President's Message to Shareholders

Reallocation of Capital for Cash Flow Per Share Growth

Our asset acquisitions in Central Alberta have provided Pine Cliff with an unprecedented inventory of highly economic drilling opportunities. As stewards of our shareholders’ capital, our management team is responsible for making prudent capital allocation decisions, which is even more important in shifting markets.  On April 2, 2025, Pine Cliff announced a $23.5 million spending program, which includes an allocation of $12.5 million for asset development in the second half of the year.  Current commodity prices still support this decision, and drill locations are now being finalized.

Our return to more active asset development this year will be measured and is not expected to result in a material change to our low production decline business model, which currently ranks among the lowest among publicly traded natural gas focused companies. Pine Cliff believes that reallocating a portion of cash flow toward strategic development projects will strengthen our core business and support cash flow per share growth, ultimately enhancing returns for shareholders. Since introducing the dividend in July 2022, Pine Cliff has paid more than $100 million in dividends to shareholders, impressive for a company with a market cap of approximately $200 million.

‍

Introduction of Unit Plan

We have proposed a share unit plan that will be brought forward at our Annual General Meeting scheduled for May 20th. Pine Cliff has historically issued stock options to all its employees, both in the field and in the head office, however stock options have not always served the purpose of creating a sense of stock ownership as we hope to see with the proposed unit plan. The proposed unit plan will give Pine Cliff the flexibility of being able to limit the number of shares being issued while still giving employees the financial treatment of being an owner of Pine Cliff stock. More details on the unit plan can be found in the information circular that has been mailed to shareholders for their consideration at the AGM.

We still believe that stock options are an important part of long-term compensation for our senior management that are making long-term strategic decisions for Pine Cliff, and we will continue to use stock options for this group. The total combined units and options outstanding will continue to be capped at 10% of the total outstanding shares, as it always has.  

‍

Hedging Update

Hedging continues to be an important part of our marketing strategy to help protect the cash flow used to support our business and shareholder distributions. The effectiveness of this strategy was evident once again as demonstrated in Q1 2025 with Pine Cliff delivering a realized natural gas price at a 34% premium to the AECO 5A benchmark during this period.

Based on our first quarter of 2025 volumes, we have approximately 42% of gross natural gas production⁴ hedged at C$2.90/Mcf and 32% of gross oil production⁵ hedged at US$65.02/Bbl for the next three quarters.

‍

Webcast

We will host our quarterly webcast regarding our Q1 results at 9:00 am MT on Tuesday May 6th. Participants can access the live webcast via PNE Q1 Results Webcast or through the Pine Cliff website at http://www.pinecliffenergy.com.

‍

Outlook

Our management team is excited to be deploying drilling capital as we are heading into a period of improved AECO gas prices. It has been a long time since forward Western Canada natural gas prices have been above $3.00 MCF.  The back half of 2025 and 2026 look promising for natural gas prices because of increased Western Canada demand and the expected launch of LNG Canada exports later this year. We are convinced that by realigning our debt payments, adjusting our dividend payout and increasing our drilling budget, we can deliver stronger cash flow per share growth which will enhance shareholder returns in the long term.

We believe that managing a dividend paying oil and gas business requires a strong focus on operating costs and opportunistically adding production through the drill bit or acquisitions, as appropriate. It requires disciplined capital allocation decision makers who share the goal of making their company more valuable in the future. Pine Cliff has these skills and capabilities, and because management are PNE shareholders, our motivations are aligned with our other owners. Thank you for your ongoing support.

‍

Yours truly,

Phil Hodge

President and Chief Executive Officer

May 5, 2025

‍

‍

¹ Disclosure Note: Please refer to Pine Cliff’s Website for Reader Advisories regarding forward looking information, non-GAAP measures, oil and gas measurements, definitions as this press release is subject to the same cautionary statements as set out therein.

² Comprised of 100,918 Mcf/d natural gas, 2,986 Bbl/d NGLs and 1,477 Bbl/d light and medium oil.

³ Comprised of113,633 Mcf/d natural gas, 3,352 Bbl/d NGLs and 1,574 Bbl/d light and medium oil.

⁴ Based on Q12025 sales volumes of 100,918 Mcf/d natural gas.

⁵ Based on Q12025 sales volumes of 1,477 Bbl/d of light and medium oil.