired 360,100 common shares (1.3 per cent of basic common shares) at an average cost of $2.27 per share during the first quarter of 2023. As of the end of April, 2023, Tenaz has retired 926,200 shares at an average cost of $1.95 per share.

Budget and outlook:

• Capital expenditures during the first quarter totalled $700,000. Annual guidance for capital expenditures remains unchanged at $20-million to $24-million.
• Production for Q2 2023 may be modestly lower than Q1 2023 due to turnarounds in both Netherlands and Canada. The company's planned 2023 Canada drilling program is expected to start in late Q2 or early Q3, with four gross (3.35 net) wells brought on production later in the year.
• Annual production guidance of 2,200 boe/d to 2,300 boe/d remains unchanged.

President's message

"We are pleased to provide this update along with our results for the first quarter of 2023. We generated significant funds flow from operations (FFO) in Q1 2023, which was coupled with low seasonal capital expenditures (capex). As a result, our positive adjusted working capital (net debt) position improved to $18.8-million, providing further liquidity to assist in the financing of future acquisitions. We continue to focus our efforts towards our strategy of acquiring international upstream assets to provide full-cycle value additions for our shareholders.

"Our Canadian asset at Leduc-Woodbend continues to produce as expected, with first quarter production of 1,560 boe/d, up from 1,423 boe/d in Q4 2022. Uptime was strong, and reservoir performance has continued to meet or exceed our expectations. Our Leduc-Woodbend production guidance for full-year 2023 remains as previously announced at 1,450 to 1,550 boe/d.

"Our 2023 drilling program will commence in late Q2 or early Q3, with production contributions from the four (3.35 net) well program expected later in the second half of 2023. While the wells to be drilled in 2023 can be brought on-line within our overall existing facility capacity, part of our 2023 capex will go toward localized facility modifications to optimize our producing operations and enhance long-term processing capabilities at Leduc-Woodbend.

"Our Netherlands natural gas asset also performed as expected, with high uptime and limited capex activity. We continue to target production of approximately 750 boe/d for 2023.

"Netherlands maintenance activity will increase beginning in Q2, though capital requirements could be lower than first projected at the time of the acquisition. At present, we are maintaining our capex guidance range at $4-million to $6-million for 2023. Our capex plan for Netherlands contemplates production-enhancing workovers and recompletions, well hydraulics optimizations and compression modifications, with no new drilling planned at present.

"Neptune Energy, as operator of the L10 field in offshore Netherlands, continues to study the technical requirements, and assess the commercial viability of carbon capture and storage (CCS). The project's proximity to other mature gas reservoirs allows for co-operation between potential CCS operators in the Dutch North Sea, which may provide additional economies of scale. If commercially viable, the CCS project has the potential to store a significant amount of CO2 [carbon dioxide], with contemplated annual capacity of up to five million tonnes (Mt) (0.55 Mt net to Tenaz).

"Our current asset portfolio is bearing fruit from our team's technical work, which is now being applied to both our operated assets in Canada and non-operated assets in Netherlands. The asset base currently within Tenaz has a quality set of development opportunities including:

• Organic development of the Leduc-Woodbend field, which has a significant number of future drilling locations within the established reservoir boundaries.
• Longer-term development of discovered oil resource at production licence F17a in the Netherlands, operated by Wintershall, which is currently being evaluated for the most effective development plan.
• Short- and medium-term projects to extend the producing life of our production licences in the Dutch North Sea. Current natural gas prices have enhanced the economic viability of both tied-in fields and those that require additional gathering lines or new production installations.
• In most cases, our offshore processing facilities and gas transmission pipelines to shore have more than sufficient capacity to handle additional volumes from several discovered but not tied-in fields. These fields are not included in our reserve report under NI [National Instrument] 51-101, but may be recordable as contingent resources. Tenaz has commissioned independent assessments of contingent and prospective resources for our Netherlands assets.

"To summarize our financial performance, Q1 2023 delivered record FFO due to strong well performance, high uptime in our two regions, supportive commodity prices and continued focus on cost control. Positive adjusted working capital (net debt) of $18.8-million reflects the excess cash flow after deducting share repurchases for the period. The positive adjusted working capital balance does not reflect income earned on the NGT pipeline system, as cash is received from that investment through the payment of annual dividends. Including our undrawn bank credit facility, we now have more cash and available liquidity than we had at the time of the recapitalization of Altura in 2021. At the same time, our production is approximately 2.3 times 2021 levels, our annualized FFO (based on Q1 2023) as compared to full-year 2021 is approximately 8.3 times, and we have retired 3.3 per cent of our shares under the NCIB.

"Despite recent decreases in commodity prices, realized prices remain at levels that generate significant free cash and provide strong project returns. The spot price for TTF [Title Transfer Facility] gas is $14.22 per mcf [thousand cubic feet], with a forward price for the remainder of 2023 at $18.63 per mcf and calendar 2024 at $24.01. Our other major product is Canadian oil, where WTI [West Texas Intermediate] is currently priced at approximately $70 (U.S.) per bbl [barrel] and WCS [Western Canada Select] differentials have contracted to $15.50 (U.S.) per bbl. While Canadian natural gas is a less-significant product in our mix, a meaningful portion of our AECO [Alberta Energy Company] gas exposure is fixed for 2023 at prices well above current market levels.

"We will seek to expand our asset base in our regions of strategic interest by pursuing additional value-adding transactions. We believe the asset market is more conducive to this goal today than at any time in Tenaz's history. Because commodity prices have receded from the highs of early 2022, asset sellers now have greater realism regarding their price expectations. Although we can make no guarantees with respect to timing, we are optimistic that we will be able to bring additional opportunities to fruition from the high-quality acquisition projects in our transaction pipeline."

Signed, Anthony Marino

President and chief executive officer

May 15, 2023

About Tenaz Energy Corp.

Tenaz is an energy company focused on the acquisition and sustainable development of international oil and gas assets capable of returning free cash flow to shareholders. Tenaz has domestic operations in Canada along with offshore natural gas assets in the Netherlands. The domestic operations consist of a semi-conventional oil project in the Rex member of the Upper Mannville group at Leduc-Woodbend in central Alberta. The Netherlands natural gas assets are located in the Dutch sector of the North Sea.

We seek Safe Harbor.