Quarterly / Earnings Reports | First Quarter (1Q) Update

Pine Cliff Reports Q1 2019 Results; Highlights Duvernay Deal

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Pine Cliff Energy Ltd. reported its Q1 2019 results.

First Quarter 2019 Highlights

In the first quarter of 2019, Pine Cliff generated its highest adjusted funds flow and revenue since the second quarter of 2017. Additionally, Pine Cliff brought its first oil well on production and subsequent to March 31, 2019, announced a strategic acquisition and financing that will significantly increase growth opportunities in the Pekisko oil pool where the Company's first well was drilled. Highlights from the first quarter of 2019 are as follows:

• generated $32.1 million of oil and gas sales for the three months ended March 31, 2019, 8% higher than the $29.7 million generated for the three months ended March 31, 2018;
• generated $6.8 million of adjusted funds flow ($0.02 per basic share) for the three months ended March 31, 2019, 33% higher than the $5.1 million ($0.02 per basic share) generated for the three months ended March 31, 2018;
• successfully brought Pine Cliff's first 100% operated oil drill on production in January, 2019. This well generated production of approximately 375 Boe/d (weighted approximately 60% liquids) from January 14, 2019 to March 31, 2019;
• net debt was decreased by 9% or $5.0 million from $56.8 million as at December 31, 2018 to $51.8 million as at March 31, 2019. This is Pine Cliff's lowest net debt position since Q3-2015; and
• realized $2.84 per Mcf gas price for the three months ended March 31, 2019, 9% higher than the AECO 5A benchmark of $2.61 per Mcf.

2019 Strategic Acquisition

On April 17, 2019, Pine Cliff announced that it had entered into an agreement to acquire oil and natural gas assets in the Company's core Ghost Pine area of Central Alberta for net cash consideration of approximately $8.6 million, after estimated closing adjustments. The Company's initial assessment is that this acquisition will, at current forward strip pricing, increase its economic Pekisko oil location inventory from six to 27 net locations and add approximately 1,575 Boe/d of production weighted 75% natural gas, 16% NGLs and 9% oil, essentially eliminating the Company's annual production decline for 2019, which is less than 10%. The Acquisition is expected to close on or around May 31, 2019 and the Company currently intends to drill its second Pekisko oil location in the second half of 2019.

Concurrent with the acquisition, Pine Cliff announced a $4.0 million flow-through common share financing and a private placement of common shares for proceeds up to $3.0 million. One of Pine Cliff's current shareholders, the Alberta Investment Management Corporation, has indicated that it intends to increase its shareholdings in Pine Cliff by approximately 15,000,000 common shares on behalf of certain of its clients through these financings. For additional details on the acquisition and financings, please refer to the April 17, 2019 news release on our website and the Q1-Report.

The Acquisition, although binding between the parties, is subject to various standard conditions, including rights of first refusal and regulatory approvals. No assurances can be given that the Acquisition will be completed as proposed or at all. The completion of the Private Placements are subject to certain conditions including the closing of the Acquisition and customary regulatory approvals, including the approval of the Toronto Stock Exchange.

Financial and Operating Results

¹ This is a non-GAAP measure, see NON-GAAP Measures for additional information.