Ops Update

Sales volumes in the first quarter of 2019 averaged 4,432 boe/d, up 2% from the sales volumes in the same period in 2018 due to inventory drawdowns and general reactivation activities offsetting weather related production downtime.

Production averaged 4,355 boe/d in Q1 2019 and was unchanged from the production level in the same quarter of 2018, due to impacts from severe cold weather in Q1 2019, and from discretionary shut-ins and an absence of reactivation and workover spending in Q4 2018. Wells shut-in during Q4 2018 are being consistently brought back online as the Company’s reactivation and workover program resumed in Q1 2019, focused on higher capital efficiency projects. In addition, well and facility downtimes have been remedied following challenging weather conditions in February and early March.

Effective July 2018, Razor began utilizing a portion of its own gas production in the generation of electrical power. Gas production for the three months ended March 31, 2019 includes 971 mcf/d of internally consumed gas.

Due to the unprecedented discounts on Western Canadian Light Sweet Oil ("MSW") in the fourth quarter of 2018, Razor did not sell all of its produced oil, instead it was temporarily stored in existing surface tanks thus establishing material inventory. As at March 31, 2019, Razor had 28,360 bbls of light oil inventory (December 31, 2018 - 35,267 bbls). MSW differentials and WTI pricing improved significantly in Q1 2019 and the Company intends to continue to reduce its inventory levels in Q2 2019.

Razor realized an oil price of $65.10 per barrel during the first quarter of 2019, which was an 11% discount to the WTI (CAD) down from a 44% discount in Q4 2018 mostly due to the decrease in the MSW differential to WTI, and consistent with a 12% discount in Q1 2018.

During the first quarter of 2019, the Company realized an average operating netback of $6.15/boe down 63% from the first quarter of 2018 due to the lower realized prices in addition to higher operating expenses.

Royalty rates averaged 14% in the first quarter of 2019, compared to 22% for the same period in 2018. The decrease in royalty is due to the decrease in government index oil prices in Q1 2019 over Q1 2018.

Operating expenses increased 32% in the first quarter of 2019 compared to the same period in 2018, mostly due to increased workover activity. Workovers and facility and pipeline integrity expenses averaged $7.33/boe in the first quarter of 2019 compared to $3.43/boe in the same quarter of 2018. During the first quarter of 2019, workovers consisted of production maintenance activities on 24 gross (23.2 net) wells up from 5 gross (4.6 net) workovers in Q1 2018.

The top cost drivers, fuel and electricity, labour, property taxes, and repairs and workovers, accounted for 75% of total operating expenses in the first quarter of 2019 (2018 - 72%). Electricity and fuel increased 23% in Q1 2019 from Q1 2018 mostly due to a 99% increase in electricity average pool prices offset by decreased usage directly attributable to the installation of natural gas power generation. Workovers increased 235% in Q1 2019 from Q1 2018 accounting for 18% of operating expenses in the first quarter, up from 7% in the same period last year. Similarly pipeline and facility repairs increased 43% in Q1 2019 from Q1 2018 accounting for 11% of operating expenses. These repairs and workover increases were mostly due to increased activity as a result of deferred Q4 2018 maintenance.

Capital Program

In the first quarter of 2019, the Company reactivated a total of 6 gross (5.9 net) wells, resulting in 107 boe/d of net additional production, for a total of $1.6 million. Reactivation capital includes 3 (3.0 net) Virginia Hills reactivations, 1 (0.9 net) South Swan Hills Unit reactivation, 1 (1.0 net) Kaybob well reactivation and 1 (1.0 net) Carson Creek reactivation. Reactivation capital also includes capital spent on wells not yet on production in Q1 2019.

The Company invested a further $0.9 million in additional field service equipment and $0.5 million in power generation and corporate information technology infrastructure.

Razor received $2.0 million in government grants related to the clean power development and energy efficiency initiatives.