Cuda Oil and Gas Inc. Announces a Financial Milestone for its Light Oil Project in the Powder River Basin, Wyoming

Calgary, Alberta--(Newsfile Corp. - June 5, 2019) - Cuda Oil and Gas Inc. (TSXV: CUDA) ("Cuda" or the "Company") is pleased to announce it has signed a Letter of Intent (the "LOI") to refinance its CAD $35 million credit facility (the "Facility") with its Canadian institutional lender (the "Lender"). The refinancing includes the extension of the maturity of the Facility by one year from July 2019 to July 2020, subject to a definitive agreement. Interest on the Facility will continue to compound monthly at a rate of 10.5% per annum, payable monthly. In connection with the refinancing of the Facility, the Company will issue 1,500,000 common share purchase warrants (the "Warrants") at the Lender's option. Each Warrant will entitle the Lender to purchase one common share (each a "Common Share") of Cuda at an exercise price of CAD $0.65/Common Share and will expire up to 24 months after the issuance of the Warrants. The issuance of the Warrants is subject to the approval of the TSX Venture Exchange.

In addition, the Lender has agreed to provide an additional CAD $8 million demand facility (the "Additional Facility") that is due on December 31, 2019. Interest on the Additional Facility will compound monthly at a rate of 10.75% per annum, payable monthly. The proceeds on the Additional Facility will provide a financial back-stop to fund and execute the natural gas miscible flood program (the "Program") at the Barron Flats (Deep) Federal Unit ("BFU") in Converse County, Wyoming. A cyclic gas-injection stimulation test, associated with the Program, at William Valentine #1 is expected to be onstream in July 2019.

KES 7 Capital Inc. ("KES 7") is acting as financial advisor to the Company.

The Additional Facility is an integral milestone in support of the 2019 capital plan to fund the development of the significant light oil reserves assigned to the Company at year-end 2018. The reserves were prepared in accordance with the definitions, standards and procedures contained in the COGE Handbook and NI 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), by the Company's independent reserves evaluator, Ryder Scott. All reserves information for Proven Developed ("PDP") and Proved Non-Producing ("PNP"), Total Proved ("1P"), and Proved plus Probable ("2P") Reserves is provided below.

Reserves at December 31, 2018

  • PDP + PNP is 1,534 mboe (62 % oil & liquids)
  • 1P is 4,949 mboe (84 % oil & liquids)
  • 2P is 14,571 mboe (84% oil & liquids)

Reserve Value at December 31, 2018 (BT discounted at 10%)

  • PDP + PNP is $26.8 Million or $1.22 per basic common share
  • 1P is $77.8 Million or $3.55 per basic common share
  • 2P is $191.6 Million or $8.74 per basic common share

In addition to the existing covenants, the Additional Facility is subject to customary work and facility fees and an initial draw of CAD $3.5 million. PDP values at year-end 2019 are required to be no less than CAD $50 million based on a Ryder Scott year-end reserve report.

Cuda also recently acquired the Cole Creek Unit consisting of 11,000 gross acres (3,630 acres net) which can support a 48 well (16.7 net) project that can be developed with unconventional horizontal technology.

The Powder River Basin, specifically Converse County, continues to see higher activity levels from major oil and gas E&P companies and private equity backed firms. The stack of horizontal oil targets continues to deliver positive results. The Company has recognized that several additional horizontal opportunities exist below the conventional Shannon Sand on the land base, specifically within the Frontier, Niobrara and Muddy formations. These opportunities provide for further resource development on Company lands.

About Cuda Oil and Gas Inc.
Cuda Oil and Gas Inc. is engaged in the business of exploring for, developing and producing oil and natural gas, and acquiring oil and natural gas properties across North America. The Cuda management team has worked closely together for over 20 years in both private and public company environments and has an established track record of delivering strong shareholder returns. Cuda will continue to implement its proven strategy of exploring, acquiring, and exploiting with a long-term focus on large, light oil resource- based assets across North America including significant operational experience in the United States. The Cuda management team brings a full spectrum of geotechnical, engineering, negotiating and financial experience to its investment decisions.

For further information please contact:

Glenn Dawson
President and Chief Executive Officer
Cuda Oil and Gas Inc.
(403) 454-0862

Forward-Looking Information
This news release contains forward-looking information. All statements other than statements of historical fact included in this news release are forward-looking information that involve various risks and uncertainties and are based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management. In particular, this news release includes forward-looking information relating to: (i) the terms of the proposed refinancing of the Company's credit facility and the issuance of the warrants to the Lender; (ii) exploration and development activities and the timing of such activities; (iii) the timing of operational developments relating to the Company's natural gas miscible flood program; and (iv) reserve estimates and reserve values which by their nature involve the implied assessment that the reserves can be profitably produced. These statements are based on certain assumptions of the Company relating to current conditions and expected future developments including assumptions relating to: (i) the execution of definitive agreements relating to the refinancing; (ii) all necessary third party and regulatory approvals being obtained; and (iii) business prospects and opportunities. Risk factors that could prevent forward looking statements relating to Cuda and its operating activities from being realized include ongoing permitting requirements, the actual results of current exploration and development activities, operational risks, risks associated with drilling and completions, uncertainty of geological and technical data, access to capital, market conditions, the availability and nature of alternative sources of energy, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of oil and natural gas. Although Cuda has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Oil and Gas Advisories
Estimates of the net present value of future net revenue attributable to reserves do not represent fair market value.

"BOEs" may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (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 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

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

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