Criterium Energy Announces Pricing of Public Offering in Connection with Transformative Acquisition

Calgary, Alberta--(Newsfile Corp. - July 4, 2023) - Criterium Energy Ltd. (TSXV: CEQ) ("Criterium" or the "Company"), an independent upstream energy development and production company focused in Southeast Asia, is pleased to announce the pricing of its previously announced marketed public offering (the "Offering") of subscription receipts of the Company (the "Subscription Receipts") at a price of C$0.20 per Subscription Receipt, for aggregate gross proceeds of up to C$22 million (equivalent to US$16 million). The Offering is being led by Research Capital Corporation, as lead agent and sole bookrunner (the "Lead Agent"), on behalf of a syndicate of agents, including Canaccord Genuity Corp. and Stifel FirstEnergy (collectively, the "Agents").

Each Subscription Receipt will entitle the holder thereof to receive, without payment of any additional consideration and with no further action on the part of the holder thereof, one unit of the Company (a "Unit") upon satisfaction of certain escrow release conditions prior to the Escrow Release Deadline (as defined below).

Each Unit will consist of one common share of the Company (a "Common Share") and one Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to purchase one Common Share (a "Warrant Share") at an exercise price of $0.25 per Warrant Share until the date that is 36 months following the satisfaction or waiver of the Escrow Release Conditions.

Certain directors, officers, and employees of the Company are participating in the Offering alongside other investors.

The Company executed a sale and purchase agreement ("SPA") to acquire all the issued and outstanding shares of Mont D'Or Petroleum Limited ("MOPL") (the "Acquisition"). MOPL holds 100% operating working interests in two Production Sharing Contracts ("PSC") in Indonesia, the Tungkal PSC located onshore South Sumatra and the West Salawati PSC located in Southwest Papua collectively produce 1,050 bbl/d of oil and contains aggregate 2P Reserves of 4.7 MMbbl¹. Collectively, Tungkal and West Salawati have been independently valued at US$58 million (C$79.5 million) NPV10 after tax¹.

Acquisition Highlights

• Establishes Criterium as an operator in the SE Asia region: Sets the foundation for organic growth and provides the necessary credentials to unlock further and more material M&A activity.

• Generates immediate Cash Flow and Production: Collective production of approximately 1,050 bbl/d¹ and expected to generate US$24 million (C$32.9 million) Net Operating Income in 2024.

• Three organic growth opportunities that can be realized within cashflow:

1. Immediate production optimization resulting in 2-3x production growth: Executing identified work-overs and infill drilling to achieve expected production of 1,400 - 1,600 bbl/d by Q4 2023/Q1 2024 and fiscal year-ended 2024 expected production of 2,200 - 2,600 bbl/d (3,200 - 3,600 bbl/d in 3P estimates), funded from cash flow¹, with the expectation to generate US$25 - US$35 million (C$34.2 - C$47.9 million) EBITDA in 2024².

2. Gas monetization resulting in approximately 10 million cf/d (1,600 boe/d): The Tungkal PSC contains 20 bcf¹ of 2C Contingent Resource which Criterium will monetize and convert to reserves by establishing a plan of development and securing a gas sales contract. Gas production is anticipated in early 2025 at a rate of up to 10 million cf/d (equivalent to approximately 1,600 boe/d) (management estimate).

3. High impact, low-cost, exploration: Total Prospective Resources of 29 MMboe¹, most notably contained in the Berkas (17 bcf + 6 MMbbl) and Cerah (26 bcf + 7 MMbbl) prospects which are located proximal to both oil and gas transportation infrastructure resulting in low-cost and quick transition from discovery to production.

• Strong Cash Position: Upon closing of the Acquisition, MOPL will hold a cash balance of approximately US$17 million (approximately US$8 million cash from the Offering and US$9 million of MOPL cash). Creating a resilient balance sheet which will utilize cash to execute drilling and workover campaigns while ensuring the debt amortization is met.

• Strategic Shareholder: Upon closing of the Acquisition, Criterium will issue US$1 million Common Shares to Tourmalet Holdings Ltd. ("Tourmalet"), a company owned by the founding partners of Provident Capital Partners, a leading Southeast Asia focused investment firm which has successfully built multiple billion-dollar businesses in Indonesia. Current MOPL shareholders, which includes Tourmalet, will receive contingency payments upon certain price and production thresholds⁴.

• Assumption of Favourable Debt: Acquiring MOPL in consideration of assuming US$32.5 million of outstanding debt which Criterium will reduce to US$19.7 million post-closing through cash payments (US$7.9 million) and conversion to equity (US$2.5 million Common Shares at closing and US$2.4 million converted in 2025³). Favourable weighted average interest rate of 7.9%. By the end of 2024, the debt to cash flow ratio is expected to decrease to less than 0.5x.

Equity Financing Details
The Company intends to use the net proceeds of the Offering for: (i) drilling activities in 2023 to ramp up oil production focused on the Tungkal PSC; (ii) execution work associated with the Tungkal PSC gas monetization tie-in project; and (iii) a portion for repaying certain debt with MOPL's existing lenders to reduce the total debt balance outstanding following completion of the Acquisition.

In connection with the Offering, the Company has granted the Agents an option, exercisable in whole or in part, at the sole discretion of the Agents, at any time, from time to time, for a period of 30 days from and including the closing of the Offering, to purchase from the Company up to an additional 15% of the Subscription Receipts sold under the Offering, on the same terms and conditions of the Offering to cover over-allotments, if any, and for market stabilization purposes (the "Over-Allotment Option").

Upon closing of the Offering, the net proceeds will be placed in escrow (the "Escrowed Proceeds") with an escrow agent ("Escrow Agent") and will be released to the Company (together with the interest thereon) upon satisfaction of certain escrow release conditions and the Agents receiving a certificate from the Company prior to the Termination Time (as defined below) to the effect that:

1. the completion, satisfaction or waiver of all conditions precedent to the Acquisition in accordance with the SPA (save and except for those conditions precedent which are contingent upon and/or will be completed, satisfied or waived concurrent with or as part of the closing of the Acquisition (the "Concurrent Conditions Precedent"), provided that the Chief Executive Officer of the Company (or such other officers as may be acceptable to the Lead Agent, acting reasonably) has certified to the Agents that, to the best of his information, knowledge or belief, no event, circumstance or condition exists which could reasonably be expected to result in any of the Concurrent Conditions Precedent not being completed, satisfied or waived concurrent with or as part of the closing of the Acquisition; it being understood and agreed that certain of the Concurrent Conditions Precedent may be completed or satisfied pursuant to the giving and acceptance of solicitors' undertakings, as applicable, to the satisfaction of the Agents, acting reasonably;

2. the receipt of all required shareholder and regulatory approvals, including, without limitation, the conditional approval of the TSX Venture Exchange ("TSXV") for the Acquisition;

3. the representations and warranties of the Company contained in the agency agreement to be entered into in connection with the Offering being true and accurate in all material respects, as if made on and as of the escrow release date; and

4. the Company and the Lead Agent having delivered a joint notice and direction to the Escrow Agent, confirming that the conditions set forth in (a) to (c) above have been met or waived.

If (i) the Escrow Release Conditions are not satisfied or waived on or prior to 5:00 p.m. (Toronto time) on the date that is 90 days following the closing of the Offering (or such later date as the Lead Agent may consent in writing); (ii) the Acquisition is terminated in accordance with its terms; or (iii) the Company has advised the Agents or the public that it does not intend to proceed with the Acquisition (in each case, the earliest of such times being the "Termination Time"), the Company will be responsible to refund the gross proceeds of the Offering (including the amount of the Agents' commission and the Agents' expenses) without penalty or deduction to the subscribers of the Offering, such that it would be the Company's responsibility to return the full amount of the gross proceeds of the Offering to the holders of Subscription Receipts, together with such holders' pro rata portion of the interest earned thereon, if any (the "Required Refund").

The Offering is expected to close on or about the week of July 19, 2023, or such other date as the Company and the Lead Agent may agree. Closing of the Offering is subject to customary closing conditions, including, but not limited to, the receipt of all necessary regulatory approvals, including the approval of the securities regulatory authorities and the TSXV. In addition, the Company will use commercial reasonable efforts to obtain the necessary approvals to list the Warrants on the TSX Venture Exchange.

The Company will be filing an amended and restated preliminary short-form prospectus in respect of the Offering later today. The Offering is being made pursuant to the amended and restated preliminary short-form prospectus to be filed in each of the provinces of Canada (except Québec), and may be offered in the United States on a private placement basis pursuant to an appropriate exemption from the registration requirements under applicable U.S. law, and outside of Canada and the United States on a private placement or equivalent basis. The preliminary short form prospectus and the amended and restated short form prospectus is available on SEDAR at www.sedar.com.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Criterium Energy Ltd.
Criterium Energy Ltd. is an upstream energy company focused on the acquisition and sustainable development of assets in Southeast Asia that can deliver scalable growth and cash generation. The Company focuses on maximizing total shareholder return by executing on three strategic pillars, namely (1) successful and sustainable reputation, (2) innovation and technology arbitrage, and (3) operational and safety excellence.

For further information please visit our website (www.criteriumenergy.com), call 403-668-1630 or contact:

Robin Auld
Chief Executive Officer
Criterium Energy Ltd.
Email: rauld@criteriumenergy.com

Matt Klukas
Chief Operating Officer
Criterium Energy Ltd.
Email: mklukas@criteriumenergy.com

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

¹ Reserve report commissioned by MOPL and prepared by ERCE Limited dated May 16, 2023 with effective date of December 31, 2022 (the "Reserve Report"), which was prepared in accordance with the definitions, standards, and procedures contained in the Canadian National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities. Gross reserves and resources are the working interest share of Reserves and Resources and are prior to the application of the contractual terms of the PSC. Stated production data is as of December 31, 2022.

² EBITDA projections are based on 2P Reserve Report case for 2024 with management estimate for phased activity (Reserve report states US$11 MM ^EBITDA for 2023 and US$37 MM EBITDA for 2024).

³ Common Shares issued to Tourmalet are in satisfaction of the fee payable by MOPL to Tourmalet for negotiating write-downs to current MOPL lenders and will be issued at the lower of the Subscription Receipt Price or the 10-day VWAP prior to closing. The Common Shares issued to the lenders in exchange for debt (US$2.5 million) will be issued at the Subscription Receipt Price. The convertible shares issued to the lenders will convert US$2.4 million of existing debt and an additional US$0.35 million to Common Shares in 2025 at an issue price equivalent to the 20-day VWAP on May 31, 2025.

⁴ The contingency payments are calculated and paid semi-annually and are based on asset performance and commodity price, specifically (1) 'Oil Production' payment of US$3 per barrel of incremental production above 1,200 bbl/d when ICP is greater than US$80/bbl and less than US$90/bbl or US$7.5 per barrel of incremental production above 1,200 bbl/d when ICP is greater than US$90/bbl. (2) 'Oil Price' payment payable if average daily production exceeds 1,200 bbl/d and if ICP is greater than US$100/bbl. The contingency payment is US$1/bbl and increases by US$1/bbl for every US$10 increase of ICP above US$100/bbl/ (3) 'Gas Production' contingency payment equal to 1.82% of gross revenue from third party gas sales.

⁵ Based on the base case STOIIP contained in the Reserve Report.

Cautionary Note Regarding Forward-Looking Statements

This press release contains certain forward-looking information and statements that are based on expectations, estimates, projections and interpretations as at the date of this news release. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends", "seek", "aims" and similar expressions are intended to identify forward-looking information or statements.

This press release contains statements of forward looking information including, without limitation, statements with respect to completion of the Offering, price of the Subscription Receipts, dates for closing of the Offering, amount of proceeds under the Offering, approval of the Offering by regulatory authorities, intended use of net proceeds of the Offering, generation of stated net operating income by the Company for the second half of 2023, the stated significant upsize potential of the MOPL assets, the intention to drill 3-4 wells in Q4 2023 and commence an annual drilling program in 2024 in the Mengoepeh Field, the increase of recovery from simple faulted anticline structures through converting former producing wells into water injectors, the implementation of a workover in Q4 2023 by Criterium in the BLL-A Field, the satisfaction of conditions precedent to the Acquisition and approval by all regulatory authorities of the Acquisition.

Factors that could cause actual results to vary from forward-looking statements or may affect the operations, performance, development and results of Criterium's businesses include, among other things: risks and assumptions associated with operations; risks inherent in Criterium's future operations; increases in maintenance, operating or financing costs; the availability and price of labour, equipment and materials; competitive factors, including competition from third parties in the areas in which Criterium intends to operate, pricing pressures and supply and demand in the oil and gas industry; fluctuations in currency and interest rates; inflation; risks of war, hostilities, civil insurrection, pandemics (including COVID-19), instability and political and economic conditions in or affecting Indonesia or other countries in which Criterium intends to operate (including the ongoing Russian-Ukrainian conflict); severe weather conditions and risks related to climate change; terrorist threats; risks associated with technology; changes in laws and regulations, including environmental, regulatory and taxation laws, and the interpretation of such changes to Criterium future business; availability of adequate levels of insurance; difficulty in obtaining necessary regulatory approvals and the maintenance of such approvals; general economic and business conditions and markets; and such other similar risks and uncertainties. The impact of any one assumption, risk, uncertainty or other factor on a forward-looking statement cannot be determined with certainty, as these are interdependent and the Company's future course of action depends on the assessment of all information available at the relevant time. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

With respect to forward-looking statements contained in this press release, Criterium has made assumptions regarding, among other things: the COVID-19 pandemic and the duration and impact thereof; future exchange and interest rates; supply of and demand for commodities; inflation; the availability of capital on satisfactory terms; the availability and price of labour and materials; the impact of increasing competition; conditions in general economic and financial markets; access to capital; the receipt and timing of regulatory and other required approvals; the ability of Criterium to implement its business strategies; the continuance of existing and proposed tax regimes; and effects of regulation by governmental agencies.

The forward-looking statements contained in this press release are made as of the date hereof and the parties do not undertake any obligation to update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Oil and Gas Advisories

Total proved, probable and possible reserves disclosed in this announcement in respect of the Tungkal PSC are based on the Reserve Report commissioned by MOPL and prepared by ERCE Limited dated May 16, 2023 with effective date of December 31, 2022, which was prepared in accordance with the definitions, standards, and procedures contained in the Canadian National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities.

The Resource Report describes reserves as "…estimated remaining quantities of commercially recoverable oil, natural gas, and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable."

These reserves are further classified based on the level of certainty and status of development or production.

The Reserve Report classifies levels of uncertainty in accordance with the Canadian Oil and Gas Evaluation Handbook. These levels are described as PDP, PD, 1P, 2PD, 2P and 3P levels of status and uncertainty (see glossary for summarized definitions). According to the Reserve Report, estimates and uncertainty are further influenced by: (1) a variety of market factors which may influence the commerciality of resource recovery; and (2) the Reserve Report is based on estimates only and there is no guarantee of actual recovery.

Any references in this presentation to initial production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Criterium. Management of Criterium believes the information may be relevant to help determine the expected results that Criterium may achieve within oil and gas interests and such information has been presented to help demonstrate the basis for Criterium's business plans and strategies with respect to the Tungkal PSC. There is no certainty that the results of the analogous information or inferred thereby will be achieved by Criterium and such information should not be construed as an estimate of future production levels, reserves or the actual characteristics and quality of Criterium's assets.

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 5.6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 5.6:1, utilizing a conversion on a 5.6:1 basis may be misleading as an indication of value.

Glossary

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