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”)³ in Q1 2023 which was coupled with low seasonal capital expenditures³ (“CAPEX”). As a result, our positive adjusted working capital (net debt)³ 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 online 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 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 cooperation 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, with contemplated annual capacity of up to 5 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 license 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 licenses 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 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 FFO³ 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)³ 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 2.3x 2021 levels, our annualized FFO (based on Q1 2023) as compared to full-year 2021 is approximately 8.3x, and we have retired 3.3% 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 gas is $14.22 per mcf, with a forward price for the remainder of 2023 at $18.63 per mcf and calendar 2024 at $24.01⁴. Our other major product is Canadian oil, where WTI is currently priced at approximately US$70 per bbl and WCS differentials have contracted to US$15.50 per bbl. While Canadian natural gas is a less-significant product in our mix, a meaningful portion of our AECO 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.

/s/ Anthony Marino

President and Chief Executive Officer
May 15, 2023