Mr. Leonard Van Betuw reports

AVILA ENERGY CORPORATION PROVIDES OPERATIONAL UPDATE AND IS PLEASED TO ANNOUNCE THE ADDITION OF 3RD PARTY PROCESSING SERVICES

Avila Energy Corp. has provided an operational update and has made a future addition of third party processing services.

The company upon closing its initial tranche of $1,033,000 as announced on Oct. 31, 2023, of the previously announced $3-million private placement on Sept. 20, 2023, remains focused on three priorities, the strengthening of its balance sheet, the recovery and improvements in its daily production, and the commencement of direct-to-consumer sales of Avila's integrated energy solution.

Upstream operations

The company is currently completing its facilities maintenance and turnarounds prior to winter setting in. It is preparing to commence additional remediation of wells which are anticipated to re-establish production to 1,000 boe/d (barrels of oil equivalent per day); 15-per-cent oil production, 5-per-cent liquids and condensate, and 80-per-cent natural gas., The company's product mix is expected to only vary less than 5 per cent per 100 boe/d of growth as it continues to focus on the future development in 2024 of its approximately 58,000 acres in Alberta.

Avila's upstream operations remain focused on the refinement of its goal to meet its first milestone of 650 boe/d where it is capable of consistently generating cash flow that exceeds the total cost of the company's operational (opex) and general and administrative (G&A) obligations. Avila has defined this to be its breakeven point for its upstream operations. By the end of 2023, this breakeven point is expected to be based on daily production of 650 boe/d (80-per-cent natural gas and liquids, and 20-per-cent heavy crude oil and condensates), and assumes it will realize an average price of $2.50/mcf (thousand cubic feet) for natural gas and a blended price of $75.00/bbl for heavy crude oil, liquids and condensates. Furthermore, the company assumes its production and future investments will continue to be focused on maintaining a product mix of 80-per-cent natural gas and liquids and 20-per-cent heavy crude oil and condensates and initially operating expenses including all fixed well and facilities costs of $17.58 per boe.

Upon establishing operational breakeven, the company's goal is to exit 2023 at a production rate ranging from 800 boe/d to up to 1,000(at/d at which time economies of scale are expected to reduce operating expenses to $11.75 per boe (at 1,000 boe/d) and result in the capacity to generate operationally free cash-flow of approximately $5.8-million per year in 2024.

The company's goal in 2024 is to continue to reduce operating expenses to $7.50 boe/d upon reaching a production rate of 2,000 boe/d in the second half of 2024.

Third party processing services

As reported earlier, Avila commenced in late September and October the completion of the company's seasonal maintenance and turnarounds along with the reconfiguration of the company's facilities in west-central Alberta. These efforts are in alignment with Avila receiving notice from an Alberta-based producer in early September that it can expect new third party volumes of natural gas to be processed at Avila's facilities in west-central Alberta.

Avila previously had been anticipating this was to occur as it is an important precursor to the sanctioning and construction of the company's proposed new power generation, carbon capture and CO2 sequestration facilities in the region. The company's two facilities in west-central Alberta are currently capable of producing 15,000 mcf day and are expected to be operating at capacity by the end of 2024.

The additional third party natural gas processing volumes are expected to be flowing prior to year-end 2023, however regulatory delays may result in the first volumes being received and processed by Avila in the first quarter of 2024.

The agreed rates are expected to increase annualized cash flow by an additional $1.5-million in 2024.

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 the company 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 with the delivery of direct-to consumer energy sales to both residential and commercial consumers.

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