Mr. Leonard Van Betuw reports

AVILA ENERGY CORPORATION REFILES AMENDED AND RESTATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2022

Avila Energy intends to refile its amended and restated annual financial statements for the year ended Dec. 31, 2022. The refiling of the financial statements will be completed no later than Aug. 8, 2023.

The annual financial statements as at Dec. 31, 2022, and for the year then ended have been restated to correct a material error in its filing. The company discovered the deficiency in the accounting information subsequent to the filing and issuance of the financial statements and now wishes to rectify the situation by restating the financial statements for the year ended Dec. 31, 2022, using the updated and complete information currently available.

The company determined that the approach employed to ascertain the fair value of property, plant and equipment (PP&E) related to the west-central Alberta (WCA) and Donalda property acquisitions were inappropriate, resulting in inaccuracies in calculating the deferred tax asset, deferred tax liability, goodwill, gain on acquisition, goodwill impairment expense, and impairment expense for PP&E. Furthermore, at year-end, the presence of impairment indicators required the recognition of additional impairment for PP&E. The effects of the restatement are as follows:

1. For the Donalda property acquisition, this the gain on acquisition was reduced to $13,942,757 from $14,698,701 and the deferred tax liability was reduced to $3,677,668 from $3,903,469. For the WCA property acquisition, the goodwill increased to $11,516,303 from $9,836,173, the deferred tax asset increased to $5,640,021 from $5,138,074, and the goodwill impairment expense increased to $11,516,303 from $9,836,173.
2. An impairment expense of PP&E of $18,444,338 was recorded to adjust the recorded amounts to their recoverable amount.

The effect of the restatement decreased the non-current assets by $20,880,411 and increased the loss to $20,403,076.

About Avila Energy Corp.

The company is an emerging Canadian Securities Exchange listed corporation trading under the symbol (VIK) and, in combination with an expanding portfolio of 100-per-cent-owned-and-operated oil and natural gas production, pipelines and facilities, is a licensed producer, explorer and developer of energy in Canada. The company's long-term vision is to achieve, through the implementation of a closed system of carbon capture and sequestration, an established path toward the material reduction of Tier 1, Tier 2 and Tier 3 emissions and continues to work toward becoming a vertically integrated carbon-neutral energy producer. The company's goals are to be achieved by focusing on the application of proven geological, geophysical, engineering and production techniques in combination and the direct sale of energy to both residential and commercial consumers.

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